At the time of writing, the Labour Party conference is well underway. With the housing and lending sectors being equally as keen to get a steer on what the future may hold after a regime change, we take the opportunity in this week's blog to unpack some of the latest promises made, have another look at some of the existing problems we face, and reiterate our believe in the critical role P2P and alternative lending will play in rebuilding Britain's domestic housing infrastructure. Invest & Fund, as always, remains politically neutral when mulling over these issues.
One of the core announcements from Rachel Reeves's speech at the conference was the introduction of planning reforms aimed at rebooting Britain's antiquated planning system; this is something we have called for ourselves as what we believe should be a top priority in the wish list if we are working off the assumption that increasing supply solves all woes. As politically expected, the blame is laid wholly at the feet of the incumbent party: "The Tories would have you believe we can't build anything anymore. In fact, the single biggest obstacle to building infrastructure, to investment and to growth in this country is the Conservative Party itself." however, what wasn't particularly clear was the nitty-gritty of the policies involved, and there may be a reason for that.
One of the previous policies mooted to speed up Britain's need to build was providing local development authorities with the rights to buy land using compulsory purchase orders, and then that land could theoretically be sold off at fair or discount value to smaller developers or used to build local authority housing. The details are still vague on how this will work. Still, at its essence, the fields will revert to agricultural value, and the planning uplift value or fair-weather value gained directly from the planning consent, will be removed. Theoretically, this targets land bankers and people hoarding land to profit from speculation rather than building. The issue is the landowners may fight this; under the Acquisition of Land Act 1981, many may have grounds to fight the purchases in the High Court should they wish, and given the wealth and resources at the disposal of some of the owners, this wouldn't be an easy process, unless the entire way we value land is ripped up alongside the planning system, and everything reverts to a more state orientated approach. With that in mind, we are suddenly discussing wealth redistribution and 'big state', not precisely vote winners in an election run-up.
The second policy will be a central topic of fierce debate in the next election, building on the green belt. At any other point in electoral history, if one party were to announce their intention to build on the green belt, it would be an open goal for the opposing party to rally its exasperated pastoral electorate to their cause; however, in this instance, it does raise the point, if we want to build more houses on a scale never seen before, where will they go? When you look at the details of what are admittedly indistinct aspirations, the plan, so to speak, would be to target abandoned agricultural infrastructure sites, car parks, and disused industrial sheds that all exist inside the green belt, remnants of an agricultural industry long since moved overseas, it wouldn't be to build a tower block on the croft behind the village hall. However, again, this will be a tough sell, convincing people that will be part of the next election.
The third and final policy we have eyes on at this stage was announcing a unit specifically designed to enforce affordable housing obligations, including Section 106 agreements - cracking down on companies negotiating down the number of affordable homes they build via a leverage position of "if you don't lower the number, we can't build anyway". Hence, a smaller amount is better than none - a cynical negotiation tactic. The issue with this argument, though, especially in the smaller developer sector, is that schemes are often stretched far tighter than people realise, and this isn't coming from a position of greed; it's coming from a place of genuine financial viability.
So how will the alternative lending sector fit into these plans, should this be the future path the country decides on, and what would we like to see? Suppose we are solely focusing on traditional tropes. In that case, Labour governments historically have been parties of increased spending. We know from our position working with the SME development sector that to bolster the housing supply, there will need to be a significant level of financial support to go in alongside the private sector. What those schemes and projects look like is yet to be seen. Still, there will need to be strong alliances with private sector lending and vehicles such as P2P to be the conduit between the state and actors on the ground; one of the lessons an incoming party will learn quickly is the key to success is effective distribution via knowledgeable private sector counterparties who have relationships already in place with end users, to streamline the process and not to end this blog with further sloganeering, keep Britain building.
Invest & Fund has returned over £157 million of capital and interest to lenders with zero losses, showing the rigour that governs our business.
To take maximum advantage of this robust and exciting asset class, please visit www.investandfund.com or contact Shaheel at firstname.lastname@example.org.
Don't invest unless you're prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Take 2 minutes to learn more.