Labour’s Housing Proposals: What They Mean for the Industry
Following Labour’s rise to power in July, Real Estate Director Julie Carr has shared her insights on the potential impact of several new proposals affecting the housing industry.
Julie comments: “Regarding the housing crisis, Labour has introduced a range of proposals. These include improving rental terms and housing conditions, increasing social housing, and reducing deposits for first-time buyers.
“While the necessity of these measures is evident, it’s important to recognise that they come with significant costs. In the case of improved EPC ratings (A-C for rented accommodation) Hampsons suggested that it will take beyond the original Net Zero 2030 target date to achieve this—approximately 18 years.
“For those of us in the housebuilding industry, there’s a promise to build over 300,000 homes annually for the next five years to meet the 1.5 million target. This plan involves:
- Adding 300 more planning officers.
- Updating the National Policy Planning Framework (NPPF), restoring housing targets, and urging councils to maintain up-to-date local plans.
- Prioritising the fast-tracking of brownfield site approvals over other lands, preserving the green belt while strategically ensuring homes are built in the right locations.
- Focusing on local developments, including new towns, urban extensions, and regeneration projects.
- Imposing new cross-border strategic planning on combined authorities, granting them new powers and freedoms to better utilise grant funding.
- Reforming compulsory purchase powers to expedite processes with ‘fair compensation’ rather than inflated prices based on potential planning permissions.
- Implementing solutions to unlock housing developments affected by nutrient neutrality without compromising environmental protections.
“Since the King’s Speech in July, Deputy Prime Minister Angela Rayner (and Secretary of State for the newly renamed Housing, Communities and Local Government) made early progress by outlining further plans and meeting with the Home Builders Federation (HBF) just after they published their housing blueprint for the next government, detailing necessary measures to achieve tangible improvements (www.hbf.co.uk/policy/general-election-plan).”
Julie also addresses the revised National Planning Policy Framework (NPPF) and its implications.
She notes: “On 30 July 2024, the government released its consultation on a revised NPPF and other planning system changes.
“One significant change is the introduction of a new ‘Grey Belt’ definition, referring to land within the green belt that has been previously developed or contributes little to the five Green Belt purposes (as outlined in paragraph 140 of the draft NPPF), with certain exclusions.
“When developing within this new Grey Belt, a ‘golden rule’ applies, stipulating:
- 50% of the development land must be allocated for affordable housing, with an appropriate portion designated for social rent, subject to viability.
- Necessary improvements must be made to local or national infrastructure.
- New or improved green spaces accessible to the public must be provided, ensuring residents have access to quality green areas within a short walk from their homes.
“Regarding the viability of developing within the Grey Belt, the draft NPPF introduces a new Annex 4, outlining maximum land values chargeable within the Grey Belt and how exceeding these values impacts viability.
“The new planning provisions raise several questions:
- How will the addition of a mere 300 planners across the 337 authorities address the backlog of undecided planning applications, local plans, and the cross-border strategic planning imposed on combined authorities?
- How can the process be accelerated to deliver housing while considering the multitude of factors that feed into planning decisions?
- When will these changes be implemented, what will they cost, and who will bear the costs?
“The introduction of these reforms will take time to go through consultation, which ends 24 September 2024, before becoming operational.
“The costs are yet to be determined, but those who may bear them include landowners, buyers, or non-UK residents purchasing non-residential property via SDLT. I expect to landowners of Grey Belt will not welcome the threat of compulsory purchase at less that market value based on a planning assumption.
“For some good news, UK interest rates were cut by 0.25% to 5%. The impact of this is currently unknown and needs to be viewed alongside inflation. This may go some way to improving house purchases.
“Meanwhile, housebuilders continue to face additional challenges in relation to bulk sales of affordable housing to registered providers.
“Homes England’s grant funding for affordable housing is available only until the end of March 2026, meaning housebuilders must commit now to ensuring handover of completed homes by that date, despite needing to discharge numerous pre-development/pre-occupation conditions before practical completion.
“It is hoped that Homes England will be able to either extend the dates based on unspent funds and/or increase the funds and the dates to give certainty that the affordable housing supply pipeline will not be delayed.”
Julie concludes: “Fingers crossed that Labour’s plan to improve the economy through planning reforms, housebuilding, and infrastructure proves fruitful. It’s crucial they engage all relevant stakeholders in this effort.
“This includes community engagement, so people understand that their input is to support sustainable development, not to try to block it.”
For advice on how Labour’s proposed changes may affect you or for any real estate enquiries, contact Julie at julie.carr@brmlaw.co.uk
