How the July General Election Will Dictate the UK Property Market

Introduction:

On the 4th of July, after 14 years of a Tory-led government, the UK is likely to see a new political party come to power. This article aims to elucidate some of the key takeaways from the Conservative and Labour manifestos that will impact the UK property and housing market.

Housing remains one of the most pressing challenges in the UK. According to YouGov, it ranks as the fourth most important political issue facing the country, trailing only the economy, health, and immigration. The demand for new affordable homes is a significant public concern, making it a priority for the government as well. The National Housing Federation estimates that 8.5 million people are in housing need. Consequently, both parties manifestos are heavily focused on housebuilding initiatives.

Conservative Initiatives:

The current Tory government pledges to “build more houses in the right places.” They plan to construct 1.6 million new homes over the next parliamentary term. For context, since 2010, the Conservative government has delivered 2.4 million homes, averaging approximately
170,000 homes per year. They also fulfilled their promise to build 1 million homes in the last parliamentary term.

The Tories aim to deliver a record number of homes each year on brownfield land in urban areas by fast-tracking the planning process. They also plan to support smaller-scale housebuilders by requiring councils to allocate land for them and lifting Section 106 burdens.

Additionally, the manifesto highlights the use of the new Infrastructure Levy to provide essential local infrastructure, such as GP surgeries and roads, to support these new homes. A notable commitment is the renewal of the Affordable Homes Programme, which aims to deliver homes of all tenures and focus on regenerating and improving housing estates.

However, this manifesto lacks local accountability. It does not mention reinstating the mandatory housing targets for councils that were abandoned in 2023, potentially leading to unequal distribution and neglect of areas with the greatest need.

The full Conservative Manifesto relating to housing includes:

Abolishing the legacy EU ‘nutrient neutrality’ rules to unlock the building of 100,000 new homes with local consent, with developers paying a one-off mitigation fee to ensure no net additional pollution.
Delivering a record number of homes each year on brownfield land in urban areas by fast-tracking the planning system for new homes in the 20 largest cities.
Unlocking new urban regeneration schemes by creating locally led urban development corporations in partnership with the private sector and institutional investors.
Supporting local and smaller builders by requiring councils to set land aside for them and lifting Section 106 burdens on smaller sites.
Ensuring local authorities use the new Infrastructure Levy to deliver GP surgeries, roads, and other local infrastructure needed to support homes.
Renewing the Affordable Homes Programme to deliver homes of all tenures and focus on regenerating and improving housing estates.
Protecting the Green Belt from uncontrolled development, while ensuring more homes are built where it makes sense, like in inner cities.

Labour’s Initiatives:

Labour pledges to “Get Britain Building Again’ by constructing 1.5 million new homes over the next parliamentary period. Their approach includes permitting selective development on green belt land and balancing environmental considerations with the need for additional housing, indicating a more centralised yet adaptable strategy for meeting the UK’s housing needs.

Labour’s manifesto includes updating the National Policy Planning Framework, restoring mandatory housing requirements, and ensuring councils are accountable for addressing specific housing needs.

They also plan to strengthen planning obligations to ensure new developments provide more affordable homes and modify the Affordable Homes Programme to deliver more homes with existing funding. Additionally, Labour aims to support councils and housing associations in building capacity.

A priority is placed on constructing new socially rented houses by reviewing the increased right-to-buy discounts introduced in 2012 and increasing protections on newly built social housing.

The full Labour Manifesto relating to housing includes:

Updating the National Policy Planning Framework, restoring mandatory housing targets.
Taking tough action to ensure planning authorities have up-to-date Local Plans and reforming and strengthening the presumption in favor of sustainable development.
Supporting local authorities by funding additional planning officers through increasing the rate of the stamp duty surcharge paid by non-UK residents.
Prioritising brownfield-first development and fast-tracking the approval of urban brownfield sites.
Strategically approaching greenbelt land designation and release to build homes in the right places, prioritising lower quality ‘grey belt’ land, and introducing ‘golden rules’ to ensure developments benefit communities and nature.
Granting Combined Authorities new planning powers and flexibilities to make better use of grant funding.
Reforming compulsory purchase compensation rules to improve land assembly, speed up site delivery, and deliver housing, infrastructure, amenity, and transport benefits in the public interest.
Ensuring landowners receive fair compensation rather than inflated prices based on prospective planning permission for specific types of developments.
Strengthening planning obligations to ensure new developments provide more affordable homes, modifying the Affordable Homes Programme to deliver more homes with existing funding, and supporting councils and housing associations to build capacity and contribute more to affordable housing supply.
Prioritising the construction of new social rented homes and better protecting existing stock by reviewing the increased right-to-buy discounts introduced in 2012 and increasing protections on newly built social housing.

Conclusion:

Although the numbers presented by both parties sound promising, history shows that governments have frequently over-promised and under-delivered on housebuilding plans. Only 1.01 million homes have been completed over the last five years, yet both Labour and the Conservatives promise to deliver at least 50% more homes during the next term. Irrespective of which party gains power after the July 4th election, they must demonstrate how they will support the building of these new homes.