Housing policy in the wake of a new government

An upcoming election and the possibility of governmental change could mean a shift in future housing policy. In this briefing, we’ve outlined three election outcomes against four 2019 party manifestos and other policy trends to keep you up to date on the possibilities for housing policy change in wake of the new government.

Context

The current government has called for a General Election on December 12th 2019. Parliament is currently in its pre-election suspension period, purdah, and party leaders are in full campaign mode. All the main parties have now published their party manifestos, which all contain some description of future housing policy and priorities.

According to YouGov, the three most realistic outcomes of the election according to popular polling are:

Outcome 1: Conservative majority (59% say ‘it can reasonably happen’)

Outcome 2: Conservative majority Hung Parliament with Conservative coalition including other parties (63% say ‘it can reasonably happen’)

Outcome 3: Hung Parliament with Labour coalition including other parties (41% say ‘it can reasonably happen’)

There are some similarities between the three main parties on home ownership and private rented sector property, however there are also some major policy differences, priorities, and points of emphasis. The Conservative focus is on homeownership, shared ownership and extending Right To Buy pilots; Labour’s focus is on delivering 150,000 new homes of which 100,000 will be local authority social rent homes, ending the Right To Buy and looking at rent stabilisation, as well as focusing on building safety with a £1 billion Building Safety Fund; and the Liberal Democrats’ focus is on social rent reform and devolving housing rights to local authorities.

In the following sections, we’ll explain how these outcomes could happen, and how various party’s manifestos help define what government housing policy may look like in the future.

What do these outcomes mean?

Outcome 1: Conservatives gain majority

How can this happen?

The Conservative’s preferred outcome, and key driver for the General Election being called in the first place, is that the Conservatives gain a majority in the House of Commons and may therefore set up a government.  This would happen if they gain 28 seats while maintaining all currently held seats.

What are the housing policy implications?

The implications would likely result in the passing of Boris Johnson’s Brexit deal, and a general perseverance of the status quo in the housing sector since the Conservatives have driven policy over the past circa 9 years (first in coalition with the Liberal Democrats from 2010 to 2015, and then as a majority government from 2015 to 2017, and as a minority government from 2017 until today). There is the potential of some change reflective of those policy aspirations included in the 2019 Conservative manifesto, which includes promises to: 

  • Build more housing
  • Focus on homeownership initiatives, such as a revived Starter Homes policy and continued Help to Buy and Right To Buy policies
  • Make planning simpler for public and small developers
  • Introduce a Stamp Duty on non-UK resident buyers
  • Bring forward a Social Housing White Paper
  • End leasehold sales
  • Reform the Private Rental Sector (PRS) by abolishing no-fault evictions and introducing lifetime deposit schemes
  • Enhance energy efficiency standards

Conservative housing policy since 2010 has generally focused on pro-homeownership and intermediate rent initiatives, with decreasing capital funding for new social housing. Recently, consultation has focused on reforms to Shared Ownership, and there is currently talk about a Housing Association resident Right to Buy programme, which would allow social housing residents to purchase tranches of the new build social home they currently live in.

 Other policies on the Conservative agenda include investment into innovation in the sector, including green modern methods of construction and off-site technologies. Last month, Housing Minister Esther McVey announced a £30m boost for modular housing firm ilke Homes to open a second housebuilding factory, as part of a wider ‘Construction Corridor’ initiative in the North of England. We anticipate that with a Conservative Majority, such initiatives will continue.

Outcome 2: Hung Parliament with Conservative coalition including other parties

How can this happen?

A hung Parliament is when no single political party wins a majority in the House of Commons. If this happens Boris Johnson will remain in power and is given the first chance to create a government. He may decide to negotiate with another party or parties, such as the Brexit Party or Liberal Democrats, to build a coalition. He also has the option to try and govern with a minority of Members of Parliament, as they have done so since 2017 when Conservatives entered into a ‘confidence and supply arrangement’ with Northern Ireland’s Democratic Unionist Party (DUP) to remain in power. However, since the election called to try and gain a Conservative majority lost in the 2017 election to push through a Brexit Deal, this outcome is unlikely to happen in reality.  

Of course, other parties will need to be on board with a coalition government with the Conservatives. The Liberal Democrats, for example, have stated that they will support the Conservatives, along with any other party, if they agree to another Brexit Referendum.

What are the housing policy implications?

The Lib Dems propose similar policies to the Conservatives, with the addition of specific rental reforms and policies in the private and social sectors. For example, in the private sector, the Lib Dems want to introduce a government-backed Help to Rent providing low-cost loans for tenancy deposits, mandatory licensing of PRS properties and three-year tenancies with rent stabilisation linked to inflation. In the social sector, the party wants social rents reform to include accountability to complaints and clearer standards around rent levels. They also propose:

  • a Rent to Own model for social housing, where rent payments give tenants an increasing stake in their property, owning it outright after 30 years.
  • Devolved rights to local authorities, including on Right To Buy and council tax charges for second homes and non-UK resident buyers

Outcome 3: Remain Coalition Led by Labour

How can this happen?

It is unlikely that Labour will win the outright majority, as this would require Labour to win an additional 83 seats, while holding onto all of their gains from 2017. However, if Labour secure more seats than the Conservatives, they may wish to seek a coalition government. Alternatively, if the Conservatives are unable to form a coalition, Boris Johnson may decide to resign and recommend that Labour, the (likely) largest opposition party be invited to form a government through a coalition or as a minority government.

As a result, Labour may seek to form a coalition with other Brexit ‘remainers’, such as the Liberal Democrats, Scottish National Party (SNP) or Green Party.

In the case of a minority government, The SNP has ruled out a formal coalition with Labour in the event of a minority Labour government but have said they would support Labour on certain votes in exchange for Labour’s support of specific policies.

What are the housing policy implications?

Labour’s 2019 Manifesto contains a number of significant housing policy proposals, including the introduction of English Sovereign Land Trust, which grants the public powers to buy land more cheaply for housing and a £1bn Fire Safety fund to fit adaptations into high-rise tower blocks. However surprisingly, many of the policies are consistent with those of the Conservatives and Liberal Democrats, with some proposed homeownership initiatives, PRS rent reform, planning reform and promises to build significantly more supply.

Of course, a partnership agreement between Labour and the Liberal Democrats could mean some additional prioritisation is made on their overlapping policies, including PRS rental reform, enhanced energy efficiency standards, and financing expanded social housebuilding programmes.

The SNP do not outline housing plans in great detail in their manifesto, but have historically introduced PRS rental reform through the introduction of a new mandatory tenancy, have supported first time buyers through a Help to Buy programme and tax incentives, have eliminated the Right to Buy and have funded rural and Island housing programmes.

Finally, the Green party has indicated through their manifesto that they will ensure that all new supply meets strict green standards, such as Passivhaus or equivalent. They also want to ensure infill and extension development is utilised where possible, and that all new homes are built with non-car transportation and other local placemaking principles considered.

Conclusions

In theory, the points of consistency suggest that the focus of the election will result in a housing policy shift towards new supply and the introduction of stricter private renting standards, with some push towards energy efficiency initiatives and the strengthened role of local authorities in housing policy, whatever outcome we have. The sector should continue to monitor any changes in rent-to-own social housing or housing association Shared Ownership policies, being proposed by Conservatives and Liberal Democrats, which if enacted will likely impact RP financing arrangements considerably; and should prepare itself and develop strategies to influence whichever government is in place, in a post-Brexit political and financial environment after 12th December 2019.