Labour restores housebuilding targets - how easy is it to build 1.5 million homes?

Chancellor Rachel Reeves has reinstated housebuilding targets in one of the first policy initiatives since Labour came to power.

Labour’s manifesto pledged to build 1.5 million homes during the five-year parliamentary term and Reeves, alongside deputy prime minister and housing secretary Angela Rayner have already signalled an intention to get spades in the ground following the party’s landslide general election victory.

Reeves confirmed in a her first speech (8 July) that the mandatory targets – scrapped last year under the Tory government – would be reinstated, while “grasp[ing] the nettle of planning reform”.

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Reeves said there will be a National Planning Policy Framework consultation, while Rayner will write to local planning authorities making clear what will now be expected of them.

This will include universal coverage of local plans and reviews of greenbelt boundaries. 

“These will prioritise brownfield and grey belt land for development to meet housing targets where needed,” says Reeves.

Housebuilder stocks have risen in response to the proposals.

The hope is that more supply will make it more affordable for people to buy a property.

David Thomas, chief executive of Barratt Developments, says building more new homes will bring “huge economic and social benefits to the UK.”

He adds: “It is vital that local and central government are united with industry to plan positively to deliver high quality new homes and developments across the country.

“The country urgently needs more new homes, of all types and tenures. We look forward to working with the new government to help them build 1.5 million homes across the next parliament, unlocking planning and helping first-time buyers access affordable finance, ultimately helping more families own a high quality, sustainable, new home.”

Neil Jefferson, chief executive of trade body the Home Builders Federation (HBF), said the sector was ready to support the plans.

“Building the homes the country needs will address the social issues our housing crisis is creating, provide young people with access to decent housing, whilst creating tens of thousands of jobs and boosting investment in communities in every area of the country,” he says.

But while the lack of property supply is well-documented and more housebuilding is welcomed by most property professionals, increasing development may be easier said than done.

Councils need to overcome local opposition, protect the green belt plus there are also questions over who will build the homes due to a skills shortage in the sector.

Here are some of the key challenges.

Meeting mandatory housebuilding targets

The Conservative Party scrapped local targets last year in an effort to avoid backbench rebellions.

The restoration of targets has been welcomed but many in the property market are awaiting a consultation that will detail how this will work in practice.

Building 1.5 million homes over five years is a challenge, requiring 300,000 homes to be built per year.

The UK has regularly struggled to get close to that figure and research by estate agency trade body Propertymark, suggests Labour must deliver just over 1,150 new homes consistently every single working day for the next five years without defaulting to meet the target.

This is roughly equivalent to delivering at least five large scale housing estates every single week, Propertymark says.

“Local councils need as much support as possible in meeting the new UK government’s aims,” says Nathan Emerson, chief executive of Propertymark.

“Building 1.5 million new homes by the next general election is an challenging target, but Propertymark would like to see urgent clarity and detail as to how this ambition can be achieved. This goal would require over a thousand new homes to be built every working day before 2029.”

Protecting the green belt

Overhauling council planning departments and combating NIMBY (Not In My Back Yard)-ism - where residents regularly oppose local developments - is one thing, but the UK is pretty passionate when it comes to its greenbelt.

“The green belt issues have always been a cause for restrictions and arguments from local residents along with MPs,” says Tomer Aboody, director of specialist lender MT Finance.

“By potentially being more flexible on planning and encouraging developers, this could be the only way in which success can be achieved when it comes to building new homes. Without doubt, challenges will come from local residents, and how Labour navigates through these will be very interesting.”

Each area identified as having potential for new housing must pay full respect to greenbelt status, and there should ideally be a focus on bringing brownfield land back to purposeful use first, adds Emerson.

Reeves said in her speech that the government intends to build on some lower quality green belt land - known as grey belt - but Propertymark warns this should involve a full review to prioritise alternative available land to achieve their housing targets. 

Nutrient neutrality

The Tory government introduced nutrient neutrality rules in 2022, that made sure development in certain areas didn’t affect the condition and cause more water pollution on a site.

Roger Barrett, land and new homes director for Connells Group, warns that these rules have already blocked 160,000 homes from being built so a resolution may be required.

The Tories had tried to amend the rules to support more development last year.

Tackling the skills shortage for housebuilding

Even if there is a willingness to create more homes, some are asking who will build them.

The Federation of Master Builders (FMB) warns that while targets and presumptions in the planning system in favour of sustainable development is a positive step, the sector is suffering from a talent shortage.

“The UK is currently experiencing a construction skills crisis, and there are serious questions to be asked about how deliverable any of this is, without a long-term training and skills plan to ensure the workforce is in place,” says Brian Berry, chief executive of the FMB commented: 

“To pull this off will require government departments working in tandem to ensure we have the skilled workers available to deliver these plans. The government now needs to address how the skills shortage will be tacked.”