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Published: 08/07/2025
It was on the election campaign trail back in October 2023 that Keir Starmer first pledged a Labour government that would ‘recapture the dream of homeownership’ by delivering 1.5 million new homes.
Twelve months into power, there’s been no shortage of announcements, systemic reforms and renewed commitments to that goal, but many in the industry remain unconvinced that it is possible to even come close to meeting the target within this Parliament.
Karl Horton, BCIS’s Data Services Director, assesses how far the government has come – and what hurdles to success it may have put in its own path along the way.
Thoughts on the effectiveness of Labour’s housebuilding messaging?
The government has introduced several reforms to stimulate housing development, including the reclassification of parts of the green belt as ‘grey belt’ to facilitate construction on lower-quality land. This was broadly welcomed as a way of increasing land supply.
At the same time, however, ministers have warned that developers could face financial penalties for delaying the build-out of approved sites. This dual messaging, designed to drive delivery and deter land banking, risks sending mixed signals. In a fragile market, threats of penalties may heighten perceptions of political risk and deter investment at a time when developer confidence is already on shaky ground.
What about skills shortages. Has the government handled this well?
The government has made concerted efforts to support domestic skills growth in construction, announcing funding for apprenticeships and green skills initiatives. However, it also wants to tighten restrictions on overseas labour, which has historically been key to delivering projects at scale.
Skills shortages were already a constraint on output before the election and they show no signs of abating. New research from City & Guilds found that 76% of construction firms are struggling to recruit the skilled workers they need, and more than half (54%) of business leaders lack confidence that the sector can meet housing targets(1). Without near-term access to the required workforce – domestic or international – these shortages could place a hard ceiling on the pace of delivery.
Have planning reforms had the desired impact?
Planning reform has been one of the most prominent elements of the government’s housing strategy. Labour has reintroduced mandatory council housing targets via updates to the National Planning Policy Framework (NPPF), introduced a fast-track route for brownfield development, and brought forward the Planning and Infrastructure Bill.
While these reforms lay important groundwork, albeit with their own issues, they have yet to feed through into faster housing approvals. According to the Home Builders Federation’s (HBF) 1Q2025 Housing Pipeline report(2), the number of residential planning approvals was down 32% on the year, reaching the lowest quarterly total since 2Q2012. For now, supply remains constrained by planning system bottlenecks, even as policy shifts attempt to unblock them.
Recent EPC registration data, which provides a useful estimate of new builds while official completions data suffers from a significant lag, suggests most regions in England (with the exception of the north east) have seen lower housebuilding levels in the past year than in the previous 12 months.
Affordable housing and first-time buyers
A £39 billion injection into the Affordable Homes Programme in June’s Spending Review is a welcome increase on previous government commitments. But it’s not yet clear how far this will translate into accelerated delivery. According to the latest ONS data, public housing output was down 8.6% in April year-on-year, while private housing output showed moderate growth. A reversal in trajectory is imperative.
Meanwhile, calls for a targeted package for first-time buyers remain unanswered. HBF estimates that around 100,000 additional homes could be unlocked over the next five years if a support scheme were introduced(3). Without this demand-side catalyst, even increased investment may not shift the dial fast enough.
What about mounting financial pressures?
New and proposed taxes are adding to the financial headwinds facing housebuilders. The Building Safety Levy, confirmed for introduction in autumn 2026, risks suppressing housing delivery, particularly for SME developers and affordable homes providers.
Further tax changes introduced in the 2024 Autumn Budget have exacerbated these pressures. The removal of Business Property Relief for family-run firms has created uncertainty for smaller housebuilders. A rise in employers’ National Insurance contributions has increased payroll costs, and the reversion of the first-time buyer Stamp Duty threshold to £300,000 in April has added further friction for new entrants to the housing market.
With the cost of doing business already high, and the government simultaneously calling for growth in output and recruitment, developers are understandably concerned that these policies risk pulling in the opposite direction.
Is the road ahead bumpy?
Responses to the BCIS Private Housing Construction Price Index survey in 1Q2025 reinforce that the housebuilding sector remains cautious. Asked about expected output over the next two years, 47% of developers said they are anticipating only a modest 0-5% increase, 40% expected no change, and just 13% forecasted a rise of 5-10%.
These figures highlight a core tension: while political will is strong, housing delivery at scale depends on more than ambition. It requires stable market conditions, planning capacity, labour availability, and a confident, well-incentivised private sector.
With four years left in the Parliament and multiple reforms still bedding in, the government’s strategy remains a work in progress. But year one has confirmed what the industry already knew: significant policy ambition alone is not enough to overcome the structural realities slowing housing delivery.
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One year of Labour
More commentary on the government’s first year in power:
One year of Labour: housing figures show work to do
One year of Labour: BCIS chief economist says government is ‘turning a corner’
One year of Labour: an economic snapshot
