What does a new prime minister mean for housing?

The race to become UK prime minister is hotting up – with the Conservative leadership election down to two candidates – Rishi Sunak and Liz Truss.

Whoever takes the helm of the party will face considerable challenges in the housing sector. At the last election, the Conservatives promised to build 300,000 new homes per year by the mid-2020s, a million homes in the next parliament and an end to rough sleeping.

What will happen to the housing sector after the leadership election concludes? This blog post investigates.

What is the Conservatives’ view on housing?

The Conservative Party has been in power in the United Kingdom since 2010.

The party won the 2010 general election but did not win enough seats to win an outright majority and therefore entered a coalition government with the Liberal Democrats.

In 2015, the Conservatives won a majority before the 2017 general election resulted in a Conservative minority government that was supported by the Democratic Unionist Party.

In December 2019, the party won an 80-seat majority, led by Boris Johnson – with both Liz Truss and Rishi Sunak, the two final leadership candidates serving in the cabinet.

At his 2015 Manifesto Launch, David Cameron said, “Conservatives have dreamed of building a property-owning democracy for generations… This generation of Conservatives can proudly say it, the dream of a property-owning democracy is alive – and we will fulfill it.”

Historically, the creation of a ‘property-owning democracy’ has been a central objective of the Conservatives. The idea first emerged in the 1920s – as Unionist MP Noel Skelton had a strategy of ‘constructive conservation’ designed to win working-class votes. The idea remerged after the Second World War as part of the Conservative response to the Conservative response to the social reforms and electoral success of Clement Atlee’s Labour government. In 1946 Anthony Eden told the Conservative Party Conference that his measures ‘would enable citizens to buy land and workers a share in the industry. Our objective is a nationwide property-owners democracy.

After returning to office in 1951, the Conservative Party enjoyed remarkable successes in housing policy. Elected on the back of a pledge to build 300,000 new homes each year, the Minister of Housing, Harold Macmillan met and exceeded these targets. This rapid expansion of the housing supply was combined with measures to allow council tenants to buy their homes and policies for the creation of new mortgages. These measures led to a steady increase in the proportion of owner-occupies.

This government housing policy resurfaced again in the 1980s. The creation of a ‘property-owning democracy’ was not merely about extending ownership, what Margaret Thatcher described as a ‘crusade to enfranchise the many in the economic life of the nation’ – but now formed part of a strategy to reduce the size of the state.

Under the Right to Buy council tenants were offered the opportunity to purchase their homes at discounts of up to 70% of the market value and were eligible for 100% mortgages underwritten by their local authority. Millions of people seized the opportunity, and more than two and a half million homes (approximately 40% of the UK’s total social housing stock) have been sold under the policy.

Under Johnson, housebuilding has been on the rise – however, last year (2021) there was a mere 175,390 homes built which is well below the 300,000 target that was identified in the manifesto.

To build the remaining 652,000 homes needed to meet that pledge, the government will have to increase their rate by 50% immediately in the next half of the parliament.

While rough sleeping is on the decrease, there is no sign that it will be eliminated by 2024.

This is largely due to an acute lack of labour and materials caused by Covid-19 and Brexit. However, a behind-the-scenes resistance is building. Some in the party feel like ambitious housing goals could see voters switch to the Liberal Democrats, in a protest against increased housebuilding.

What are the Conservatives leadership candidates’ views on housing?

As the leadership election draws to the final two, solving the housing crisis has grown in popularity as a talking point.

The short-termism of certain housing issues has dominated the debate, with the aforementioned targets attracting criticism.

According to Property Wire, “Central targets and their toothless penalties for not meeting them exist because councils weren’t building enough and were allocating impossible to deliver sites. Since their introduction housing numbers have increased considerably, something this government is constantly championing as their success, planners have been

able to justify their position against potential planning decisions and smaller sites within communities have been given a greater mechanism.“

“Removing central targets and the Housing Delivery Test (the policy that identified which councils face penalties) simply removes the accountability that councils have in meeting housing demand and robust land allocations. How else can we ensure that the most unaffordable areas, such as the South East and London, where more than forty percent of councils are not meeting their minimum housing targets, actually build enough homes?

There are questions on brownbelt land, councils sitting on undeveloped land and the role of housing in the cost of living crisis. It has been described by some as ‘a national crisis of wartime proportions’, but what are the candidates’ views?

What are the conservative candidates’ views on housing?

Liz Truss

Liz Truss said it was very worrying that people are getting older and older before they can afford their first home and argued that this was a problem for the country and an electoral problem for the Conservatives.

However, she saw a problem with the ‘one size fits all’ approaches and argued that we need to “build up more” in cities and allow incremental expansion but not enormous targets in rural areas. “We won’t have a successful planning policy if we don’t have the support of all of the Conservative Party. I don’t want another planning war like we had before. It’s very important that we have policies that have local consent”.

She added that she would “abolish the topdown Whitehall inspired Stalinist housing targets” if made Prime Minister.

Rishi Sunak

Former Chancellor Rishi Sunak said, “We’re all Conservatives and we believe in homeownership. But getting consent for the number of homes we need is a challenge.”

He cited brownfield land, urban densification and modular building as examples of the action needed, along with getting small and medium-sized builders back into the market and stopping landbanking by big developers.

“We have a very big social housing budget that the Government supports. One of the things that Robert Jenrick did very well was to start to shift that budget in the direction of ownership.

“A philosophical difference we have with the Labour Party is we believe in support homeownership, not just keeping people in rented social accommodation. Lots of people don’t like that but we need to make sure we stick up for that because ownership is something that as a value is really important to the party.”

Sunak has by far the most detailed record on housing of any of the original leadership candidates.

In last Spring’s statement he injected £11.5bn to build 180,000 affordable homes and plans to raise £2bn to remove cladding by taxing developers were seen as progressive solutions to the cladding crisis.

On the other hand, Sunak’s broader economic policy has shown a much greater leaning toward homeowners than to renters. Measures like freezing the stamp duty (property purchase tax) for homes under £500,000, resulted in a significant spike in house prices as buyers flooded the market. Similarly, guaranteeing 95% loan-to-value mortgages is good for those with disposable income to jump onto the property ladder.

She said her plan would make it easier and quicker for developers to build on brownfield land in “opportunity areas”.

In the past, she has called on the Government to build a million homes on greenbelt, and to simplify the planning system to enable more housing.

What happens next in the Conservative leadership election?

A series of hustings now take place in UK towns and cities between now and the end of August.

Ballots are sent out to Tory members on the 1st August.

The deadline for the return of ballots is on the 2nd September. The winner of the contest is announced o the 5th September.

What next for my property journey?

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