Candidates in the Conservative party leadership race must pledge to keep their general election manifesto target of building 300,000 new homes every year, warns the Leeds Building Society chief executive Richard Fearon. 

Fearon has sent a letter to all of the remaining candidates outlining why the promise should be retained if they are appointed to the role. 

In the letter, he highlights how supply is a vital factor in addressing the difficulties faced by people looking to buy the home they want.

The 2019 General Election manifesto included targets of building a million more homes in this parliament and 300,000 homes a year by the middle of this decade, a figure which was last reached in 1977.

Last month, the former secretary of state of levelling up, housing and communities Michael Gove said since the record high of 244,000 completions pre-pandemic there has been “a number of economic headwinds which will make life more difficult” to reach the target of 300,000.

Gove said the target was still in place “but there are a number of factors that are going to make it and have made it more difficult”.

The secretary of state also noted it’s “unlikely” the government will consistently hit the 300,000-target year on year. 

According to data published by Unlatch, last year 181,810 new homes of the 300,000 target were completed across the UK, representing a shortfall of 118,190, which is the highest number since 2007.

Fearon says: “We regularly see first-time buyers and those trying to move up the property ladder facing huge challenges in achieving their home ownership ambitions.”

“There are lots of factors at play but the lack of housing supply remains a major obstacle and it needs the Government to be loud and clear in its commitment in overcoming it.”

“We’ve seen increasing talk about the need to focus house building only in specific areas but diluting the overarching target sends the wrong signal: this is a crisis that requires big and bold ambition.”

In addition, Fearon’s letter highlights how the expected end of the Help to Buy scheme later this year will reduce support for first-time buyers and how the increasing cost of living will make it even harder for people to afford a mortgage.

It also emphasises the positive impact house building can have on economic growth, with the housing targets expected to create £14.2 billion of economic activity and 260,000 additional jobs.

“We are entering a considerable period of economic uncertainty with average household incomes getting squeezed tighter than we’ve seen for decades. Supporting our housing infrastructure would create valuable growth opportunities for the country, create jobs and give hope for the millions of people unable to make home ownership a reality,” Fearon adds. 

Private rented sector

On the same day, the National Residential Landlords Association (NRLA) warned that the next prime minister “must address” the supply crisis in the private rented sector if homeownership ambitions are to become a reality.

The warning comes after survey data shows that the supply of homes to rent is likely to keep falling over the next year.

According to this research, by BVA-BDRC, 23% of landlords said they plan to cut the number of properties they let in the next 12 months, an increase of 20% compared to last year. 

In contrast, just 14% say they plan to increase the number of properties they let, unchanged since the same point last year and down four points since the first quarter this year. 

Against this picture of falling supply, 60% of landlords in England and Wales reported increased demand for rental housing in the second quarter of the year. This represents a large increase from the 39% of landlords who reported increased demand a year ago.

With the demand for rental housing outstripping supply, NRLA says official data has found that private rents across the UK rose by 2.8% in the year to May this year, the largest annual growth since January 2016.

NRLA says the survey supports recent evidence of the fall in supply from other organisations including the District Councils Network.

More than three-quarters (76%) of the councils have warned that a rise in landlords leaving the sector or converting properties to holiday lets has led to longer waits for council housing.

The NRLA is warning that the trend is a direct result of government policy and punitive tax increases since 2015, which have shrunk the private rented sector.

Since the Government began to restrict mortgage interest relief for landlords, NRLA explains that the number of private rented homes in England has fallen by over a quarter of a million. 

However, it notes that those providing holiday lets continue to enjoy full mortgage interest relief creating a distortion in favour of short-term housing over longer-term rentals.

NRLA urges the next prime minister “to end this hostility to landlords” and “take steps to encourage investment to meet the rising demand”.

Last month, the government published the Fairer Private Rented Sector White Paper with plans to ban Section 21 evictions and see the creation of an ombudsman for private renters.

The whitepaper aims to redress the balance between landlords and 4.4m tenants in the private rented sector (PRS).

The measures will form part of the Renters Reform Bill that was announced in the Queen’s Speech and will be introduced into Parliament later in 2022.

NRLA chief executive Ben Beadle says the next administration “needs to reset its plans for the sector”. 

“The last six years prove that it was nonsense to think that cutting the supply of rental housing when demand is so strong would make it easier for those saving for a home of their own.”

“Driving rents up just leaves tenants with less cash to save for a deposit. We need a strong and vibrant private rental market that meets the needs of those who rely on the flexibility it provides, those who need somewhere to live before becoming homeowners and those for whom the promise of social housing tomorrow provides cold comfort today,” Beadle adds.