Labour Party’s Housing Policies

Key policies proposed by Labour include:

  • Increasing the supply of affordable housing: Labour aims to boost the construction of affordable homes, including new social housing, to provide high-quality, low-cost homes for those priced out of the private market.
  • Reforming the rental sector: Proposals include improving tenants’ rights, implementing rent controls in certain areas, and encouraging secure tenancies.
  • Enhanced regulation of the housing market: Following incidents such as the Grenfell Tower fire, Labour intends to impose strict regulations on housing quality and safety.
  • Tax reforms affecting property: Property-related taxes may include council tax reforms and the introduction of a land value tax to discourage speculative property investments.
  • Support for first-time buyers: Labour plans to assist first-time buyers with help-to-buy schemes and preferential access to new-build homes.

 

Labour pledged to build 1.5 million new homes over the next five years, which would mean building 300,000 properties every year. However, achieving this target may be tricky, particularly given the recent slowdown in new housing projects and planning permissions granted.

Planning approvals for new homes in England plunged to a decade-low last year. According to Glenigan and the HBF, just 231,215 homes were given the green light.

With some permissions not followed through on, this suggests a dip in the number of new homes built in the coming years, regardless of who’s in government. This could make finding a new home even more challenging, especially for first-time buyers and those on lower incomes.

The number of new homes built is not down to planning permission – it is about how many people want to buy them! The government doesn’t actually build houses.

Labour promises to change the rules around planning and housing targets, but ultimately, it is the housebuilders who decide how many homes to put up for sale. And they will only do it if they think people will want to buy them at a profit.

Could we see fewer new homes in the future? If the economy slows down, people might not be keen on buying. But if things pick up again, so could housebuilding!

House Prices and Stamp Duty

Labour has stated that the stamp duty nil rate band will revert to £300,000 from £425,000 in April 2025, which is not good news for first-time buyers. However, Labour says it will make securing a deposit easier under the Freedom to Buy scheme.

According to the Labour manifesto, overseas buyers will be expected to pay an extra 1 per cent stamp duty surcharge. Property experts are concerned about how this will impact their plans for wealth creation by attracting or deterring overseas capital and investment. However, these changes to stamp duty are not expected to significantly impact property prices or transaction volumes.

Further changes to mortgage rates are expected to have a greater impact on the housing market this year than changes to stamp duty or the Freedom to Buy scheme.

Overall, property price forecasts for the UK, Greater London, prime outer London, and the prime Country markets remain unchanged. These sectors, typically less susceptible to political fluctuations, tend to follow broader economic trends.

 

Investment Climate

The UK’s prime property market, a symbol of wealth and economic power, continues to be a hot topic in 2024. London and other major cities are home to this high-value sector, attracting investors from around the globe.

This market is more than just an economic indicator. It reflects the UK’s social and economic divides, with soaring prices raising concerns about affordability and inequality. These issues are central to the political debate, with Labour promising policies to tackle these disparities.

Despite Brexit-related uncertainty, the market has bounced back. A weak pound has attracted foreign investment, and limited high-quality properties have kept prices high.

Labour’s focus remains on social housing, affordability, and renters’ rights. It advocates for greater government intervention to create a fairer housing landscape.

Impact on Landlords and Tenants

Landlords and tenants will be keeping a keen eye on the lettings market this year, especially if Labour introduces policies that make it financially challenging for anyone to become or remain a landlord. Reducing rental property numbers will see a more competitive rental market and higher tenant rents.

The Labour Party have pledged to move forward with the Renter’s Reform Bill, which was abandoned due to the general election being called. The party said it would end no-fault evictions but understands that assurances must be made first.

In an interview with LBC, Angela Rayner said: “That’s a simplistic way of looking at it. We also need to ensure the court system is working and that we have a fair balance between landlords and renters.”

Landlords and tenants will be eager to see new legislation, especially any decisions for or against the introduction of rent control.

 

Taxation and Regulation

Because Labour has already ruled out using a formal ‘Wealth Tax,’ the party will be expected to raise tax revenues in other ways. For example, private schools will likely be charged VAT starting in September 2025.

Labour has not ruled out increasing capital gains Tax, which may be off-putting for landlords. However, this won’t apply to primary residences. Property experts have mixed views over whether we will see changes to Capital Gains Tax in the party’s first budget. Labour party frontbenchers have said there are no plans to raise CGT during many interviews, so this is highly unlikely. Changes to inheritance tax have not been ruled out.

 

Conclusion

Property experts believe the Labour Party moved into office at a fortunate time. The party is inheriting an economy that is building momentum. This could justify a base rate cut and allow the Office for Budget Responsibility to reduce its deficit forecasts. This improving economic climate may reduce the need for Labour to introduce tax rises.

We could see at least one rate cut of 0.25 per cent before December, which would put downward pressure on mortgage rates following the summer and likely boost the housing market.

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