Labour has ambitious plans to “get Britain building again”, which will be underpinned by reforms to the planning system. But what do the proposed planning reforms and house-building targets more generally actually mean for private landlords?
Labour’s much repeated target is the building of 1.5 million homes during this parliament, which means by 9 July 2029 at the latest.
On 31 July 2024, Angela Rayner announced, with much fanfare, reform to the National Planning Policy Framework (NPPF) in England to “deliver the change needed to turbocharge growth and build more homes”. 370,000 homes a year, no less.
Mandatory targets are being rolled out to local authorities that are considerably different from those under the Conservative government.
In this blog post, I pick through the government’s announcements to try to figure out what planning reforms and the new house-building targets are likely to mean to landlords, property developers and property investors.
Planning reform and house-building at a glance
Where is Labour stimulating house-building?
As the government is not about to become a house-builder itself, it needs to create the conditions needed that will encourage private companies, local authorities and housing associations to build houses.
In order to stimulate the building of 1.5 million houses by mid 2029, the government is reintroducing mandatory housing targets for local councils in England, which were previously advisory targets.
The detail of the targets is different, with some areas seeing a reduction in targets, with others doubling.
The Financial Times explains that the previous system had an “urban uplift” where the biggest 20 urban areas in England had targets that were 35% higher than elsewhere. This is now changing, and according to the FT:
- London’s target will decrease from 100,000 to 80,000
- Cities such as Birmingham, Bristol, Nottingham and Derby will face less pressure to build.
- Targets will increase in some parts of southern England, including Worthing, Elmbridge, Rushmoor, Hart and Surrey Heath.
- The target for North East England will double from c6,000 to 12,000.
- The North West’s targets will jump 75% from c21,500 to 38,000.
The FT shows the impact of the changes in the heat-map below.
The government’s vision for a new generation of New Towns
The government published its vision for a new generation of New Towns on 31 July.
This includes the establishment of a New Towns Taskforce that will advise ministers on “appropriate locations for significant housing growth”, with a final shortlist by 31 July 2025.
Each of the New Towns will have at least 10,000 homes, and some will be “far larger in size”, collectively providing “hundreds of thousands more homes in the decades to come”.
What proportion of the new homes will be in the private rented sector?
The government has not specified what the mixture of tenure will be between owner-occupied, social housing and the private rented sector. However, the Labour 2024 election manifesto promised to “deliver the biggest increase in social and affordable housebuilding in a generation” and “strengthen planning obligations to ensure new developments provide more affordable homes” and “prioritise the building of new social rented homes”.
Angela Rayner also told the House of Commons on 30 July that “new golden rules will require the provision of 50% affordable housing, with a focus on social rent”.
This means that there is likely to be less pressure on the private rented sector in that there will be more social and affordable housing available, with more homes for renters to buy.
What’s happening to planning policy?
The government announced in the King’s Speech that the government would “get Britain building, including through planning reform, as they seek to accelerate the delivery of high quality infrastructure and housing”, with this reform being in a new Planning and Infrastructure Bill.
This new Planning and Infrastructure Bill was number four in the list of upcoming Bills in the 2024 King’s Speech, and is clearly a priority.
However, planning law is complex. The government has not yet published the Planning and Infrastructure Bill. However, it launched a consultation into the reform of the NPPF and other changes to planning policy on 30 July 2024, which is scheduled to close on 24 September 2024.
The consultation refers to a “brownfield first approach and then release low quality grey belt land, while preserving the Green Belt” and boosting affordable housing to “deliver the biggest increase in social and affordable house-building in a generation”.
What impact will the house-building have on the private rented sector?
It is clear that the government’s focus is not on stimulating growth in the PRS, but is instead looking to boost the building of homes for social rent and owner occupiers.
However, it is important to bear in mind that the population is forecast to keep growing. Government figures predict that the UK’s population will grow from under 68 million now, to 70 million by mid-2026, and almost 74 million by 2036.
This population growth will outpace the government’s pledge to build 1.5 million homes by mid-2029, even when taking into account that the homes won’t all be for single person households.
With a growing population, and the time-lag inherent in building homes, it is clear demand will still continue in the private rented sector. Particularly in the areas where there will be less house-building.
Great post, yeah it’s going to be interesting to see the details of how they going to do and what will happen if the Council don’t meet targets? I mean some of the councils are bankrupt like Birmingham council. Will they get find or is it just wording ?
Under the last targets, before the Tory backbench rebellion, if a planning authority didn’t meet its targets, they were pressured to approve planning applications they’d prefer not to.
A lot of new development would be privately funded (including infrastructure contributions) so councils being bankrupt may not hold up development too much/too often. But lack of council (and Government funding) may limit affordable housing (e.g. council housing) and provision of e.g. major roads and secondary schools if the timeline for developer infrastructure contributions doesn’t align with when the facilities are first needed.
Thank you Suzanne Smith for the interesting article. Very well observed about predicted population growth exceeding the Government’s pledged targets.
Sorry I am late replying, and given time I could go into things like:
– “brownfield first” (not actually a new policy, and certainly not a silver bullet, including brownfield is often not where housing demand is greatest, and less viable/needing subsidy e.g. due to contamination, flood risk);
– greenbelt and where it is (not where most people think it is, and far less in extent), and its 5 “purposes” are unrelated to how attractive it looks, or not;
– the whole issue of “greybelt” and what numbers of homes it might deliver (especially if it is only grey bits of greenbelt, as there is not so much greenbelt (as above));
– re-establishing regional planning (should never have been abolished – ’twas an election bribe- and will take years to legislate for and then actually do;
– bringing local plans up-to-date with the new mandatory targets (will also take years, even after the last Government ‘rigged’ local plan inquiries in favour of the Local Planning Authority);
– the consultation draft NPPF (National Planning Policy Framework) which thankfully I no longer have to read, digest, and implement;
– new towns (the Taskforce will take a year for starters, and they start slowly);
– why developers may delay building schemes with planning permission, once obtained;
– natural building rates, so even for large sites there is a limit to how many homes can be built and sold each year per location;
– labour availability to build on sites;
etc., etc..
Even without the population forecasts exceeding the Government target, I doubt it will be achieved in this parliament (doesn’t help the last Govt. abandoned enforcing their targets, so there is catch-up needed already). Perhaps double the target over two terms might be more realistic.
I note in the good article the bit; “This means that there is likely to be less pressure on the private rented sector in that there will be more social and affordable housing available, …”.
Government money is tight. Whatever the 30%, 40% or 50% affordable homes target for private developers to provide, it is only a target and can be negotiated down by developers on grounds of viability.
Another issues now, in London at least, is a lack of Housing Association appetite to develop the affordable homes on private sites offered to them (I understand HAs are more keen to do their own developments). More public money could fix this, but where will it come from?
I don’t see renters demand reducing (population forecasts as above) and supply improving enough to make private renting unattractive to landlords.
But the threats to me as a small landlord are:
-insufficient replacement grounds for s.21 (the Renters Reform Bill ones weren’t, so I doubt the new Government’s will be any easier on landlords);
-discretionary, not mandatory grounds for eviction as a rule (Labour MP told me), and not being able to enforce tenancy agreements without a lot of cost, hassle and uncertainty re. outcome;
– proposed “hardship test” for evictions, including as one of three examples by the now Housing Minister when in opposition and proposing amendments to the RRB, that of not evicting if it would make a tenant homeless. So different Governments, from George Osbourne’s s.24 onwards to s.21 abolition, all make things worse for renters and landlords (higher rents, less choice, landlords selling). Then, when the result of eviction is tenants being homeless, we cannot evict and suffer the results of what Governments have done to us (even when we told them what would happen, arrogant politicians ignored us);
-forcing us to accept pets (been there and learnt in some hard ways) even with the proposed caveat, which I don’t trust to be effective. Hamsters okay, dogs not (even after an okay one, the next -even of the same breed- may not be (from experience)), a cat okay in one property but not another;
-loss of my control, including to make sure things work, including between tenants and e.g. gardens don’t turn to jungles, etc.. [Irony of ‘taking back control’ (re. EU), but for us it is loss of control – them taking away control].
:: Due to insufficient safeguards in the Renters Reform Bill, despite my approaching MPs on the matter; and the strong desire not to have to suffer the bad tenants -I’m pleased to be rid of- for the rest of my life!; one s.21 served (certainly not “no fault”) and the house is on the market for sale. TDS deposit adjudication outcome just confirmed my view.
:: Jury is out on the 2 flats I was keeping, partly for my old age. These need to be Land Registry registered, so I will take the opportunity to ‘split the title’; not as a money-making trick, but to make sure I can sell individually easier if new laws make this the only way out (but “hardship test” referred to above).
:: My one-off build-to-rent plans (brand new 2 bed house for rent) now on hold. I don’t have to do this, and if politicians continue to make life worse I can just leave it. I won’t suffer. Prospective tenants over many decades will miss out on something really nice.
I can sell-up completely, and retire very comfortably, with no hassles nor landlord responsibilities.
And I thought I did well when I voluntarily, self-funded, early retired from being a local authority forward planning manager: responsible for local plans and meeting housing targets (and the criticism from all sides, including ruling councillors who didn’t like bad news, one gets with that job).
I have far better things to do in life; and could see the results of charity donations, which I wouldn’t if left in my will.