Since Labour came into power in late 2024, the government pledged to build 1.5 million new homes in England by 2029, equivalent to 300,000 net additional dwellings per year. However, progress so far has fallen well short of expectations.
The Scale of the Shortfall
- In its first year, Labour delivered around 186,600 net additional homes, leaving a significant annual gap of roughly 113,400 homes. This underperformance stemmed from a steep decline in planning approvals, reaching the lowest level since 2012, along with skilled labour shortages and a sluggish housing market
- Property consultancy Savills estimates Labour will likely complete only 840,000 homes by 2029, roughly half of its target. Challenges include weaker demand from first-time buyers and housing associations, a collapse in planning consent levels, limited construction capacity, and added burdens from post-Grenfell regulations.
What are the issues?
- Planning Bottlenecks
- Planning approvals have plummeted—only 39,170 new homes approved in Q1 2025, the lowest since 2012.
- Experts argue that even with reforms, improvements will take years to bear fruit.
- Significantly, over 1 million homes already have planning consent but are yet to be built, pointing to developers—not councils—as a key bottleneck.
- Labour Shortages and Construction Capacity
- There’s a growing shortage of skilled tradespeople, coupled with a decline in experienced builders—constraints that remain largely beyond the government’s control.
- High costs, weak developer confidence, and restrictive regulations—especially for high-rise fire safety—are further dampening construction activity.
- Affordability & Demand-Side Weaknesses
- Even when homes are built, borrowing costs, high prices, and limited demand from first-time buyers inhibit the pace at which new builds convert into completed homes.
- Experts writing for the Financial Times contend that deep-rooted structural issues—like inflated land values and tax structures—constrain affordability, and that supply boosts alone may be insufficient without broader fiscal reform.
- Policy Complexity and Internal Strain
- While the government has committed £39 billion toward affordable housing and pressed ahead with planning reform, internal disagreements—particularly between Chancellor Rachel Reeves and former Deputy PM Angela Rayner— had raised doubts about fiscal alignment and strategic clarity. This of course may now change with the new housing secretary in position and promising to build, build, build.
- As one commentator recently noted, “Reforming the planning system alone will not enable the UK government to meet its goal… developers control the pace… even after planning permissions are granted”.
Labour’s housing ambition—though ambitious and arguably very necessary—has run into entrenched planning delays, an under-resourced construction sector, lagging demand from buyers, and internal policy tensions. If recent projections hold, Labour could potentially deliver only a third to half of the promised homes by 2029, jeopardizing one of the most high-profile domestic pledges of its term.
In a recent Times interview, Helen Gordon, CEO of Grainger Plc—Britain’s largest residential landlord—warned that proposals to increase taxes on non-incorporated landlords, such as a potential National Insurance levy on rental income, could worsen the rental shortage. She argued that many first-time buyers are not in a position to absorb the housing stock if existing landlords decide to sell.
At the same time, she noted that the outlook for corporate landlords remains strong and expressed confidence in Grainger’s continued expansion.
We share this view and would be delighted to discuss how North Fox can help you achieve your own property goals.
