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Housebuilders say the UK government’s swiftly executed planning reforms will set the industry up for more growth in the coming years, despite uncertainty over mortgage costs.
Sir Keir Starmer’s administration has been under intense pressure to deliver economic growth but faced criticism for its tax-raising Budget and a sharp rise in the UK’s borrowing costs to their highest level since the financial crisis.
But big housebuilders, which will be key to delivering the 1.5mn new homes Labour has promised by 2029, have praised the government’s overhaul of the planning system, concluded in December.
“I am not deaf to some of the criticism that is being made. But in the planning realm they have acted swiftly. I have not seen a government act this quickly . . . in many, many years,” said Jennie Daley, chief executive of FTSE 100 housebuilder Taylor Wimpey, adding she was “delighted” with the progress.
England’s complex planning system has been criticised as a key brake on building housing, factories and infrastructure, and called a major obstacle to economic growth.
Labour has made significant changes to England’s national planning policy, including increasing targets for local government, opening up part of the greenbelt for building and promoting infrastructure projects such as data centres.
Persimmon, another large housebuilder, on Tuesday said the reforms would “likely take some time to fully make a difference” but would help the developer to grow its number of active housing developments (sites from which it is selling homes) from 270 at the end of last year to 300.
Angela Rayner, the deputy prime minister and housing secretary, has also stepped in to approve several high-profile projects that had been blocked by local authorities.
Lucian Cook, head of residential research at Savills, praised Rayner’s planning agenda at a recent industry event, joking that she had proved to be the “goddess of reform”.
“One of the most radical changes [Labour has] made is putting in place a housing minister with a genuine interest in building more homes,” he quipped.
Several business leaders in other sectors also agree it is too early to dismiss Labour’s economic agenda.
“No one likes it when taxes are raised. I discount a lot of the grumbling. The government has been making an effort and it’s been a relatively short period of time,” said one FTSE 100 chief executive. “I’m not saying the UK track record has been smooth and flawless but a rush to judgment and condemnation feels premature.”
One City grandee said: “The relationship of confidence and trust between business and the government has been bruised — but it’s not beyond redemption.”
However, housebuilders and other companies face rising costs from the Budget including higher employers’ national insurance contributions, with Taylor Wimpey warning on Thursday it expected “increased build cost pressure” as a result.
Developers are also vulnerable if market anxiety pushes up mortgage costs for new buyers, with HSBC and Santander both announcing increases in mortgage rates this week following the recent UK debt market sell-off.
Meanwhile, the Home Builders Federation industry group has warned that Labour is still some way from being able to deliver its 1.5mn homes target. And the industry is calling for more funding for affordable housing.
Vistry, the largest listed builder of affordable homes, this week said the government ought to provide “meaningful investment in the funding programme for affordable housing to accelerate the supply of housing, provide certainty to the supply chain and support economic growth”.
The Resolution Foundation said this week it would cost £15bn to clear the backlog of families in temporary accommodation in England.
The government is expected to set out its multiyear spending plans for affordable housing in the upcoming spending review.
