Labour’s 1.5m Homes Target Faces Major Hurdles
Labour’s promise to deliver 1.5 million new homes by 2029 a central plank of its 2024 election campaign is under pressure after early data suggests the UK’s largest developers are struggling to scale up construction.
The pledge requires an annual average of 300,000 homes, but figures from leading builders show completions are running below this pace. Rising borrowing costs, planning delays, and uncertainty over housing policy are compounding the challenge.
Meanwhile, the Bank of England is expected to hold interest rates at 4% until spring 2026, dashing hopes of near-term mortgage relief and reducing demand for new homes.
Labour’s Ambitious Promise
When Labour entered government in 2024, it promised to build 1.5 million homes within five years, framing the policy as essential to tackling the UK’s affordability crisis.
The project was initially overseen by Angela Rayner as Housing Secretary, but she resigned earlier this year. Steve Reed, her successor, has embraced the slogan “build, baby, build” and pledged to drive one of the biggest housebuilding programmes in modern history.
Developer Struggles Emerge
One of the clearest signals of the challenge comes from Barratt Redrow, the UK’s largest housebuilder. The company has set a target of 16,600 to 17,200 homes in 2025, well short of the output needed to hit Labour’s national goals.
The firm has longer-term ambitions to reach 22,000 annual completions, but the current pace highlights the gap between government ambition and industry capacity.
Vistry and Industry Caution
Other developers also show signs of strain. While Vistry Group continues to build at scale, reports suggest completions have dipped compared with pre-election figures. Executives warn that political uncertainty and speculation over new property taxes in the upcoming November 26 Budget are weighing on investment decisions.
Without clarity on fiscal measures and support for planning reform, housebuilders are unlikely to accelerate production to meet government targets.
Mortgage Pressures Remain
High mortgage costs are further complicating Labour’s housing drive. Analysts at HSBC expect no further interest rate cuts until at least April 2026, with the base rate likely to remain at 4%.
This leaves many would-be buyers priced out of the market, lowering demand for new builds. Developers, in turn, are moderating their pipelines, slowing the pace of construction just as the government pushes for expansion.
Planning and Approvals Bottleneck
Beyond economics, structural bottlenecks remain. Planning approvals have fallen sharply, limiting the pipeline of future developments. Local authorities, already under financial strain, struggle to process applications quickly enough to support the scale of construction envisioned.
Reed himself acknowledged the problem, warning that Labour’s pledge could be “dead on arrival” without urgent reform to the planning system and faster contract approvals.
Analysts Cast Doubt
Market analysts are increasingly sceptical about Labour’s ability to deliver.
Aarin Chiekrie of 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.”
Such warnings highlight the risks to Labour’s credibility if its flagship housing promise falls short.
Final Summary
Labour’s flagship promise to build 1.5 million homes by 2029 is not just a housing issue it cuts to the heart of taxation, fiscal planning, and long-term economic growth. At Pie, we examine how policies intersect across these areas, and the housing shortfall risks undermining both Labour’s social commitments and its revenue forecasts.
Slower construction output, high borrowing costs, and planning delays are combining to limit progress. Without urgent reforms and stronger industry support, the government risks missing its central housing promise, leaving affordability pressures unresolved with knock-on effects for tax receipts, public spending, and voter trust.
