Starring – Ian Vogler/AFP
Taking on a legacy long held by the Conservatives, Labor is trying to rebrand itself as the new “homeowner’s party”.
Sir Keir Starmer has pledged to boost the home ownership rate to 70 per cent and help first time buyers get on the housing ladder.
But experts warn Labor will face the same problems as the Conservatives and say the party is proposing ideas that will be ineffective or “misfire” by hurting homeowners and disrupting the market.
Here we analyze Labor’s proposed policies on housing and see how effective they would be in promoting UK homeownership.
Home construction target of 300,000
Labor said it would restore mandatory housebuilding targets to deliver 300,000 homes a year, a promise the Conservative Party itself had made before it abandoned the pledge last year.
The prime minister and his housing minister, Michael Gove, have been accused of giving in to greed.
But critics have pointed out that Labor MPs also have a history of blocking efforts to increase housing construction.
Roopa Haque, the Labor MP for Ealing in London, recently objected to the 26-storey tower scheme, which would have provided 477 homes in her constituency.
In 2020, Labor opposed government reforms to the planning system which would have led to faster development in some areas through the use of a zoning system.
Steve Reid, then Shadow Communities and Local Government Secretary, accused the government of trying to “silence communities and hand planning control over to developers”.
The government has left the reforms, which Shadow Leveling Up Secretary Lisa Nandy recently welcomed, until June 2022.
However, now that the government is bowing to backbenchers who want local communities to have more control over housebuilding, Labor has changed its tune.
James Vitali, a research fellow at the Policy Exchange think tank, said a Labor government could face the same problems as the Conservatives.
He said that Labor realized there was “political currency in bashing the government for housing”, but that “the issues that have held back reform of the planning system for decades are not exclusive to the Conservative Party”.
“To be optimistic about a Labor housing policy we need to get more details on how they are going to resolve a tension that has long plagued the Conservative Party,” he said.
He added: “Saying that you aspire to build hundreds of thousands of homes is not the same as saying, ‘Here are the detailed policies for how we are going to deliver them’.”
Limiting Foreign Buyer Purchases
Labor has also said it will ban overseas buyers from buying more than 50pc of properties in any new-build development.
Experts have said the pledge is effectively meaningless as it is rare for foreign buyers to purchase such a large proportion of homes in a single development.
Tom Wrigglesworth of Leeds Building Society said: “There are some suggestions that really won’t touch the sides because if you look at most new developments, they’re generally buying less than 50pc, if anything.”
Christian Nimitz, head of political economy at the Institute for Economic Affairs think tank, dismissed the policy as an “election gimmick”.
He said: “Most of the time when an overseas buyer buys a home here they either move here – in this case they are a British resident and no longer overseas – or they leave it as a back-up option, But in case you are not actively using it then renting it always makes sense.
“Leaving it vacant would not be a smart choice, and in practice it does not happen very often. The proportion of vacant houses here is very low by international standards.”
Where foreign investors buy more than 50pc of homes in a development, this can be a significant source of wealth.
Steve Turner, executive director of the Federation of Home Builders, said: “Some large scale developments require upfront funding which investor buyers can provide.”
Samuel Hughes, head of housing at the Center for Policy Studies think tank, said limiting foreign buyers could limit the scope for providing new infrastructure and improving complex brownfield sites.
First DBS for first time buyers
Labor has promised that “first time buyers will be given first time information about new homes in their area”. First-time buyers will be allowed to buy new builds only for a specified period – for example, the first six months.
Mr Hughes warned of unintended consequences, saying: “Some first-time buyers are affluent young professionals, and some second-time buyers are struggling families in overcrowded flats – so as a redistribution measure it may fail in some cases.” Will go
“In most cases, however, this would be just as costly and ineffective: developers of high-end developments would simply have to wait six months to sell, until some first-time buyers finished being able to use them. Would have happened.
Mr. Nimitz said it was unnecessary and would negatively impact other homeowners.
He said: “The housing market at the moment is like a game of musical chairs where you have more players than chairs. You can reserve some chairs for some players, in which case they will benefit from it, but by definition , it means someone else loses.
“It’s just interfering with the first people in the queue, but it’s not changing the overall situation that there isn’t enough to go around.”
Mr Turner said any “overly restrictive” or “bureaucratic” policies could jeopardize investment and inhibit sales. New developments generally include all types of homes to cater to different needs, he added.
State Backed Loan Scheme
Labor said it would help first time buyers by introducing a mortgage guarantee scheme.
However, the government already has a mortgage guarantee scheme, which provides state-backed support for lenders offering 95pc of mortgages.
The guarantee compensates mortgage lenders for part of the net loss if they had to repossess the home, applying to 80pc of the purchase price of the property.
Other lenders are not part of the scheme as they have to pay a fee and prefer to guarantee 95pc of the loan on their own.
Mr Rigglesworth said it was unclear how the Labor plan would differ from what is already in place.
He said this could be expanded by becoming mandatory for all lenders, but added that this could create problems.
Mr Wrigglesworth said: “I think a lot of the smaller lenders in particular will be hit hard by this.”
Labor did not respond to a request for comment.
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