Housing Targets and Affordability in the UK under Labour Government (2024)

The UK is facing an ongoing housing crisis, characterized by a chronic shortage of affordable homes, rising house prices, and housing affordability challenges. In response to this, the Labour government, led by Prime Minister Keir Starmer, has set ambitious housing targets aimed at addressing these issues. As outlined in their 2024 manifesto, the government’s goal is to build 1.5 million homes over the next parliamentary term, with a focus on both quantity and affordability.

This case study examines the government's housebuilding targets, progress compared to past efforts, challenges related to affordability, and the policy measures proposed to achieve these goals.

Housing Targets: A Bold Ambition
The Labour government has laid out its strategy under the slogan “Get Britain Building Again.” The plan calls for the construction of 1.5 million homes in England by the end of the current parliamentary term, a five-year period. This equates to an average of 300,000 new homes per year. Prime Minister Starmer revealed these targets at the 2023 Labour Party conference, highlighting the need for widespread housebuilding, including new "Labour towns," to alleviate the housing crisis.

Historically, the UK has struggled to meet similar targets. The previous Conservative government set goals of building 300,000 new homes annually and delivering one million homes over the course of a full parliamentary term. While the Conservative government reported that it met its target of one million homes over the term, annual figures fell short, with 234,397 net additional dwellings built in 2022-23.

Net Additional Dwellings
The Labour government’s housing target focuses on net additional dwellings, a metric that includes newly built homes, converted properties, and subtracts demolished homes. While this approach helps gauge the true growth in housing supply, achieving the 300,000 figure annually has not been accomplished since the 1960s. At that time, the construction boom was accompanied by widespread slum clearances, which affected net housing gains.

Impact of Past Policies
The previous Conservative government's failure to meet annual targets, particularly after reaching a peak of 248,590 new homes in 2019-20, was attributed in part to the COVID-19 pandemic and, more critically, the abolition of mandatory housebuilding targets for local authorities in December 2022. Labour quickly reinstated these mandatory targets in its first month in office, acknowledging their importance in ensuring housing delivery across the country.

Addressing Affordability: A Growing Challenge
While increasing the supply of housing is crucial, affordability remains a pressing concern for millions of people across the UK. According to housing charity Shelter, Labour's housebuilding plans risk failing unless affordability is made central to the government’s strategy. Homes in England and Wales have consistently cost more than five times average workers' earnings since 2002. By 2023, average house prices had risen to £285,000, more than eight times the average worker's annual earnings of £35,000.

Affordability Measures
Labour’s manifesto promises the largest expansion of social and affordable housing in a generation. To meet this commitment, the government aims to build over 66,100 affordable homes each year, including at least 51,500 homes for social rent. This is a significant increase, considering that just 9,500 social rent homes were built in 2022-23, despite 63,605 affordable homes being completed overall.

Types of Affordable Housing

• Affordable Rent: Properties rented at up to 80% of local market rent, typically managed by local authorities or housing associations.
• Social Rent: More affordable than market rent, with rents set according to a national formula.
• London Affordable Rent: A variant of affordable rent, capped at 80%, specific to the Greater London Authority.
• Intermediate Rent: Housing for key workers, typically capped at 80% of market rent, with options to save towards home ownership.
• Shared Ownership: Purchasers buy between 25% and 75% of a property and pay rent on the remainder.
• Affordable Home Ownership: Properties sold at no more than 80% of local market value.

Unlocking Land for Development: The ‘Grey Belt’
Labour has committed to prioritizing development on brownfield land—previously developed land—but acknowledges that it will need to release portions of currently protected green belt land to meet its housebuilding targets. The focus will be on low-quality green belt land, or what is often referred to as the “grey belt.” This land is not of high environmental or recreational value but is protected under planning laws.

The Labour government plans to introduce a golden rule for developing this land, ensuring that at least 50% of new homes built on green belt land are designated as affordable housing. This is a marked increase from the 10% affordability requirement typically imposed on developments on brownfield sites.

Challenges and Future Considerations
While Labour’s 1.5 million homes target is ambitious, there are concerns about the feasibility of achieving these goals within five years. Housing experts have pointed out that the annual target of 300,000 net additional dwellings has not been met for several decades, and there are practical barriers to accelerating construction on this scale, including planning delays, skilled labor shortages, and material supply constraints.

The affordability of new homes remains a critical concern. For Labour to deliver on its pledge to build the most affordable homes in a generation, it will need to ensure that social rent homes are prioritized and adequately funded. This is particularly important given that previous governments have struggled to build enough homes at social rent levels to meet demand.

Conclusion
The Labour government’s housebuilding target of 1.5 million new homes over the next five years represents a bold and necessary response to the UK’s housing crisis. The focus on both increasing supply and improving affordability, particularly through the expansion of social and affordable housing, is central to the strategy. However, achieving these goals will require overcoming significant challenges, including unlocking suitable land for development, ensuring the right balance between public and private sector housebuilding, and maintaining affordability for the people who need it most. With rising house prices and stagnant wages continuing to stretch the housing market, Labour’s success in delivering these targets will be closely watched over the coming years.