Britain Has A Welcome New Policy Consensus On Housing, But It Also Needs New Cash To Make A Lasting Difference

20th June 2024

A welcome new political consensus is emerging on housing, with the Conservative and Labour manifestos both combining support for first-time buyers with stretching housebuilding targets. But the lack of cash for affordable housing will make these targets hard to hit, according to new Resolution Foundation research published yesterday.

Home truths - the latest Resolution Foundation election briefing, funded by the Nuffield Foundation – examines the current state of housing in the UK, the major challenges ahead for the next government, and what the two main political parties are proposing.

Housing has become an increasingly salient topic among voters in recent years. Almost a quarter of people (23 per cent) identify housing as one of the top three concerns facing the country in 2024, more than double the proportion of people who felt this way in 2020 (11 per cent).

The need for action on housing is also driven by the long-term fall in home ownership, especially among young people. The share of families headed by someone aged 19-29 years that own their own home is, at 12 per cent, less than half the level it reached in the peak homeowning year of 1990, although it has risen from a low point of 8 per cent in 2015-16.

The long-term nature of this problem, and the fact that solutions must be sustained to make a difference, mean that the emerging policy consensus in the main parties' manifestos is welcome, says the Foundation.

Support for first-time buyers includes Labour’s plan to permanently extend the Mortgage Guarantee Scheme (MGS) introduced by the last government, which allows lenders to pay a fee in return for the government underwriting the riskiest part of a mortgage.

The Conservatives have pledged to deliver 1.6 million new homes by 2029, just topping Labour’s commitment to 1.5 million new homes over the same time period. These are ambitious targets, says the Foundation, requiring at least 300,000 new homes to be delivered in England every year of a five-year parliament. Both main parties say they would achieve this through reforming the planning system, although while the Conservatives are wedded to the green belt, Labour’s strategy is to allow some building on lower quality ‘grey belt’ land.

The report notes that the last time we came close to reaching this target was during the housebuilding heyday in the 1970s, when around 250,000 new homes a year were built across England. During this period, local authorities and housing associations played a crucial role, contributing almost half (45 per cent) of all new homes built. In contrast, they contributed to just one-in-five (21 per cent) new homes built in the 2010s – when the average annual number of new homes completed fell to just 136,000.

The lack of new funding for affordable housing will make it extremely challenging for either of the main parties to get remotely close to their housebuilding targets, says the Foundation.

More positively, both main parties have committed funding to improving the energy efficiency of the nation’s housing stock. The Conservatives have committed £6 billion over the next three years to this goal, while Labour have committed an additional £6.6 billion over the next parliament through their ‘Warm Homes Plan’.

And while the main parties have also both pledged to improve conditions for renters by passing a Renters Reform Bill, existing plans to reduce support for low-income private renters via a cash freeze in Local Housing Allowance (LHA) remain in place.

The report authors note that this is a major shortcoming with both parties’ proposals, with today’s private renters spending more of their lives in the sector than previous generations, and paying on average more than three-times as much as mortgagors for their housing (around £11 per metre square for private renters in 2021-22, compared to just over £3 for mortgagors, excluding principal payments).

Failing to link LHA to local rent rises in the next parliament risks placing low-income private renters under increasing strain, at a point where we’ve seen record numbers of households pushed into temporary accommodation (nearly 113,000 by the end of 2023).

Cara Pacitti, Senior Economist at the Resolution Foundation, said:

"Housing has risen up the political agenda in recent years, both in terms of its salience as an issue among voters, and as a focus for action in the main parties’ manifestos.

“There is a welcome new policy consensus emerging on both the need to assist first-time buyers, and to dramatically increase the number of new homes built across Britain, in order to reduce housing costs and get youth home ownership on a sustained upward path.

“But whoever wins the next election will struggle to hit these stretching targets without significantly more funding in place to boost affordable house building, and to support low-income families with rising rents. Britain’s new housing consensus desperately needs new cash for it to deliver."