Conservatives all at sea on housing
In a week that has seen Rishi Sunak joining patrol boats in the English Channel, reaffirming his alleged tough stance on illegal immigration, it’s not just the Prime Minister finding himself all at sea: his government’s paralysis in addressing the housing shortage risks turning a crisis into a disaster.
A couple of weeks ago, my colleague drew attention to the battle lines that were emerging in housing policy ahead of the next general election (widely expected to take place in autumn 2024). Since proclaiming last month that they will be ‘backing the builders, not the blockers’, Labour has strengthened its fire by announcing plans that would force landowners to sell their plots below market value to local authorities under compulsory purchase powers.
The planned scrapping of the so-called “hope value” – an additional premium value placed on the sale price of land in the expectation that a developer will gain planning permission on the site – would enable more land to be acquired and developed at a viable rate for housing, as well as for all-important infrastructure.
Meanwhile, the Conservatives remain divided on housing, following the scrapping of targets and the easing of pressure on local authorities to approve developments. Even their developer donors have effectively turned off the taps due to the ongoing infighting in Tory ranks; saying the party’s MPs “just don’t get it” when it comes to housing, as well as labelling them “selfish”. It is estimated that developers accounted for a fifth of Conservative Party donations over the past ten years - not the friends you want to lose in the run-up to a general election!
All the above comes against a well-documented backdrop of falling house completions (the Home Builders Federation claims housebuilding in England is set to fall to the lowest level since WW2) and increasingly unaffordable property prices – the average house price is now around nine times average earnings (the highest since 1876!).
As a result of these huge increases, homeownership rates are dropping – largely due to a squeezing of young people out of the market. These same young people are living in rented accommodation, where rents are soaring and living standards falling. It’s a sobering fact that whilst house prices have risen 70% in the last decade, the number of 25-34 year olds who are homeowners has dropped from 43% to 24% in the same period.
In the short-term, the Conservative impasse on housing risks them losing a fair few quid in donations, but it’s the longer-term impact that will be felt the most. Their prized label as the party of home ownership could fade into the long grass of the green fields they now purport to represent, with the fatal consequences of alienating a whole generation of voters.
Housing is likely to be a highly charged issue over the coming months and a potential cornerstone of the general election campaign (assuming Rishi has sorted out those boats!). The numbers can’t be ignored, but don’t expect the government to take any meaningful action on the issue in the meantime.