Starmer and Sunak agree the UK needs more houses to ease the crisis – here’s how their plans compare

Aiming to reclaim his party’s role as the builders of “property-owning democracy”, Rishi Sunak used the Conservative manifesto launch to praise his predecessor Harold Macmillan. As Winston Churchill’s housing minister in the 1950s, Macmillan first set the target of completing more than 300,000 homes across the UK each year.

Now that same target, although ambitious, must be achieved to meet the UK’s demand for new housing, and to make homes more affordable.

After peaking at more than 400,000 in the late 1960s, new home delivery trended downwards, dipping below 200,000 in 1990 and recovering above that total only in 2004-7 and from 2019.

The number of new homes built in England dropped to 189,260 last year and averaged just 164,450 from 2019-23. So, the Conservative manifesto promise to “deliver 1.6 million homes in England in the next parliament” implies an immediate doubling of that completion rate, to 320,000 per year.

Labour’s plans are slightly less ambitious, pledging 1.5 million new homes in the next parliament – but that’s still 50% more than were completed during the last one. Recognising that councils were the driving force behind Macmillan’s building boom, Labour would reintroduce the mandatory targets for local authorities that were scrapped last year.

There is cross-party consensus that first-time buyers (FTBs) need more help to get on the property ladder, with the average home price in England having increased by 173% (253% in London) in real terms since 1997. At the same time, the average wage for 25- to 34-year-olds has risen by just 19%.

The Conservatives are offering a revival and expansion of “Help to Buy”, a scheme that loans FTBs up to 20% of the sale price and shares any capital gain (or loss) with the Treasury. The Tories would also extend FTBs’ exemption from stamp duty to purchases up to £425,000 (from £300,000 currently).

Labour plans to make it easier for FTBs to borrow commercially by launching a mortgage guarantee scheme, drawing on the US approach where government mortgage guarantees enable lower-income households to borrow affordably. Labour also aims to give local buyers priority by stopping foreign investors snapping up new developments, and by charging them additional stamp duty.

But FTB support schemes have been criticised for fuelling the demand for housing without ensuring additional supply. Recent analysis suggests the largest housebuilders have used price-setting power to boost their profits via Help to Buy and other planning relaxations.

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All parties agree that meeting house-building targets requires planning reform, as highlighted in the Barker Review almost 20 years ago. This outlined ways to cut the time needed to implement local development plans to 18-24 months from three years or more, including streamlined regulation, better land-use incentives and clearer infrastructure plans.

Labour is promising metropolitan combined authorities new planning powers, and all local authorities more resources to process applications along with the right to buy land at lower prices. The Conservatives see more scope for relaxing environmental rules and density restrictions, and letting private enterprise take the lead in large developments.

Building at the proposed scale will mean creating new towns and neighbourhoods. Labour promises to create some more “new towns”, probably designed – like those in the 1946-1970 programme – to move homes and jobs out of congested areas.

The Conservatives cite their plans for Cambridge – envisaging 150,000 or more new homes by 2040 around the once-small university town, with central government coordination to overcome local resistance.

But even if planning rules are relaxed, the UK’s ability to build homes is severely constrained on the supply side. The construction industry says it must recruit more than 50,000 workers each year to 2028 to keep up with demand.

Shortages of building materials since the COVID pandemic have not abated either. Complaints about the quality of new-builds suggests that even the current pace may be hard to maintain.

All of this means that keeping homes affordable has become more challenging. As such, both parties propose to refine and enlarge the Affordable Homes Programme, which commits £11.5 billion to building 180,000 homes – half for “affordable” purchase or rent – between 2021 and 2026.

And what about renters?

The post-2008 drop in owner-occupation reflected a mortgage squeeze after the global financial crisis, but was also consistent with Labour’s earlier efforts to revive “social renting”. Council housing at affordable rent was once a widely available alternative, and this formed a hefty chunk of Macmillan’s celebrated building spree.

Conservative policy changed radically under Margaret Thatcher’s administrations, which gave tenants the “right to buy” their council homes at a significant discount. The social housing stock shrank from 5.5 million in 1979 to 4.1 million by 2022, despite nonprofit housing associations trying to fill the gap.

More renters have therefore turned to private landlords, usually with higher rents and lower security of tenure. Although the Conservative government promised to strengthen tenants’ rights, legislation to stem the rising tide of “no fault” evictions ran out of time when parliament was dissolved.

Private rents have risen much faster than consumer prices or house prices in the past five years, with fewer homes being offered for long-term tenancy. This has helped private landlords resist calls to strengthen tenants’ rights, by warning they may quit the market if the rules get any tighter.

Despite election promises to boost affordability, UK governments ultimately prefer house prices to keep rising. This keeps the whole economy buoyant, as well as satisfying homeowners – still the majority of voters – who are keen to keep new developments away from their own back yards.

Alan Shipman does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.