Disaster for Labour's key manifesto pledge as Britain hit by major slump

A key Labour manifesto pledge to build 1.5 million new homes faces disaster as the number of housebuilders in the UK has fallen for the first time in at least a decade. Chancellor Rachel Reeves has long said the Labour Government is "backing the builders", but in the year to September the number of housebuilders trading in the UK fell by over 1,500 (1.7%), according to Hamptons.

Over the same period, the broker found 1,904 developers were either in administration or undergoing the process of being wound up. It represents a 5% year on year rise, which is also 63% higher than in September 2022, when Liz Truss was prime minister.

The Government wants 1.5 million homes built by 2029 through a combination of planning reform, construction of new towns and a boost in the number of social and affordable homes.

An average 300,000 new homes would need to be built per year, but industry giants including the National Housing Federation, Home Builders Federation and Savills have warned the Government is set to fall short of its ambition.

Figures reported by Savills in February show 2024 saw the lowest number of new homes built in a twelve-month period since 2017. Total completions for last year were 217,911, according to Energy Performance Certificate data. This compares to 231,000 in 2023.

Hamptons' lead analyst, David Fell, told Bloomberg businesses are struggling to keep up momentum in a "post-Help to Buy world".

Help to Buy was a Government-backed scheme introduced in 2013 by the coalition Government led by former Prime Minister, Lord David Cameron.

It helped buyers purchase a property with loans, which initially were interest-free, to meet the 25% deposit typically required by lenders. The scheme ended in March 2023.

Hamptons said 71% of the housebuilders which went bust this year were established during the decade Help to Buy was in place.

Mr Fell said demand for new homes had also been hampered by rising mortgage rates and construction prices. Weaker house prices in the south of England also made turning a profit harder, according to the expert.

The Government on Tuesday trumpeted a raft of measures it said would get Britain "building faster" under changes to Labour's Planning and Infrastructure Bill.

New powers would stop councils rejecting planning permissions, tackle legal obstacles and boost large housing projects, according to the Government.

Under the plans, builders would receive help to stop planning permissions from being timed out on "vital" housing projects tied up in the courts.

Housing Secretary, Steve Reed, said in a statement: "We will 'Build, baby, build' with 1.5 million new homes and communities that working people desperately want and need."

Hamptons' figures came from businesses registered as housebuilders listed as actively trading on Companies House. Some of the total will be subsidiaries of bigger developers.