As the UK transitions to a new government led by the Labour Party under Prime Minister Keir Starmer, many homeowners, buyers, renters, and investors are wondering how the changes might impact the housing market. The new government’s manifesto could significantly influence various aspects of the property sector, from housing policies and economic confidence to interest rates and taxation. Here’s what to expect in the coming months.
1. Housing Policies
The Labour government has outlined ambitious housing policies aimed at addressing the current market challenges. Key initiatives include:
Increasing Housing Supply: Labour plans to build more affordable homes, including social housing, to meet the high demand and low supply. Rachel Reeves, the new Chancellor, recently announced the return of compulsory housing targets for local authorities.
First-Time Buyers: Introduction of a “Freedom to Buy Scheme” to help first-time buyers save for deposits and purchase homes is part of the Labour manifesto. However, this is largely the same as the Mortgage Guarantee Scheme introduced by the last Conservative government.
Green Housing: Labour have committed to making homes more energy-efficient as part of their broader environmental goals.
2. Economic Confidence
The election result has brought a sense of stability with Labour’s large majority. This political stability is likely to boost economic confidence among buyers and investors, potentially stimulating market activity. However, the long-term impact will depend on how effectively the government implements its policies.
3. Interest Rates and Inflation
With inflation and interest rates currently high, the Labour government’s economic policies will be critical. They aim to control inflation through various fiscal measures and the Chancellor has promised to stick to strict financial rules, which may inspire market confidence, but could also restrict the growth of the UK economy. If they are successful, we could see lower interest rates in the future, making mortgages more affordable for homebuyers.
4. Taxation
Labour had been tight lipped about any potential increases to taxation before the election, however some mention of proposed changes have been made, including:
Stamp Duty: Possible revisions to make it easier for first-time buyers.
Capital Gains Tax: Adjustments that might impact property investors and landlords.
These changes could influence buying and selling decisions and overall market dynamics.
5. Regulation
We can expect significant regulatory changes, especially concerning landlord-tenant laws and housing standards:
Renters Reform Bill: Labour plans to revive and possibly enhance this bill, aiming to provide more security for renters and improve housing quality.
Planning Permissions: Labour have promised big changes to the often long winded and convoluted planning application laws in the UK. Efforts to streamline planning processes to accelerate housing development are welcomed, but expect strong push back from local communities which might hamper these ambitions.
6. Investment and Development
The new government promises increased investment in housing development, infrastructure projects, and urban regeneration schemes. These initiatives are intended to stimulate the housing market by creating more development opportunities and improving living conditions across the country.
7. Social and Affordable Housing
Labour’s commitment to social and affordable housing includes:
Increased Construction: Building more affordable and social housing to alleviate pressure on the private rental market. Exact numbers on social housing are currently unknown, but Labour have committed to building 1.5m homes in their first term.
Housing Support: Changes to legislation and enhanced support for low-income renters has been rumoured, potentially impacting the overall health of the rental market.
8. Rental Regulations
Changes to rental regulations are on the horizon, including:
Rent Caps: Rumours have swirled around about a Labour plan to cap rental increases, with a report from May 2024 supporting the idea. However, there are no concrete plans within the Labour manifesto for this.
Eviction Rules: More stringent rules on evictions to provide greater security for renters have been touted. According to the Labour Party’s manifesto, they will immediately abolish Section 21 ‘no fault’ evictions. This could effect the relationship between landlords and tenants and could make those entering the market more wary.
9. Landlord Taxes
Labour’s tax policies affecting landlords might include changes to:
Buy-to-Let Mortgage Interest: Possible adjustments to tax relief, impacting the profitability of rental properties.
Property Taxes: There are concerns that Labour might target tax increases away from earning and towards property – any modifications could affect landlords’ financial planning and investment decisions.
10. Supply of Rental Properties
Government incentives for increasing the availability of properties and converting commercial spaces into residential units could increase the availability of rental homes. Conversely, policies that discourage buy-to-let investments might reduce supply.
11. Economic Confidence and Employment
Labour’s broader economic policies aim to improve employment and wage growth, which could enhance renters’ ability to afford payments and reduce vacancy rates.
12. Housing Benefits and Support
Changes to housing benefits, such as Universal Credit, will directly impact tenants’ ability to pay rent. Supportive policies can help maintain a healthy letting market.
13. Urban Development and Infrastructure
Investment in urban development and infrastructure will make certain areas more attractive to renters, boosting demand in those locations through improved transport links and amenities.
Whatever Happens, We’re Here to Help You
The new Labour government has the potential to significantly shape the UK housing market. The outcome will influence various aspects of the property sector, from housing policies and economic confidence to taxation and rental regulations.
As a property owner, buyer, renter, or investor, it’s crucial to stay informed about the new government’s policies and consider how they may impact your specific situation. Having a trusted property expert by your side can help you navigate any challenges and seize opportunities that arise.
If you have any questions or concerns about how the new government may affect your property decisions, don’t hesitate to reach out to us. We’re here to provide guidance, support, and up-to-date valuations to help you make informed choices.
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