The opposition leader, Keir Starmer, has rightly put solving the housing crisis at the top of his agenda, promising Labour will be “the builders, not the blockers”, pledging to construct new towns and to match the Tories’ target of 300,000 new homes a year.
His work will certainly be cut out for him. If Labour wins the election, it will inherit a country running on fumes. Britain’s broken housing system is expensive and insecure; a creeping social and economic catastrophe pushing people into poverty and homelessness. Many Britons now shell out about half their post-tax income on rent while more than 1.2 million families are stranded on housing waiting lists, sometimes for decades. English homes are on average now not just the smallest, but in the worst condition, and among the least affordable in Europe.
Unravelling a property crisis decades in the making will require ambitious policy changes, long-term investment and regulatory reform, not simply matching the same targets the Tories have failed to meet for 13 years. Here’s how Labour could actually solve the housing crisis with six policies.
First, Labour must abolish right to buy, the Thatcher-era rules that force local authorities to sell off, at vastly discounted prices, our dwindling stock of socially rented homes. In just four decades, the policy has seen more than two-thirds of Britain’s council houses lost to privatisation, only for many to be leased out again at far higher rents by private landlords. Labour has already ditched the policy in Wales, as has the SNP in Scotland, but until right to buy is repealed across the UK, any new council homes will continue to be sold off almost as fast as they are built.
Next, Labour must invest in council housing. The 2018 Letwin review showed that boosting the supply of private newbuilds alone does not, contrary to the assumptions of many commentators, bring down property values or rents. Therefore, instead of a vague target of 300,000 new homes of any tenure, Labour should specifically invest in building high-quality council housing.
Last year housing benefit cost the taxpayer an estimated £23.4bn, with much of the bill going to the profits of private landlords providing temporary accommodation to plug the shortfall in available council homes. By replenishing the overall council housing stock, Labour would allow those billions to flow back into the public purse while freeing up hundreds of thousands of homes for private rent.
Some ambitious local authorities are already finding ways to build outstanding new social housing. Goldsmith Street, a council estate commissioned by Labour-controlled Norwich and designed by architects Mikhail Riches, even won the 2019 Stirling prize, Britain’s most prestigious award for architecture. With further support from central government for similar projects nationwide, the change to our streets and quality of life would be spectacular.
To stem the demolition of affordable housing, Labour should close the topsy-turvy VAT loophole that makes it artificially cheaper to demolish and rebuild existing homes rather than upgrade them. Over the past 12 years, this ludicrous “refurbishment tax” has contributed to Britain knocking down or selling off 170,000 more social rent homes than we have built.
Labour must also regulate the private rental sector. Britain is an outlier among European economies in its severe lack of protection for the 4.6m households who rent their homes from private landlords. This chronic underregulation leaves renters exposed to swingeing price hikes and unfair evictions. By contrast, countries like the Netherlands, France, Sweden, Germany and Denmark all have targeted rules capping rents in certain locations, prohibiting no-fault evictions and pegging rent rises to inflation rates or local averages.
Labour’s London mayor, Sadiq Khan, has been campaigning for rent regulation for years, but the ruling Conservatives have a vested interest in keeping renters’ rights weak, as a higher proportion of Tory MPs are private landlords than in other political parties. If Labour finally takes control of parliament, it will have a historic opportunity to end the suffering caused by Britain’s cowboy rental market.
Next, tax empty homes. Labour should adopt a long-term goal to gently take the financial incentive out of housing. It can’t do this overnight, as so many people’s retirement plans are wrapped up in property, but houses should ultimately be homes, not assets on a balance sheet. With second home ownership up 13% since the last census, an empty homes tax would disincentivise the wealthy from buying additional properties and penalise developers which build homes then refuse to sell them. The Shard, for instance, was built in 2013 with a number of flats that have seemingly not been sold a decade later.
Finally, to bring about the big surge in construction that Britain requires, Labour must reinvigorate the ailing planning system, which the shadow chancellor, Rachel Reeves, has labelled “antiquated”. Unlike in many modern economies, British planning departments do not have the capacity and clout to set legally enforceable plans for the future of neighbourhoods. Knowing this, property developers pay enormous sums for land in the hope that they’ll be able to haggle their way into winning permission to build bigger, more profitable projects.
The process is inherently adversarial and inefficient, often requiring developers to take big risks while leaving our demoralised and underfunded public sector planning officers on the back foot. A Labour government could create a planning framework that is propositional and proactive, empowering local authorities with the support and muscle to set out democratically informed long-term plans that can deliver new housing across the country, and limit the ability of landowners to gouge inflated prices.
Starmer is absolutely right to put solving the housing crisis at the heart of his pitch to become Britain’s next prime minister. Solving the crisis will be an enormous challenge, but we know it can be done: local and regional Labour politicians from Wales to Wandsworth have put many of the right policies into practice. With long-term investment and the willingness to actually wield power if Labour wins the election, Starmer could finally solve the British housing crisis.
Phineas Harper is chief executive of the charity Open City
