Fresh setback for Labour pledge to build 1.5m homes

The new Housing Secretary faces a fresh headache as the Government’s plans to build 1.5m homes suffer yet more setbacks.

Britain’s biggest developer is this week set to admit it built fewer homes in Labour’s first year in office than in the final 12 months under the Tories.

And in a further blow, the Bank of England is widely expected to leave interest rates^[1] on hold, with some analysts suggesting there will be no more rate cuts until next spring.

That spells misery for househunters hoping for cheaper mortgages – and could in turn hit demand for new homes.

Labour set a target for 1.5m new homes to be built in this Parliament – or 300,000 a year.

The plan was overseen by Angela Rayner, who was deputy prime minister and housing secretary until she was forced from office for failing to pay enough tax on her second home.

Talking the talk: Steve Reed succeeded Angela Rayner in the housing brief and told officials his mantra was ‘build, baby, build’

Steve Reed succeeded her in the housing brief and told officials his mantra was ‘build, baby, build’ as he seeks to ‘unleash one of the biggest eras of building in our country’s history’.

But an update from Barratt Redrow, the country’s biggest developer, will this week show he has his work cut out after official figures showed housebuilding is at its lowest level since 2016 outside the pandemic.

The FTSE 100 firm will reveal it built 16,565 homes in the 12 months to June 29 – down from 17,972 the previous year when the Tories were in power.

Bosses have set a target to build another 17,200 to 17,800 new homes this year – but that is still below the level of 2023-24 before Labour came to power. Other builders are also developing fewer homes, with Vistry last week saying it built 6,889 properties in the first six months of this year, down from 7,792 in the same period before the election.

Vistry bosses warned that ‘uncertainty’ created by ‘procrastination’ over possible property taxes ahead of the November 26 Budget will hit the housing market. And Reed last week warned his plans were ‘dead on arrival’ after a slump in housing approvals and contract awards for work to begin.

Analysts at HSBC said there would be no more rate cuts in the UK before April, with the Bank all but certain to hold them at 4 per cent on Thursday.

Aarin Chiekrie at Hargreaves Lansdown said: ‘Given the slow start towards the 300,000 homes per year hurdle rate and continuing affordability pressures for buyers, the chance of reaching the 1.5m new homes target looks slim at best.’