In the battle for political power, housing could rule supreme

While the next general election isn’t due until January 2025, or earlier, housing is shaping up to be a key battleground for both parties. It could arguably even decide the election.

There seems to be clear blue water developing between the two main parties on this issue.

Now ahead in opinion polling - garnering 45% of headline voting intention - Labour’s rhetoric on housing and planning is growing stronger, with party leader Sir Keir Starmer vowing in a speech to the British Chambers of Commerce to “choose the builders, not the blockers”.

This sentiment was echoed at a recent discussion Shoosmiths held in partnership with Lexington at its Manchester office, where over 50 real estate professionals gathered to find out the views of Labour MP and former Leader of Trafford Council, Andrew Western MP - in the same week where the government set out its measures to unblock the planning system and build more homes.

Speaking on themes such as increasing housing delivery, planning policy and the green belt, Andrew Western MP remarked in his introduction: “I don’t have a tremendous amount of time for people who want to look at the problems in our housing system without fairly swiftly coming to the overarching issue of supply. And so, I’ve said an awful lot in my six or seven months in Parliament about the need to just build - all tenures, all types.”

Battle lines

The government’s approach to housing is predicated on brownfield delivery, densification and focussing growth on cities, where ‘demand is highest and growth is being constrained’.

These pillars were cemented in its announcement and speech by the Housing and Levelling Up Secretary, Michael Gove, where the government confirmed that it will meet its pledge to build 1m homes over this Parliament. This is critical new supply, but would require the delivery of about a further 300k homes – a number it has been unable to hit annually.

The government’s vision seems to be based on achieving its housing targets, without taking land out of the green belt or relying on sites in the outer suburbs. This is a tall order given the scale of the UK’s existing housing shortage, let alone its future requirements.

Labour’s approach to housing delivering and planning policy is more inchoate and may well be better articulated by its party conference in October 2023. Its pronouncements to date do, however, suggest reinstating housing targets and boosting supply across all tenures.

Green belt release has not been ruled out in order to achieve this, with Andrew Western MP putting forward a potential approach: “What we have to do, in my opinion, is look at everything within one mile of a commuter train station to a major city, excluding Sites of Special Scientific Interest or areas of outstanding natural beauty, or any sort of protection, and you get somewhere in the region of 1.9-2.1m homes that you could build.”

For the current government, the proposed revisions to the National Planning Policy Framework (NPPF) offer additional protection to the green belt - removing the requirement for local authorities to review and alter green belt boundaries if this is the only way of meeting their housing need. A stark contrast to Labour’s potential flexible approach.

Targets

Following the pre-Christmas rebellion where Conservative backbenchers sought to amend the Levelling-up and Regeneration Bill (LURB) to outlaw the use of mandatory targets in local plan production, the government has tempered its approach to housing targets.

This is reflected in proposed revisions to the NPPF that refer to the introduction of ‘new flexibilities to reflect local circumstances’ in the way that councils meet their housing needs.

The revisions to the NPPF, originally anticipated in the spring, may now not be finalised until after the LURB is enacted, which could be as late as November 2023.

In comparison, Labour now appears to be adopting a more robust approach to target setting.

Indications are that Labour is prepared to commit to the government’s 300k homes a year figure that Clive Betts, Chair of the Levelling Up, Housing and Communities Committee, described as a "starting point". These housing targets could be formulated at a ‘wider than local’ level, with responsibilities transferred to combined authorities and city regions.

“I’d absolutely get those targets back in,” said Andrew Western MP at Shoosmiths’ event. “I might go above 300k, but I don’t think the party are going to. 450k gets us to the European average over 25 years.”

Infrastructure funding

It is fair to say that proposals to introduce a national infrastructure levy have not been well received by the real estate industry.

In June 2023, a coalition of organisations submitted a joint letter urging the Department for Levelling Up, Housing and Communities to abandon the levy. The general tenor of the response was that amalgamating financing for affordable housing and infrastructure could impact the delivery of the former, while potentially rendering brownfield regeneration unviable and perpetuating regional inequalities.

The government has now watered down the requirement for all authorities to charge the proposed infrastructure levy – they will not have to do so if it would make development in an area economically unviable. Labour has indicated that it will not proceed with the levy.

As the levy was due to be phased in over several years, the current infrastructure funding regime - using a combination of planning obligations and the Community Infrastructure Levy – is likely to continue irrespective of what party comes into power at the next election.

Delivery vehicles

There is a rare degree of unanimity between parties when it comes to the role of metro mayors, combined authorities and development corporations in driving housing growth. 
When announcing the long-term plan for housing, Gove offered a commitment to “work with the metro mayors to align the new housing we envisage with the wider economic development that they are helping to drive”. 

For Labour, Starmer has voiced an enthusiasm for setting up locally-based development corporations with a housing focus. The shadow housing secretary, Lisa Nandy, also outlined in a recent media interview how Labour would look to work with combined authorities to identify areas of green belt land to declassify, before then handing development corporations the role to bring these sites forward and deliver new homes.

Planning reform

The LURB reflects the government’s approach to planning. It embraces a ‘plan led’ system, albeit one where national development management policies can ‘trump’ local plan policies.

Alongside launching a £24m Planning Skills Delivery Fund and forming what it terms a ‘super-squad’ of leading planners, the government’s recent housing announcement also featured several proposals aimed at promoting development. It mooted introducing new flexibilities to convert shops, takeaways and betting shops into homes, while also enabling barn conversions and the repurposing of agricultural buildings and disused warehouses.

For many in the real estate industry, these changes will be viewed as tinkering – falling short of the streamlining and resources that are needed for the planning system to work efficiently.

There are signs that Labour is contemplating more radical planning reform.

In a speech at Gillingham’s Mid Kent College in July 2023, Starmer said: “I will bulldoze through planning laws to reignite the dream of homeownership.”

Andrew Western MP went a step further during the discussion at Shoosmiths’ Manchester office, stating: “These are my own views and definitely not attributable to the front bench, but I have said it on the record several times; I would scrap the Town and Country Planning Act 1947. It stymies development. We are one of the few places in the world that has a guidance based, case-by-case permission system, rather than a rules-based planning system.”

The prospect of further changes to the planning regime, whether introduced by a Labour or Conservative government, could lead to uncertainty and delays in local plan production.

There is a lot to be said for simplifying, consolidating and properly resourcing the existing planning system. Whichever party comes into power must, however, allow developers and planning authorities to get on and deliver the housing that is required.

The average house in England now costs up to 10 times the average salary, according to Centre for Cities. Britain also faces a backlog of 4.3m homes missing from supply - not built for a myriad of reasons, but all contributing to what is now a systemic housing shortage.

With over a year until voters head to the polls, the outcome of the next election is far from decided. What is clear though is that housing policy will be a key deciding factor. The party that is able to put forward a robust, logical and viable plan for increasing residential development could well win over not only the real estate industry, but also the public.

In the battle for political power, housing could rule supreme.

Kathryn Jump is a partner and co-head of Shoosmiths’ living sector, Andrew Pattinson is a partner and head of real estate north at Shoosmiths.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2024.

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