The government promised to build 1.5 million new homes over the course of this parliament. How close are they to reaching the annualised rate? We don’t yet have government statistics to cover the whole of Labour’s first year in office, yet in the year to March construction began on just 138,650 new homes across the UK. In other words, housebuilding is running at substantially less than half the rate needed for the government to meet its promise. In fact, construction is slowing compared with where it was under the Conservatives.
A report by the House Builders’ Federation (HBF) on construction in London explains some of the reasons why. In London, the supply of new homes is running even further behind the government’s schedule than in other parts of the country. Over the course of this parliament, 444,000 new homes are supposed to be built in London – 88,800 per year. But in the year to June the HBF estimates that only around 30,000 were actually started.
What is holding them up? The HBF looks at a number of obstacles which it says has made London a ‘no-go area’ for developers. There is the London Plan, the irregularly updated plan for the capital’s development, which the HBF says adds 88 planning policies on top of national planning policy. There is also the Building Safety Regulator. No-one wants regulation to ignored, especially after the Grenfell Tower disaster, but according to the HBF developments for a total of 10,000 homes have been stuck in the approval process for more than six months. There are carbon offsets which have to be bought, payments made under the Mayor of London’s Building Safety and Mayoral Construction Infrastructure Levy – which seeks to place a disproportionate share of the costs of new infrastructure on the developers, and buyers, of new homes. It also cites the lack of any mortgage guarantee scheme like Help to Buy, which propped up the industry for a decade (not in a healthy way).
On top of all that, the HBF blames Sadiq Khan’s demand that 35 per cent of all new developments must be affordable housing. Private developers – and not just in London – are now relied-upon to build the bulk of new social housing. In 1978, the last year before Thatcher arrived with her ‘right-to-buy’ for council house tenants, private developers built 152,170 of the 288,620 new homes built in the UK that year. Housing associations built 22,790 and local authorities 113,660. By 2024, private developers built 139,470 of the 184,600 new homes, housing associations 40,460 and local authorities 4,670. Private developers are often blamed for the low rate of housebuilding, accused of clinging on to land and developing it too slowly. But from the figures, private housebuilding has held up quite well while a collapse in the construction of new council housing has not been matched by a corresponding increase in the construction of new homes by housing associations. For some reason housing associations don’t want to build new homes. The government is relying instead on deals with private developers. The private developers are happy to play along with this so long as the percentage of affordable homes demanded by local authorities is reasonable. When the demands become too great, they stop building altogether.
Interestingly, the one factor which the HBF does not mention in its report on house building in London is nimbyism. Yet to listen to Angela Rayner in her months as housing minister you would have thought that this was the sole reason. Sooner or later, it is going to dawn on the government that if it wants new homes at anything like the rate it has promised, it is going to have to look at the many other reasons why construction is slumping.
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