Only a party allergic to growth could turn a housing shortage into an ice age. Labour promised a building boom, yet has frozen every scheme solid with taxes before the ground has even had a chance to thaw. The result is a market locked in permafrost, projects frostbitten by land value capture, and a housing agenda that generates more inequality than homes.
Their initial “brownfield first” idea has taken a dark turn, making brownfield land financially untouchable. Proposed landfill tax reforms would impose a single flat rate. Where Conservatives at least toyed with targeted relief after listening to industry, Labour’s instinct has been to scrap relief altogether and slash exemptions. That hardly helps deliver new homes when the policy makes it cheaper to import landfill than to recycle it.
The consequences are obvious: anything north of the Midlands becomes unbuildable, schemes shunted onto greenfield, and delivery frozen before it can start. Developers and waste management firms warn the tax rise could surmount to be in the order of 3,000 per cent. In effect, acting like fiscal liquid nitrogen designed to preserve nothing but inertia.
The dream of homeownership on ice
Keir Starmer pledged Labour would be the party of homeownership. That dream has been put on ice with another triple whammy of poorly designed tax policies — each new levy adding another layer of frost.
First Time Buyers saw a deadline driven frenzy in April when the Stamp Duty Land Tax (SDLT) threshold was reduced. The short-term rush was followed by a slump in market confidence, with April’s RICS survey recording a sharp fall in sentiment. It is almost as if increasing the size of the entry ticket, adding thousands in upfront costs that can’t be mortgaged, may have been a bad idea. Second homes buyers have been hit with higher SDLT surcharges. Meanwhile Labour trumpets a mortgage guarantee scheme, the same type that has been shown not to increase homeownership levels.
And if taxing consumer sentiment into oblivion wasn’t enough, Labour are now flirting with the wholesale liquidation of the British middle class. How you say? By scrapping primary residence exemptions for Capital Gains Tax (CGT). A measure guaranteed to catch the majority of households in London and the South East. All coupled with an Annual Property Tax so large it will make stamp duty and council tax look like a parking ticket. In isolation this might have looked like reform. But instead it amounts to nothing less than Corbyn-lite expropriation: the Soviet habit of seizing assets, minus the honesty to admit it.
At present, residential sales are so anemic they barely muster half a sale per month. What more evidence do we need to see the housing market less like a patient in recovery, more like one in cryogenic storage. One that will be lucky to thaw within fifty years. Even Rightmove’s chief executive, Johan Svanstrom, has warned Labour’s proposals could reduce mobility and raise less revenue than the current system. That should give pause for a thought, given forecast transactions are already set to plunge more than 12 per cent year on year. And when transactions fall, housebuilding falls with them. Bakers don’t bake bread nobody will eat. Likewise, housebuilders won’t build for an imaginary market — though Labour appears happy to legislate for one.
Labour was founded to defend the working class. Yet today it betrays them. Manufacturing a class of downwardly mobile would-be buyers, priced out of the housing market by tax grabs on transactions and a slew of supply squeezing levies. This betrayal could not be starker. It comes at the very moment social housing need outpaces delivery by 12 to one. The party that once promised security now engineers exclusion. This is not just policy failure, but a moral abdication Britain simply cannot afford.
Labour’s obsession with affordable housing extractions only twists the knife. Section 106 contributions sit unspent, the Community Infrastructure Levy ratchets up with inflation, and developers drown in viability reviews. These devices are sold as redistributing value, but in reality function as adversarial theatre — a pantomime of fairness that masks the betrayal of those it was created to serve. It is the moral equivalent pointing at a frozen puddle and declaring you’ve solved the draught. A betrayal dressed up as salvation.
Ice-pick economics
The 2019 Land Value Capture changes provide the bleakest evidence yet. Savill’s Residential Development Land Index shows house prices rising sharply while land prices remain flat or falling, particularly in urban areas. Yet the left’s quasi-religious obsession with compulsory purchase and land value capture marches on. Another frosty five-year plan to bleed viability dry, rationing development uplift like bread in a Soviet winter. The fresh inquiry launched this year for even tougher reforms only proves how detached they are from reality. Such extensive land value capture proposals are not reform, they are capital punishment with an ice-pick, the last resort of a Corbyn-lite politburo that has frozen failure into doctrine.
The evidence is staring them in the face. Pre-development land values cannot absorb further punishment, as owners of existing uses simply won’t sell below that level. Yet Sadiq Khan has made matters icier still, clinging to late-stage viability reviews and piling on reems of regulation. Reviews without a cap are not viability tests, but gulags for capital. London’s housebuilding agenda is on its knees, frozen by ideology. Instead of a deliverable programme, Khan has pursued a political housing agenda that has entombed Britain’s capital city in an icebound ruin.
And then there are the mind boggling statements from the Chair of the Housing Select Committee, such as the claim “the cost of land is one of the main reasons that house prices are rising so rapidly”. It is enough to make your head spin. The statement betrays not just confusion but a total misunderstanding of how land markets actually function. Labour’s fixation with maximizing land value capture merely chisels the ransom into ice. Far from breaking up housebuilding monopolies, they are creating a frozen landscape where only the largest players can survive. These policies are sold as Robin Hood but in practice only fatten the Sheriff of Nottingham.
To call this capturing value for the public good is disingenuous. In reality it delivers a public bad, housebuilding market locked in permafrost so deep it kills everything beneath it. By squeezing land instead of reducing transaction costs, Labour ensures sites are delayed from coming forward, as hard-pressed values fall below tradable values. That delay pushes prices higher still, while erecting state-induced barriers that salt the earth and freeze the ground so no small builders can ever grow.
The result is clear for all in the industry and public to see. Labour’s land value capture does not expand public benefit, it expands monopoly. Actual land economists know this. Hong Kong’s experience is textbook case in point. Here in Broken Britain, Labour promises affordable homes, but the only thing it has shown any appetite for is capturing competition.
Overburdening developers simply collapses viability. In Sydney, government changes now account for nearly half the cost of a new home. And Labour is trudging down the same frozen path, one that will produce, not reduce, inequality. Land value capture mechanism are technically and politically challenging, but Labour pursues them with blind certainty. If the next government — which seems unlikely to be a Labour one — is serious about reform, it should look instead towards frameworks developed in Mexico City, which at least acknowledges both the design and the dangers. Until then, Labour’s course is clear, choke supply, drive out builders, and let inequality harden into black ice, conceived with little to no input from those who actually invest.
Icebreaker ignored
The one policy with the potential to crack the ice has been left to drift. Maxwell Marlow’s “New Build Break”, advanced by The YIMBY Initiative, is designed to speed up sales, the critical ingredient in any developer’s appraisal. A faster-moving market allows first-time buyers to step in, last-time buyers to step out, and developers to recycle capital into fresh projects. Yes there is an upfront cost. But the economics are clear. Increased profits generate higher capital gains, and new jobs deliver income tax receipts.
If Labour were serious about growth, this is the lever it would reach for. Yet tax breaks remain deeply unfashionable in a party besieged by a hundred Liz Truss’s on its backbenches, a party more comfortable with regulating and restricting than with building. They call it value capture for public good. What it delivers is public ruin, a housing market locked in an Arctic night where no dawn will ever come.
