Britain’s top homebuilders saw their stock prices rise on Friday morning after the Labour Party won the general election by a large margin. Investors were hopeful that Keir Starmer’s new government would move forward with plans to build 1.5 million new homes over the next five years.
The Labour Party’s June manifesto laid out their plans to fix Britain’s housing crisis. They said they would do this by bringing back mandatory house building targets and changing the U.K.’s planning system, which many people think makes it hard to build new homes.
In its platform, the Labour Party says, “Labour will get Britain building again, creating jobs across England and building 1.5 million new homes over the next parliament.” “Labour will build more social and affordable homes than at any time in the last ten years.”
It became clearer on Friday morning that the Labour Party has won a large majority in the U.K.’s House of Commons, which will allow it to keep the promises it made in its election platform. This caused shares in Britain’s FTSE-100 housebuilders to rise.
Barratt Developments BDEV, +2.44%, Britain’s largest home builder by revenue, saw its shares rise 4% on Friday morning. Shares in its competitors also rose, with Bellway BWY, +1.50% shares rising 3%, Taylor Wimpey TW, +2.82% shares rising 4%, and Persimmon PSN, +2.23% shares rising 5%.
Tony Codling and his team of analysts at RBC said that Labour’s huge win could now mean the “dawning of a new age” for the U.K.’s homebuilding industry if “promises turn into policy.”
RBC’s analysts said, “If Labour’s housing pledges become policies, we believe that the scene will be set for a period of significant growth in the supply of new homes.” They also said, “Policy changes made now should have a significant and far-reaching impact on the future.”
In their platform, the Labour Party says they want to let more new homes be built on “Green Belt” land by letting construction happen on less desirable pieces of the undeveloped land that surrounds Britain’s biggest cities and towns.
Analysts at RBC said that Bellway, Crest Nicholson CRST, +2.21%, Redrow RDW, +2.44%, and Taylor Wimpey all own more land than their competitors in local authorities with greenbelts. This means that they are likely to benefit the most from the opening up of “Green Belt” land.
In their platform, Labour also says they want to build “a new generation of new towns” across Britain, make the planning system simpler to speed up housebuilding, and bring back mandatory housing targets that force local governments to build more homes.
Analysts at RBC said that all of the U.K.’s homebuilders are likely to benefit from higher housing targets because “these targets (300,000 pa) are significantly higher than current volumes.”
In its platform, the Labour Party also says it will use planning rules to force home builders to build more affordable homes in their communities.
Analysts at RBC said that both Gleeson GLE, +3.02% and Vistry VTY, +3.42% currently meet more social housing requirements than what the current planning regime requires. This means that they are most likely to benefit from any higher requirements.
