As the dust settles in Westminster approaching the second week of a new administration, Newsteer’s planners, regeneration, viability and asset optimisation specialists share their views on Labour’s initial approach and look forward to the upcoming King’s Speech:
Mark Byles, Regeneration Director
Rebranding the DHCLG: A renewed focus on local government
The recent rebranding of the Department for Levelling Up, Housing and Communities (DLUHC) back to the Department for Housing, Communities and Local Government (DHCLG) signals a renewed commitment to the fundamental role of Local Government in fostering a thriving country. This shift not only emphasises the importance of local governance in achieving economic growth but also highlights the necessity for adequate resourcing. For the Labour government’s economic strategy to succeed, a swift infusion of investment into Local Government is essential. With many newly elected Labour MPs facing the stark reality of their local councils’ financial challenges, the upcoming King’s Speech must outline actionable structural reforms that deliver immediate benefits to communities.
Lottie Smallwood, Associate Director, Development Consultancy
Unlocking development through “Grey Belt”
The concept of transitioning certain green belt areas to “grey belt” designations offers promising prospects for development. This potential reallocation could unlock additional land, but its effectiveness hinges on the criteria established through local planning processes. The reception of this change among Local Planning Authorities (LPAs) will be crucial as we observe growing interest from developers eager to explore these newly classified sites. However, the contentious nature of designating land as “grey belt” means that careful management and clear guidelines will be necessary to navigate the complexities involved.
Jonny Stevenson, Director, Development Consultancy
The future of grant funding and affordable housing
As of now, there is no government-led residential property purchase incentivisation scheme to replace Help to Buy, leaving many first-time buyers in limbo. The new government’s direction on introducing similar initiatives will be closely watched, particularly as the housing market grapples with high costs and limited access. While such a scheme could benefit housebuilders, it may place Registered Providers in a challenging position as they compete with housebuilder stock. Previously we have heard from Registered Providers that since the conclusion of Help to Buy, shared ownership units were selling well due to pricing / share levels opening up more opportunity for first time buyers. We anticipate the government will set out the direction of travel on this issue quickly. There have already been reports regarding Labour potentially missing housing delivery targets due to a lack of funding for social and affordable housing. Ultimately high levels of grant funding will be crucial in delivering affordable housing in the current economic climate.
David Conboy, Director, Development Consultancy
Labour’s plans for Compulsory Purchase Reform and accelerated home building
Labour’s manifesto stated that it will reform compulsory purchase rules to get homes built, and most expect that this will be concentrated around changes to how hope and development value is reflected in the compensation assessment. The Levelling Up and Regeneration Act 2023 (‘LURA’) introduced provisions that required the market value of a property to be assessed disregarding any hope value but this applies in limited circumstances and requires a case to be presented as to why this is necessary to deliver public benefits. Labour has stated that the changes introduced under LURA should have gone further, with hope value excluded in more instances. With plans to build a new generation of New Towns and the land assembly required to achieve this, it will be interesting to see how Labour refines the case for exclusion of hope value and how it looks to accelerate delivery of new homes through changes to the CPO process.
Rachel Lea, Associate Planner
Planning reform and housing delivery targets
The early days of Labour’s tenure have already positioned planning reform as a priority. Chancellor Rachel Reeves has reaffirmed the party’s commitment to housing delivery and greater intervention, suggesting a potential rollback of previous National Planning Policy Framework changes. With an ambitious target of 300,000 new homes annually, Labour is banking heavily on the development of new towns. However, the timeline for such developments raises concerns, as immediate solutions are needed to address ongoing viability issues and affordable housing delivery. The promise of 300 new planning officers may support efforts, but the reality of creating and implementing new local plans will take considerable time, leaving many local authorities in a precarious position. Overall, the sentiment is great, but there is no obvious tell of how Labour is going to deliver all their promises. The removal of development pressure will still always come down to viability and so this should be their focus.
Simon Martin, Associate Director, Asset & Transaction Advisory
Investment and occupier market outlook
Investor sentiment towards the new government is cautiously optimistic, with many waiting for the first budget in September/October to gain a clearer understanding of the administration’s economic direction. Positive economic indicators, such as a recent inflation rate of 2.00%—the lowest since July 2021—and meeting the Bank of England’s inflation target, have bolstered confidence. There is a growing belief that the cost of capital has peaked and that the market has reached or is nearing its bottom, although this varies depending on the specific sector and asset quality. As the government unveils its policies, investors will be looking for signals that support a stable and prosperous investment environment.
Ross Bettridge, Director, Asset & Transaction Advisory
Viability – Get the market moving
While we are hearing long term positive noises from the new government, if they are serious about achieving their target of 1.5 million homes over the next 5 years, they need to get the market moving today. The current market is burdened with viability issues, whether that is high build costs, second stair cores, high borrowing and mortgage costs, low sales rates, forever burdening Community Infrastructure Levy (CIL) liabilities and the demands for the private sector to deliver 35% affordable homes, all along with the current broken planning system.
To facilitate growth and unlock land availability, the government must consider artificial stimuli, including a CIL relief package for brownfield sites. Such measures would not only encourage development but also alleviate viability pressures. We need to ensure that the sales market is buoyant and against the backdrop of high mortgage rates, the earmarked support for first time buyers would be a very welcome initiative. The path forward is fraught with challenges, but decisive action today can lay the groundwork for a more sustainable and prosperous housing landscape in the future.
Round up
As we evaluate the initial steps of Labour’s new administration, it is clear that their approach to local government and housing carries both promise and complexity. The success of new policies will hinge on swift and decisive action, especially in addressing funding challenges and viability issues that have long plagued the sector. The coming months will be critical in determining whether Labour’s ambitious goals can be transformed into tangible outcomes, ensuring that both local communities and the housing market experience meaningful and sustainable growth.
As a team, we remain vigilant, ready to navigate and support the changing landscape. We welcome discussion with all stakeholders, developers, and local authorities so that we all can work together to shape policies and strategies that will drive the sector forward.
Get in contact: