What will Labour’s victory mean for our housing market?
With a landslide victory giving Labour carte blanche to implement its manifesto promises, what changes could we see?
We anticipate that housing will be prominent in the new Government’s mind to promote economic growth. Labour will be seeking to help 80,000 people across the next five years who can afford a mortgage but who are excluded from the housing market because of an inability to save a full 10% deposit. The “Freedom to Buy” mortgage guarantee scheme will effectively make the current Mortgage Guarantee Scheme that was due to expire in June 2025 permanent and will see the Government act as guarantor for home loans to encourage lenders to offer 5% deposit deals. However, even if this scheme is taken up to its fullest extent, it will only help 1.2% of the 6.7 million 15–34-year-olds which, according to the Office for National Statistics, lived with their parents in 2022. So, with a small proportion of those trapped living at home or renting being set to benefit from this scheme, and this policy not helping to resolve the overall shortage of housing, what else is on the cards?
Labour has said that it will re-introduce housing targets for individual local planning authorities, promising 1.5 million new homes over the next five years. However, we have had targets before which, no matter the prevailing party, have been missed. So, targets will be supplemented by policies prioritising brownfield land for development. Labour will also take a pragmatic approach to greenbelt as local authorities will be encouraged to identify potential grey-belt areas – greenbelt areas that are ugly and which could be developed, such as car parks. It is unclear how much grey-belt land could be unlocked from this review. In addition, wider constraints could hamper new schemes, such as a lack of grid capacity and the additional costs of new Biodiversity Net Gain requirements.
Unlocking potential development sites also requires planning constraints to be addressed. Labour has said that 300 more local planning officers will be funded, which equates to less than one new planning officer for each of our 337 local planning authorities. This policy may help with current vacancies but does not increase resources, and this pressure on resources will be compounded by Labour’s commitment to ensure that local plans are in place across all local authorities.
When new homes are built, Labour has said that it will ensure that first-time buyers will have first dibs on them. Labour also intends to work with housebuilders to give local people a right of first refusal on new houses ahead of international investors. This could help to reinvigorate local communities but not if local people remain priced out of their area. The current exemption from stamp duty land tax (SDLT) for first-time buyers purchasing homes priced up to £425,000 will help with affordability, but only until March 2025. Labour has also said that it will add 1% to the SDLT surcharge applied when overseas nationals buy UK residential property, taking the surcharge to 3%.
In terms of our existing housing stock, renters will be protected by a ban on no-fault evictions. In addition, improvements to housing will be achieved by extending Awaab’s Law, which requires landlords to investigate and fix reported health hazards within specified timeframes, to the private sector. There is also to be a new requirement for private rented homes to meet minimum energy efficiency standards by 2030. These proposals will likely increase costs for landlords and, if there remains a lack of private rented housing so that demand continues to outstrip supply, this may allow landlords to seek to recoup these additional costs via higher rents. However, Labour has thought of that as there will be new rights for renters to challenge unreasonable rent increases.
The certainty that comes with Labour’s victory should be good news for the market. In previous election years there has been a bounce in home-owner activity after an election, and there is no reason to doubt that this year will be any different when set against a backdrop of August’s eagerly anticipated interest rate cuts that have been hinted at by the Bank of England.
For more information regarding the Commercial Property sector and how the above might affect you and your business, please contact Beth Margetson at beth.margetson@mfgsolicitors.com, or call 0121 2367388 to speak to a member of our team.
