Government plans give grounds for developer optimism
The UK property development sector is poised for significant changes following the Labour Party's victory in the General Election on 4th July. The new government has already announced several planning reforms aimed at addressing the housing crisis, which will directly impact property developers. In a nutshell, new chancellor Rachel Reeves has promised to "get Britain building again" with the return of compulsory housebuilding targets.
According to a recent YouGov survey, there is substantial public support for Labour's commitment to a large-scale increase in housebuilding. A clear majority, 62%, support a significant boost in housebuilding, although this support varies across political lines. While younger adults (18-24) are particularly enthusiastic, with 71% in favour, older demographics show slightly less support (60% among over 65s). Among political affiliations, Conservative and Reform voters are almost evenly split on the issue, and Labour’s large majority means the right can’t stop their plans in parliament.
Labour has set an ambitious target of building 1.5 million new homes over the next five years. This target has garnered the support of 61% of the public, reflecting a strong mandate for the new government to act. However, support for large-scale housing developments dips when considering local impacts, with only 52% of people backing new housing in their immediate area, indicating a prevalent ‘Not In My Backyard’ (NIMBY) sentiment.
Addressing this local opposition is a central theme in Labour's proposed reforms. One key strategy is setting housebuilding targets for local councils, a policy that 52% of the public supports. However, the public is less comfortable with the idea of giving ministers the power to overrule local councils on planning decisions, with 48% opposing and only 36% supporting this approach. Labour voters are more favourable towards this measure, showing the party's base may be more aligned with their proposed interventions.
Labour also plans to review and possibly alter the boundaries of the green belt, prioritising development on brownfield and so-called ‘grey belt’ land - areas that are post-industrial and of lower quality. Despite this nuanced approach, there is substantial public resistance to building on any green belt land. Two-thirds of the public oppose such development, highlighting the challenge Labour faces in changing perceptions about green belt land use.
Interestingly, while green belt development is contentious, there is strong public support for green infrastructure projects. Ending the ban on building new onshore wind farms in England is favoured by 60% of Britons, including a majority of Conservative voters. This indicates a broader acceptance of environmentally sustainable developments compared to housing projects, which may be a strategic area for Labour to emphasise in their planning reforms.
For property developers, these changes signal a potentially advantageous future. The substantial public support for increased housebuilding and specific green infrastructure projects presents opportunities for significant development. However, navigating local opposition and the political complexities of green belt development will require careful planning and strategic engagement with both local councils and the broader community.
Of course, what the new government looks set to give property developers, and investors and business at large, is certainty. It is unlikely that there will be another change of administration for at least four years and the Labour leadership spent a large part of the run-up to the election courting the City and business in order to reassure them that a Labour government wouldn’t enact radical left-wing policies.
In my experience, what businesses of all shapes and sizes need and want above almost anything else is to be able to plan for the future with a decent degree of certainty; put simply, the greater the insecurity about the economic outlook or regulatory environment, the less likely business owners are to plan for growth.
While it’s very early days, what the new government has done so far has been completely in keeping with what they signposted before the election. Their focus is on growth, and they see housebuilding as a key element of that strategy. Labour's proposed planning reforms post-election suggest a robust agenda for increasing housing supply, which is broadly supported by the public.
For property developers, the future looks positive. We have a government which wants hundreds of thousands of new homes to be built and is determined to make developments less likely to be rejected because of NIMBY campaigns. Let’s see if they can succeed where previous administrations have largely failed.
Constantinos Savvides, Head of Underwriting at London Credit.
