After 14 years of a Conservative government, the electorate have gone to the polls and decided they wished for a change. But what will this paradigm shift really mean at ground level, will the clock really return to zero and how will this impact housing building and property development?
Pre-election, many promises are made, which if they all came to pass would leave us living a utopian existence. However, post-election, reality soon bites: budgetary concerns come to the fore, the appeasement of not only party colleagues but grass roots activists raises its head potentially leading to policy changes, and the transition from opposition to leadership reveals the harsh reality of accountability and decision-making. The paradigm may have shifted, the clock may have gone to zero but it is definitely ticking again! And the electorate of the UK are watching.
So, what were these pre-election promises for the housing market and how have they been addressed in the days since the general election?
Labour have promised to get Britain building again, an echo of the promise made previously by Boris Johnston during his time as Prime Minister.
The graph below would indicate that in the last year, following on from the post-Covid spike, that new home registrations, the process by which a developer registers their intent to build a new home, has fallen off dramatically:
There could be many factors feeding into this drop:
The cost of materials post-Covid
The lack of financial resources due to tighter regulations around funding
Property developers, disenfranchised with government policies and departments, leaving the arena
Lack of policy changes in crucial areas such as planning, which have a huge impact on property developers being able to build.
In the days since the election, Labour have nailed there colours to the mast by proclaiming that they want 1.5 million new homes by 2029 - quite an ambitious target! To achieve this many factors need to align: policy changes being just one of these things. And as many of the experts point out, direct influence over what is being built and where, would be necessary to achieve this target.
Property developers are not just going to do the government's bidding and are not just going to start flooding the market with new build homes unless incentivised. If this came to pass, then they would see their margins squeezed as property values potentially dropped due to over rather than under supply. Add to this Labour's commitment to be carbon neutral by some future date (another most likely impossible target), the focus for these new build properties would have to be green energy, renewables and so on. As the cost of green energy, on a large scale, is still prohibitively high, this adds another blockage in the pathway for providing affordable, sustainable housing to the masses, whilst still allowing the property developer to turn a profit.
One 'solution' that has been touted, is for the government to revert back to previous times, when government provided their own housing; however, many lessons would need to be learned from the previous iteration of this policy before any implementation could go ahead, as the previous system was often open to abuse with the most needy still not being provided with the necessary housing. Added to that the necessity for the copious amounts of funding required for this endeavour, perhaps this is not a can of worms the current government would be keen to open!
So, setting the can openers to one side for now, reaching this optimistic target of 1.5 million homes may be a bridge too far but perhaps in the reaching there may be great things achieved, which can only be of benefit to the current housing market.
If the necessary reforms to the Planning system are enacted, if green energy incentives and grants are provided (UK wide!), if the government works with property developers and not against them, and many other 'ifs', then perhaps some progress will be made towards this target.
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