Housebuilders are not the villains. It’s the system that has to change

Housing is the new political catnip. If in need of a picture for your next manifesto, don a hi-viz vest, collect your hard hat and head for the nearest residential building site.

Get snapped pointing at a pile of bricks looking wistful while, at the same time,  opining at the lack of available properties for first-time buyers.

It would seem that the new bogie man – or woman – is no longer an estate agent, journalist or expense fiddling MPs. It’s the UK housebuilder. They are apparently to blame for the housing shortage.

In spite of a well-received report from Oliver Letwin some years ago which clearly stated that it was neither economically viable nor fiscally prudent for residential builders to land-bank rather than build, the Labour Party, fresh from local election success, feels developers and builders are the culprits for the housing shortage in the UK.

>> Also read: It’s like the government wants to destroy the industry

They are reportedly drawing up plans that would force landowners to sell plots for a fraction of their market value with a desire to cut home building costs. A wholesale change to the way land is valued is promised, which enables local councils to buy land for much less than it is worth.

It is not easy and would require a sensible majority for an incoming prime minister Starmer. His government would need to rip up the 1961 Land Compensation Act, which prevents councils from buying plots for development at their agricultural price.

This is important as land worth £22,520 a hectare for agricultural use can be worth around £6.2m per hectare with planning permission, according to the Centre for Progressive Policy think-tank. According to Labour this brings the UK into line with other land valuation systems in Germany, the Netherlands and France and tilts the balance of power from landowners – where it currently sits – towards communities who apparently want to build but cannot afford the price of plots.

Donations to the Conservative Party from housebuilders are currently as popular as a Philip Schofield leaving party

I would argue that, while we clearly have a housing stock crisis, it is not just due to the lack of available land on which to build. That is just one issue. It is also no good blaming developers and housebuilders in isolation; they have had enough of the finger pointing.

It is interesting to note that a fifth of donations to the Tory party over a 10-year period – around £60m – came from developers and builders which used to align themselves with traditional conservative values of home ownership. Now housebuilding rates have dropped for five consecutive months and in April fell to their lowest level since before the pandemic.

Fifty-five councils including Surrey Heath – in housing secretary Michael Gove’s own constituency – have abandoned housing targets, according to the Home Builders Federation. Donations to the Conservative Party from housebuilders are currently as popular as a Philip Schofield leaving party.

There is no simple answer to the housing crisis. One issue is clearly affordability, another is the UK obsession with seeing property as an asset rather than a home. There are huge planning challenges as well as labour shortages post-Brexit, meaning there are fewer people building. Those that do, cost more and so will the homes they construct. These factors all contribute to the general decline.

It does not have to be this way. Not everywhere is afflicted with every part of the housing curse. Tokyo has no property shortage; between 2013 and 2017 it put up 728,000 dwellings—more than England did—without destroying quality of life.

Moaning about developers’ high share price values, the bonuses paid to housebuilders and the general politics of envy will not get more houses built

Switzerland gives local governments fiscal incentives to allow housing development—one reason why there is almost twice as much homebuilding per person as in the US. New Zealand recoups some of homeowners’ windfall gains through land and property taxes based on valuations that are frequently updated.

Most important, in some places the rate of home ownership is low, and no one bats an eyelid. It is just 50% in Germany, which has a rental sector that encourages long-term tenancies and provides clear and enforceable rights for renters.

One thing is certain: moaning about developers’ high share price values, the bonuses paid to housebuilders and the general politics of envy will not get more houses built at the right price in the right places. The Taylor Wimpey, Bellway and Barratts are neither heroes nor villains in this scenario.

Until political parties stop seeing housing through the lens of political opportunism rather than societal change, we will get nowhere. Solving the housing crisis will take more than a photo opportunity in a hard hat.

Richard Steer is chair of Gleeds Worldwide and a Building the Future commissioner