Bartek Staniszewski is a Researcher at Bright Blue, with a focus on social policy. He also sits on the editorial board of the Journal of the Oxford Graduate Theological Society.
During the 2023 London Labour Conference, a core message rang clear – London has a housing crisis, and only Labour can fix it. Similar voices echo across the country, with Labour MPs Andrew Western, Lisa Nandy, and Matthew Pennycook, making much of the need for action on housing policy. At the party’s 2022 Conference, Sir Keir Starmer similarly pledged to bring home ownership back up to 70 per cent.
However, at the same Conference, Starmer did not detail any policies. Labour’s best ideas for housing are already Conservative policies, and their worst beat the wind of long-failed, demand-side proposals.
In their Manifesto, Labour boasts that the failed Help to Buy scheme “was built on Labour’s pioneering HomeBuy Direct Scheme” and, instead of ending it, claim that they “will re-focus Help to Buy on first-time buyers on ordinary incomes.” However, Help to Buy was already restricted to first-time buyers by the Conservative Government, back in May 2021. Even before then, only 17 per cent of Help to Buy purchases were made by non-first-time buyers. This re-focusing did little to help with the serious costs of Help to Buy, which inflated house prices at the cost of an enormous investment.
Many of Labour’s recent promises are also fixated on the demand side of housing policy. For example, Starmer promises a mortgage guarantee scheme to help those who cannot afford a deposit. This is in tune with Labour’s earlier pledges to safeguard low interest rates and cut stamp duty – which contributes to the cost of the mortgage – for first-time buyers.
However, accessibility to mortgage has been one of the greatest inflationary pressures on house prices in recent years. According to the International Monetary Fund, a ten per cent increase in the availability of household credit leads to a six per cent increase in nominal house prices. The Bank of England itself acknowledged that quantitative easing alone has increased UK house prices by 22 per cent between 2009 and 2018. Without serious supply-side measures, improving accessibility to mortgages is going to contribute to the skyrocketing house prices.
Yet on the supply side, Labour are no more ambitious than the Conservatives. Following the Conservative pledge to build 300,000 homes a year, which outbid the earlier Labour Manifesto pledge to build 250,000 homes a year, Labour have been quiet on the number of new houses they want to build outright.
Instead, Labour have refocused on affordable and social housing, promising to build 150,000 “genuinely affordable council and social homes” a year. While this is a worthy aim, building cheaper social homes alone will not solve Britain’s housing supply problems.
The UK already has one of the highest proportions of social housing stock in Europe, at 16.7 per cent, as compared to the OECD average of 6.9 per cent. And if only social and affordable homes are built, people looking for more expensive homes, such as non-first-time buyers, will increasingly end up buying and renovating homes meant as affordable, inflating their price beyond affordability. To tackle the housing crisis, the total supply of homes in the right places needs to increase, but Labour seemingly have no more ideas for how to do that than the Conservatives do.
Another of Labour’s flagship policies – to give first-time buyers an exclusive six-month opportunity to buy some new build properties – sounds eerily similar to an earlier failed Conservative policy. The Labour policy promises 50,000 discount homes each Parliament, reserved for first-time buyers who live locally, “with prices linked to local incomes and discounted at up to half the market price.” But, in 2015, the Conservatives similarly promised 100,000 low-cost starter homes for young first-time buyers, priced at no more than 80 per cent of the market price (preferably less) and never more than £250,000 outside of London or £450,000 in London, in a policy dubbed Starter Homes.
Starter Homes was a staggering failure. It was withdrawn in 2020 when the money intended for it was quickly burnt up on buying land that the houses were meant to stand on. In the end, not a single Starter Home was built. If Labour do not want to repeat this failure, they need to find a lot more money, or a way to acquire land more cheaply.
Labour’s best idea to promote home-ownership is probably to restrict developers from selling more than 50 per cent of properties to buyers from abroad and raising stamp duty on them. However, even if every single overseas-owned property in the UK was sold to domestic buyers, that would amount to around 250,000 homes, which would only bring down the average house price in the UK by around two per cent. To put this into context, there are twice as many second homes in the UK as there are properties owned by foreigners.
Of course, this is not the end of Labour’s ideas. But most of the rest have already been adopted by the current Government, which has been cracking down on negligent social landlords, pushed housing firms to sign a government contract to fix unsafe housing blocks or be banned from the market, improved renters’ rights, and proposed leasehold reform.
Perhaps this is evidence of the Opposition having pushed the Government to act. But, as it stands, Labour’s ideas on housing do not stand up to scrutiny any more than those of the Conservatives. Unless this failed consensus is broken, the housing crisis is here to stay.