The Labour government has now been in power for just over 100 days and there’s growing confidence within the social housing sector that we may be on the cusp of an affordable housing revolution. But much depends on the upcoming budget and whether Rachel Reeves can come up with the cash to match the bold pledges. Neil Merrick reports.

Look closely and you’ll notice housing professionals walking around with a new spring in their step.

True, they may not have read the proposed changes to national planning policy from cover to cover, but there’s a firm belief the new government means business when it promises to build more homes.

Among those feeling moderately optimistic is Nick Atkin. “They’ve clearly put housing front and centre of wider plans to grow the UK economy,” says the chief executive of Yorkshire Housing.

Kate Wareing, chief executive of Oxfordshire-based Soha Housing, is similarly enthused. “It’s fantastic to have a government with ambitions to increase the supply of affordable housing,” she says.

Labour’s housebuilding pledge mainly revolves around a more centralised planning system, requiring councils in areas where incomes fall short of property prices to find more land and give developers the green light [see box].

But while many detect the dawning of a new era, shovels aren’t, as yet, exactly in the ground. Earlier this year, Homes England told the sector that grant funding had run out (at least temporarily), while much detail around Labour’s housing agenda is yet to be revealed.

Hopes are therefore pinned on the upcoming autumn budget when the government will be expected to come up with significant funding in order to turn its bold pledge to “turbo charge” housebuilding into reality.

Doubts over grant

Meanwhile, doubts over grant mean some schemes have stalled. “We’ve housing developments waiting to go on site,” says Craig Dransfield, head of development at Soha. “The future of the grant regime is important as we plan ahead.”

Landowners, meanwhile, are keen to know whether their land is needed for housing. “Sites could disappear,” warns Atkin. “Landowners won’t wait until spring to decide whether they sell to us.”

Then there’s the question of tenure. The government claims to see social housing as a priority, but how will that work in practice? Wareing’s solution is to make social rent the default for all homes built through section 106 agreements.

“We’ve housing developments waiting to go on site. The future of the grant regime is important as we plan ahead”
Craig Dransfield, head of development, Soha

Just two of the councils where Soha builds section 106 homes stipulate they must be for social rent. “I fail to understand why we don’t ensure that what comes out of the planning system is social housing,” she says.

Catherine Ryder, chief executive of the Placeshapers network, says the ambition of virtually all housing associations is to build more social housing. “If the right support is there, they will bite your hand off,” she says.

The dawn of a new era?

That support must consist of not just grant but a long-term rent settlement, with rents preferably rising by 1% more than the Consumer Price Index (CPI) over the next decade. “In the long term, we’re at the dawn of a new era. The potential is there, but critical pieces of the jigsaw are missing,” adds Ryder.

Sovereign Network Group expects to build at least 20,000 homes over the next ten years, and the total could be as high as 25,000. Its projections include a “reasonably favourable” rent settlement, explains Tom Titherington, the group’s chief investment and development officer.

“If CPI plus 1% is built into our business plan, we can build a significant number of homes,” he says. But while social rent may increasingly become the norm, groups such as Sovereign are looking for wider support, and certainty, over infrastructure and the availability of skilled construction workers. It’d also be good to sort out nutrient neutrality rules.

Can councils deliver?

And what of local authorities? In April, Waltham Forest placed its housing company, Sixty Bricks, into dormancy as projects dried up. The east London borough built 356 homes in 2023/24, but more are desperately needed to reduce the households in temporary accommodation, including commercial hotels.

“Having a government that’s putting housing at the heart of everything we’re doing gives confidence to the sector,” says Ahsan Khan, the council’s deputy leader and cabinet member for housing and regeneration.

Waltham Forest received £200m from the Greater London Authority for a multi-developer scheme in central Walthamstow. Two thousand homes are promised, half for social rent, but money is also needed for infrastructure, says Khan, including improvements to the central station.

“In the long term, we’re at the dawn of a new era. The potential is there, but critical pieces of the jigsaw are missing”
Catherine Ryder, chief executive, Placeshapers

When Labour was last in government, councils built little or no housing. That has changed significantly, with local authorities completing 1,700 homes during the first six months of this year, roughly double that in 2023.

Across London, Southwark built 557 homes in 2023/24. It took time for councils to build up capacity, says council leader Kieron Williams, but grant is now needed to close the gap between rent income and building costs. “We’re building more council homes than in any decade since the 1970s,” he says. “We’ve shown we can build, but to make it work we need government backing.”

Southwark is also leading a campaign among stock-holding councils for a £644m cash injection to prop up their housing revenue accounts. Other demands include changes to right to buy, a new decent homes programme, and long-term rent and debt settlements. “Council housing is on a knife edge,” says Williams.

More than just housebuilding

Catherine Ryder agrees it’s important not to overlook funding for rebuilding and retrofitting that ‘levelling up’ largely failed to deliver. “There are estates in parts of the country that have been waiting years for small and largescale regeneration,” she says. “Housing associations want to rebuild communities, but they’ve been doing it by piecing together lots of bits of funding.”

“We’re building more council homes than in any decade since the 1970s. We’ve shown we can build, but to make it work we need government backing”
Kieron Williams, leader, Southwark Council

Landlords are waiting to see how much money the government provides for energy improvements, including greener energy. Medium to long-term funding is needed to ‘decarbonise’ older properties, but to date most funding has been short-term, says Laura Shellard, head of sustainability at Notting Hill Genesis (NHG).

All homes owned by NHG are due to meet energy performance certificate (EPC) band C by 2030 – a standard that’s likely to apply to all social housing in England by 2030. “It focuses minds and helps housing associations make critical decisions about where to invest,” she says.

Shellard would also like to see more money devolved to cities and regions, so local politicians decide how it’s spent. “It will be interesting to see what London can do with more autonomy,” she says. “In London, there are specific issues around flats in multiple ownership and heritage properties.”

Devolution, planning and partnerships

Nick Atkin welcomes the government’s desire for strategic planning and co-operation at local and regional level. Areas of Yorkshire with devolution deals already include partnerships of housing associations and local authorities with stock. “We’ve got levels of collaboration that I’ve never seen during my housing career,” he says.

In Oxford, the city council not only wants to build more homes it’s keen for other developers to do the same. The problem is land, with the council dependent upon neighbouring areas to provide sites for Oxford’s needs.

The city council built 64 homes last year but is currently locked in a dispute with planning inspectors over its local plan for 2040. The plan was rejected by inspectors in September due to the council wanting two thirds of the extra 1,322 new homes it needs each year to be built outside the city.

Louise Upton, cabinet member for planning, hopes mandatory targets will work in Oxford’s favour. “We have a booming economy but, within the city, we’re very short of space,” she says. “We’re delighted there will be mandatory targets and planning at a strategic level.”

But does Labour have a realistic hope of meeting its manifesto pledge and building 1.5 million homes during the next five years? The government seems unlikely to play any direct role in construction, beyond support given to local authorities.

“I fail to understand why we don’t ensure that what comes out of the planning system is social housing”
Kate Wareing, chief executive, Soha

Parts of the public sector are major landowners, and could help out on that front, but ministers are largely dependent on housing associations and private developers to do most of the heavy lifting for the time being.

Daniel Slade, head of practice and research at the Royal Town Planning Institute, says it’s almost certain more homes will be built, but the target is challenging. There are bound to be periods of uncertainty, but the government has more hope of getting close to the overall target if strategic planning is a success.

And not everything is within the government’s control. “It’s not just about the planning system. There are skill shortages and mortgage rates, as well as changes in demand in the economy,” says Slade. “There are so many moving parts to the puzzle.

Beyond housebuilding – what else is in Labour’s in-tray?

• Right to buy: Ministers have already made minor changes to the way RTB receipts can be used to build new homes. A full consultation is imminent, but those hoping for an end to the scheme in England will be disappointed
• Private renting: A renters’ rights bill, abolishing section 21 evictions and raising standards in the PRS, is making its way through parliament. Barring hiccups, the eviction ban should be in place next year
• Decarbonisation: The warm homes social housing fund has replaced the social housing decarbonisation fund. First bids are due by 25 November. A consultation is also promised on minimum energy efficiency standards in social housing and reform of the EPC system
• Decent homes: The decent homes review, which began in 2021, rumbles on, with new standards expected to apply to private as well as social landlords. A consultation is imminent, while Awaab’s Law is due to be extended to social landlords
• Social rents: Chancellor Rachel Reeves is reported to support a ten-year rent settlement of CPI plus 1%. More will be known after this month’s budget
• Leaseholders: Parts of the Leasehold and Freehold Reform Act have yet to be enacted, while the King’s Speech promised further changes, including making commonhold the default tenure for flats
• Fire safety: It remains to be seen what reforms result from the final Grenfell report, but pressure is being put on developers to speed up fire safety work
• Welfare: A cross-government child poverty task force is studying long-term strategy, though ministers have so far resisted pressure to lift the two-child benefit cap
• Staff development: A competence and conduct standard for housing staff will aim to ensure they possess the necessary skills and experience. New qualifications are promised for senior managers and executives.

Planning for more homes

Under a revised national planning policy framework (NPPF), local authorities will be required to meet higher housebuilding targets.

Housing need will be calculated using a formula based on the size of communities, with an uplift determined by the difference between local house prices and incomes. This uplift will be greater than before, leading to bigger targets.

More homes will be required in every region except London, where targets are down but higher than the number of homes presently being built. In mayoral combined authorities, targets are up by more than 30%.

This summer’s consultation over the NPPF represents the second set of changes to planning policy in two years, after Rishi Sunak bowed to pressure from backbench Tory MPs and abandoned mandatory targets.

Local plans drawn up by planning authorities will need to reflect revised policies, with councils given less scope for failing to hit their individual target.

The County Councils Network describes some rural targets as ‘excessive’, while districts such as Arun, in West Sussex, claim developers regularly fail to build homes for which they already hold planning permission.

While most housing will be built on brownfield sites, leading to higher densities in urban areas, development will be permitted on the green belt. Here, any building will be on so-called ‘grey-belt’ – land that was previously used for development or makes limited contribution to the green belt.

Where land is released from the green belt, it’ll be for councils to decide the tenure of new homes, meaning they can prioritise social rent. Local authorities will also be able to specify social rent within broader housing policies.

In future, there should be more co-operation between local authorities, with strategic planning across council boundaries required by law. This could result in councils providing land to meet housing need in a neighbouring local authority.

Daniel Slade of the Royal Town Planning Institute says the revised NPPF should allow councils to review the type of housing needed locally, but much depends on land. “Local authorities struggling to get local plans in place may be more prone to releasing green belt,” he adds.