Avamore’s Michael Dean on Labour’s housing policy: balancing ambition and practicality

While these aspirations are commendable, there are valid concerns that its approach may inadvertently hinder development and face significant challenges in practice.

One potential drawback of Labour’s strong emphasis on affordable housing is the risk of stifling development. While the goal of providing affordable homes is admirable, demanding excessively high percentages of affordable housing from developers may deter them from undertaking new projects. Additionally, the party’s proposal to scrap Section 106 agreements, which have proven effective in delivering social housing, raises concerns about the potential decline in the construction of such homes. Striking a delicate balance between affordability and creating a conducive environment for developers to invest and build in is vital.

Labour’s commitment to streamlining the planning system is a welcome step towards addressing the challenges in the housing sector. However, it is essential to recognise that reforming the planning system is an intricate task akin to turning an oil tanker – it is easier said than done. The practical implementation of these reforms is likely to encounter significant hurdles. The complexity and bureaucratic nature of the planning process require thorough consideration to avoid unintended consequences and further delays in housing construction.

One notable aspect missing from Labour’s housing policy is the explicit consideration of small and medium-sized developers. These smaller players in the housing market face distinct challenges and may not engage in land-banking practices as frequently as larger developers. Neglecting the needs and contributions of small and medium-sized developers risks sidelining key stakeholders and inhibiting a vibrant and diverse housing market. Supporting small and medium-sized developers and providing them with ample opportunities to plan and build homes is crucial for fostering a competitive and resilient housing sector. Exploring avenues to incentivise smaller schemes through reduced requirements for Section 106 agreements, the Community Infrastructure Levy (CIL) and affordable housing contributions could create a more favourable environment for small and medium-sized developers.

Labour’s recent comments on land banking have also raised concerns within the industry. While its intent to discourage developers from sitting on land until its value increases is understandable, it is crucial to consider the realities of the planning process. The cost and duration of planning procedures can be significant barriers for developers, and forcing them to build under unfavourable market conditions may discourage investment. Labour’s statements on land banking echo past rhetoric without providing substantial details or concrete proposals. A more comprehensive examination of Labour’s intentions in this regard is necessary to understand the potential impact on housing development.

As housing has become a highly politicised issue, there is a need for caution to avoid over-intervention. Excessive changes to regulations and policies can have unintended consequences and further complicate an already complex landscape. For example, proposals to ban overseas purchasers from buying property in new developments, while appealing in theory, may disrupt project funding, which often relies on a substantial number of pre-sales to commence construction. Striking the right balance between intervention and the practical realities of the housing market is crucial to effectively address the housing crisis.

Finally, the Labour Party’s proposed plans for the green belt are also being seen as a good thing for environmental conservation, as they would safeguard green areas and promote sustainable development. However, these measures could pose challenges for property developers, as restrictions on building on the green belt may limit opportunities for expansion. Balancing the preservation of green spaces with the need for housing and development is a complex issue that requires careful consideration of both environmental and economic factors.

In conclusion, Labour’s housing policy displays ambition and a commitment to tackling the housing crisis through a focus on affordable housing and planning reform. However, achieving the right balance between ambitious targets and practicality is paramount to avoid inadvertently hindering development. The role of small and medium-sized developers should be duly considered to ensure a dynamic and competitive housing market. Implementing planning reforms requires careful navigation of complexities and challenges.

It is imperative for Labour, or any party in power, to deliver on their commitments while remaining mindful of the potential unintended consequences of their policies. With the housing crisis persisting as a significant concern and the cost of housing acting as a substantial barrier to future economic growth, finding effective solutions is of utmost importance.

Michael Dean is director and co-founder of Avamore Capital