UK Government vs. Home Buyers: Who Really Wins?

Transcript

Since taking office, Labour has made housing one of the defining themes of its domestic agenda. But the promise to build 300,000 homes per year isn’t unprecedented – previous governments floated similar targets.

What may prove different is the willingness to intervene more directly in planning, rental regulation, and land policy to try to force delivery where earlier administrations struggled.

The question, though, isn’t whether the ambition sounds bold.

It’s whether the underlying economics of the housing market have shifted enough to make those ambitions achievable – and whether the accompanying reforms genuinely lower the barriers to ownership.

Because buyers don’t transact on political momentum. They transact on cost, credit, confidence and supply.

And those forces are shaped far more by economic fundamentals rather than by political rhetoric.

So before we assume that policy alone can meaningfully reshape affordability, it’s worth stepping back and asking a more fundamental question:

What actually determines whether homes get built, financed and purchased in today’s market?

Let’s step back and look at the mechanics…

The centrepiece of Labour’s housing platform is the pledge to deliver 1.5 million homes over the course of the Parliament.

That commitment has been championed by Matthew Pennycook, the current Minister of State for Housing and Planning – one of more than a dozen housing ministers the UK has seen over the past two decades, in what has historically been one of the most reshuffled briefs in government.

In a 2025 interview, he was asked directly about that target:

https://www.youtube.com/watch?v=bZweruKvDRA&t=6s to https://youtu.be/bZweruKvDRA?si=-qXdp1X4ZiFv7Cys&t=26 (if you could remove the rolling banner at the bottom).

Still committed, still confident you’ll hit 1.5 million homes by the end of the Parliament?

Minister of State for Housing and Planning: Still confident, still committed. I always say to you we have discussed it many times in the past that it’s an incredibly stretching target. We could have picked a far less stretching target; it would have been far easier to me, but it wouldn’t have been commensurate with the scale of the housing crisis that we face in this country.

🕐 On-screen caption: Clip ©Sky News – used under UK fair dealing for commentary/review.

📝 Description credit: Contains excerpts from Sky News interview with Minister Matthew Pennycook MP on 25th March 2025). Used under UK fair dealing for the purpose of commentary and review.

It’s a confident statement. And in simple supply-and-demand terms, the logic is straightforward: if housing supply increases materially and consistently, housing market pressure should ease over time.

But housing ministers of every political colour have made similar promises over the past twenty years or for as long as I can remember anyway – often with comparable confidence. Targets are announced but delivery proves harder.

That gap between ambition and execution surfaced again in a fairly recent interview – this time involving Steve Reed, who has served as Secretary of State for Housing, Communities and Local Government since September 2025, following on from Angela Raynor’s sudden departure. He was pressed on delivery numbers during a live exchange on GB News…

https://youtu.be/7F1dtV1yyyc?si=2a3oKpDNYFWSwq2h&t=383 – can you cut out the panel at the bottom “STARMER LEAST POPULAR PM ON RECORD… up to about here: https://youtu.be/7F1dtV1yyyc?si=AFZLvw74TiNETvg0&t=470

Interviewer: How many houses have been built under Labour so far?

Steve Reid: Starts have gone up by 29%.

Interviewer: What I can’t… can you give me a figure? I know it’s really low and I’m appalled by it as well, but that is because the Conservatives didn’t get the applications… please don’t tell me you don’t know the number.

Steve Reid: Conservatives didn’t get the applications through–starts are up 29%.

Interviewer: No, how many compared to the previous… how many new homes have been built since Labour took power?

Steve Reid: I don’t have the ex… I’m not Wikipedia. I’m here to talk to you about policy; that doesn’t mean I know every single statistic going on in the entire housing sector.

Interviewer: You don’t? You only know it because it’s written in front of you? How can my producer have this figure and you not have it?

Steve Reid: Well, because somebody’s researched it for you and given it to you, and someone hasn’t researched it for me and given it to me. No, what I know I need to do is build new homes. We’re announcing today plans to develop a new generation of new towns for the first time since the Second World War; that will be more than 300,000 new homes. This will give young people the chance to get their foot on the housing ladder and give people stuck in squalid, substandard, expensive rental accommodation the chance to get somewhere they can afford to rent. It’s putting the key to a decent home in the hands of the British people. Because you’ve got a stat on a bit of paper that I haven’t got says nothing whatsoever. I’m surprised you’re trying to do a gotcha moment, and that’s so sad for your viewers because they’re probably like, “a sensible debate.” This is silly.

🕐 On-screen caption: Clip ©GB News – used under UK fair dealing for commentary/review.

📝 Description credit: Contains excerpts from Sky News interview with Secretary of State for Housing, Communities and Local Government 2025). Used under UK fair dealing for the purpose of commentary and review.

Now, GB News is probably not the most sympathetic platform for a Labour minister, and the exchange was clearly confrontational. But what mattered wasn’t the tone – it was the substance.

When the target is 1.5 million homes over a Parliament, scrutiny naturally turns to delivery. Saying “starts are up 29%” sounds encouraging. But percentage increases can flatter the picture if they come from a weak base – and they don’t necessarily mean output is anywhere near the roughly 300,000 homes per year required to hit that pledge.

There’s also an important distinction between starts and completions. A start means a project has broken ground, often on land approved years ago. A completion is a finished home that someone can actually buy or rent. Affordability shifts when homes are completed – not when foundations are poured.

Housing isn’t delivered by ambition alone – nor by emotive language aimed at frustrated young voters. It depends on viability, financing conditions, land values, build costs and local planning capacity.

And ultimately, delivery – not political messaging – decides the outcome, because housing supply doesn’t shift overnight with a change of government; it responds to land economics, build costs, financing conditions and planning capacity.

So to focus on the practicalities, it’s an indisputable fact that construction costs remain considerably above pre-pandemic levels. According to BCIS data, residential build costs rose sharply between 2020 and 2023 and, whilst inflation has moderated, the cost base has not reverted to 2019 levels (and is unlikely to do so).

Energy, materials, labour shortages, compliance requirements and insurance premiums all feed directly into development appraisals.

Finance costs are also structurally higher than during the ultra-low-rate period of the 2010s. Even though interest rates have eased from peak levels, they remain materially above the near-zero environment that underpinned much of the previous housing cycle.

Land values, particularly in high-demand regions such as the South East, have been slower to adjust. Sellers of development land often anchor expectations to previous peak valuations. When land pricing lags behind cost realities, schemes stall.

This is why housing targets do not automatically translate into housing completions. Delivery depends on financial viability and capacity, not headline commitments.

For buyers, that distinction matters. They do not transact on government commitments. They transact on what is physically built, priced and mortgageable.

There’s another issue that profoundly shapes how the housing market actually functions: Stamp Duty Land Tax.

The UK operates one of the highest property transaction tax regimes in the developed world. In London and much of the South East, moving home can mean five-figure tax bills before legal fees, surveys, removals or mortgage costs are even considered.

Stamp duty has indeed become a growing political battleground in recent times. Speaking at the Conservative Party conference, Kemi Badenoch said:

Up to

https://youtu.be/1wzsXUchDgE?si=yULOT6QeQ94aQo97&t=99

Can you take out the BREAKING NEWS

Young people trapped in the pain of renting, workers who want to further their career, pensioners who want to downsize but can’t afford the thousands of pounds they have to pay in tax. Conference, stamp duty is a bad tax; it is an unconservative tax. The last Conservative government cut stamp duty for thousands of home buyers, but now we must go further. We must free up our housing market because a society where no one can afford to buy or move is a society where social mobility is dead.

So, I have looked at the stamp duty thresholds to see where we can change them; I have looked at the rates you have to pay to see if we can lower them. I have decided that we can’t, because that simply wouldn’t be enough. Conference, the next Conservative government will abolish stamp duty on your home. It’ll be gone.

🕐 On-screen caption: Clip ©Sky News at the 2025 Conservative Party Conference – used under UK fair dealing for commentary/review.

📝 Description credit: Contains excerpts from Sky News at the 2025 Conservative Party Conference on 8th October 2025). Used under UK fair dealing for the purpose of commentary and review.

This is all very compelling. And economically, there is truth in it. High transaction taxes do indeed reduce mobility and dampen market fluidity.

When mobility slows, effective supply tightens. Homes still exist – but they are not released into the market efficiently. And even if nominal prices stagnate, movement remains constrained.

But here’s the harder question that rarely follows…

If you abolish or significantly reduce stamp duty, how do you replace the revenue?

Stamp Duty Land Tax isn’t symbolic. In recent years, SDLT has generated between £10 and £15 billion annually in total receipts for the Treasury, with higher rates on additional properties by professional buyers like ourselves contributing materially to that total.

Removing it without a replacement either widens the fiscal deficit or shifts the burden elsewhere – through higher income taxes, broader property taxes, spending cuts or borrowing.

So when politicians on either side talk about “freeing up” the housing market, it’s worth asking whether the full fiscal implications have been worked through – or whether the language is designed primarily for electoral impact.

Labour’s emphasis is on building more homes. The Conservatives’ emphasis is on reducing transaction friction. Both messages resonate with frustrated voters. But housing outcomes are shaped by trade-offs, not applause lines.

Cutting stamp duty may lift transactions in the short term – yet if supply remains constrained, much of the benefit is likely to translate into higher prices. Increasing supply may ease long-term pressure – but only if viability, land pricing and infrastructure funding align.

In housing, as in public finance, there are no costless reforms.

Lending rules form another layer of constraint.

Since the global financial crisis, mortgage regulation has tightened significantly. That has undoubtedly strengthened financial stability. The UK banking system today is better capitalised and more resilient than it was in 2007.

But prudence carries consequences.

Mortgage stress testing assumes borrowers can withstand significantly higher rates than those prevailing at the time of application. Income multiples are conservative. Affordability models incorporate buffers for rising living costs.

Even as base rates gradually ease, underwriting standards do not instantly revert to the looser norms of the mid-2010s.

For buyers, this means ownership requires more than a deposit. It requires passing what are effectively “resilience” tests designed for worst-case scenarios.

It requires absorbing transaction taxes and demonstrating long-term income stability in an environment where wage growth has not consistently kept pace with housing costs and are unlikely to do so for the foreseeable future.

The barrier to entry is therefore multi-layered.

Rental sector reform also intersects with ownership in complex ways.

Labour’s Renters’ Rights Bill is framed around tenant protection – abolishing Section 21, strengthening standards, creating greater accountability. Politically, that aligns with a growing urban, renter-heavy electorate.

But regulation reshapes incentives.

Increased compliance costs and legal complexity influence landlord behaviour. Some small landlords are exiting the market. Data from auction houses and estate agents indicates a sustained increase in ex-rental properties being listed for sale compared with pre-2016 levels, when mortgage interest relief changes under Section 24 began to bite.

On the surface, this appears positive for buyers. More supply entering the for-sale market should increase opportunity.

But ownership outcomes are nuanced.

Evidence submitted by Propertymark to Parliament has indicated that landlord sales do not always translate into new owner-occupiers; in many cases, properties are acquired by other investors or developers, depending on location and price point.

At the same time, institutional capital has expanded its footprint in the UK residential sector.

According to Savills, more than £70 billion of institutional capital has been deployed into the UK build-to-rent sector over the past decade, creating nearly 300,000 completed homes, with tens of thousands more in the pipeline.

Large operators can absorb regulatory complexity more easily. They can structure portfolios efficiently, access cheaper capital and spread compliance risk across scale.

From a government perspective, this may represent professionalisation. From a buyer’s perspective, it can mean competing against better-capitalised entities in certain market segments.

Help to Buy provides another example of policy with long-lasting effects.

The scheme helped many households access homeownership, particularly in the new-build sector. But it also pulled forward demand and supported pricing in parts of the market that may not have cleared at those levels organically.

With Help to Buy – which closed to new applications in October 2022 and ended fully in March 2023 – developers have adjusted incentives and pricing strategies.

But the removal of subsidised equity loans does not automatically reset the underlying cost base.

Deposits must now be fully funded. Lending remains strict. Construction costs remain elevated.

The artificial support has been withdrawn, but structural affordability challenges remain.

There’s also a behavioural dimension that rarely features in policy debates.

Housing markets run on confidence as much as fundamentals.

Buyers are more willing to stretch – even modestly – when they believe long-term price growth will cushion short-term uncertainty. Even low single-digit annual growth can sustain confidence. But when the outlook is flat or unclear, conviction tends to weaken.

That does not mean buyers expect a dramatic collapse. It means discretionary buyers hesitate, delay decisions, negotiate harder and reassess timing.

Needs-driven buyers still transact – for schools, jobs, family changes or range of other personal situations. But they are more price-sensitive.

From our perspective at Property Solvers, operating nationally across direct acquisitions and auctions, what we observe is not a collapse in demand but a shift in its composition.

Straightforward, energy-efficient, realistically priced homes – particularly 2- and 3-bed terraced and semi-detached houses – continue to transact and the sellers we deal with are happy the results.

Properties dependent on optimistic pricing, minimal compliance costs or generous lending assumptions face narrower buyer pools and longer marketing periods.

This is rational repricing of risk in a higher-cost environment.

So who benefits under the current framework?

Tenants may gain stronger security and legal protection.
Institutional landlords may benefit from scale and compliance capacity.
Government gains greater regulatory oversight and political capital.

Buyers, however, continue to face:

High transaction taxes. Conservative lending criteria. Elevated construction costs feeding into higher prices.  Regulatory spillover from rental reform. Ongoing uncertainty around taxation and housing policy direction.

None of this makes homeownership impossible. But structural barriers remain notable.

Affordability improves when several forces align at the same time: land values adjust, build costs stabilise, wage growth strengthens, transaction friction eases, and supply increases sustainably.

At present, those shifts are uneven.

Housing policy can influence distribution, standards and oversight. It cannot override cost economics.

If land remains expensive, construction remains costly, lending remains cautious and transaction taxes remain high, ownership will continue to require resilience and capital – regardless of political messaging.

This is not an argument against reform. Higher standards and stronger tenant protections can be legitimate aims. Planning reform may unlock supply over time.

But there is a difference between redistributing pressure within the system and reducing that pressure.

Until the underlying cost structure of UK housing changes – through land adjustment, productivity gains in construction or reform of transaction taxes – ownership will continue to feel demanding for many households.

Housing markets respond to fiscal policy, regulation, access to capital and development viability.

If those forces do not align with broad-based ownership, friction persists.

So when we ask whether government policy is helping house buyers, the honest answer is nuanced.

The direction of travel may be coherent. The intention may be clear. But the structural constraints remain significant.

If you’ve found this analysis useful, please like the video and subscribe to the channel.

We’ll continue to examine the UK housing market through incentives, economics and behaviour – beyond the slogans and beyond the noise.

Thanks for watching.