Election 2024: Property lenders push Labour for more housebuilding support
Alternative lenders have called on the new Labour government to prioritise housebuilding and promote more investment in the property lending sector.
This follows a prolonged period of falling housebuilding activity in the UK, despite soaring demand for new homes.
Mike Bristow, chief executive of property lender CrowdProperty, noted that while Labour has committed to building 1.5 million new homes in this coming Parliamentary term, this goal may be overly ambitious considering that just 1.01 million new homes have been completed over the last five years.
“Momentum is against Labour too – housebuilding starts in 2023 stood at just 176,000, with starts in the second half of 2023 in particular plummeting by 44 per cent on the previous year,” said Bristow. “This further muddies the water and adds further concern in relation to seeing an uplift in housebuilding output in 2024/25.”
Bristow added that financing for small- and medium-sized enterprise (SME) developers is “critical to increasing output and should be a policy focus area”.
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“Any levers that can be pulled now to help attract additional public and private capital will help relieve sector-wide pressure and deliver the additional housing that is so desperately needed,” he added. “As great as it sounds, any form of ‘planning reform’ will undoubtedly take years to implement; Labour need to be decisive and take immediate action now.”
Matthew Robertson, co-founder and chief finance officer of property development firm Valouran echoed this sentiment, and called for Labour to take an even more ambitious approach to housebuilding.
“A lack of planning resource has held the property industry back ever since the austerity measures were introduced post the great financial crisis,” said Robertson.
“It is encouraging to read of Labour’s planned recruitment drive for an additional 300 planning officers, but with the mandate they have received from the electorate, I would encourage them to be more bold and ambitious, and to push through their plans to release lower quality green belt land.
“Only by doing so will they have a chance of making good on their target of building 1.5 million homes over the course of this parliament.”
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During the election campaign, Labour pledged to build 300,000 new homes annually, while the Conservatives proposed building 320,000 and the Liberal Democrats aimed for 380,000.
Shojin’s Garret Stanhope described these targets as “optimistic” given Savills’ projection of 160,000 annual completions over the next three years without major policy intervention.
“Labour’s plans include restoring mandatory housing targets, strengthening development presumptions, a brownfield-first approach with some ‘grey belt’ land release, new towns, urban extensions, and increased planning resources,” said Stanhope.
“They also propose changes to compulsory purchase compensation rules. The challenge lies in balancing these ambitious goals with the desire for more affordable and social housing, without promising increased grant funding. The effectiveness of these proposals, particularly Labour’s, depends on maintaining sufficient incentives for landowner cooperation. “
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Property lenders have been vocal about the need for additional funding support in recent years, with many SME developers struggling to raise the financing necessary to complete new projects. Furthermore, planning permission legislation has made it difficult for developers to break new ground, further compounding the housebuilding crisis.
“The big lesson for Labour to learn from is not sufficiently supporting the SME residential property developer segment to build more homes,” noted Bristow.
“In the 1980s, 39 per cent of new homes were being built by SME developers, now it’s just 10 per cent. With plentiful supply of small sites, infill, conversion and refurb opportunities, SME developers aren’t constrained to the availability of large sites like the volume housebuilders – and this is the answer to delivering the 1.5 million homes.
“We need clear policies to specifically support this vital segment, potentially as widespread as finance, tax, planning and employment.”
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