Britain woke up on Friday to change of government. Plenty of change is expected across the board, but what will Labour's General Election victory mean for the housing market? Annabel Dixon takes a look, speaking to experts from across the world of property.
In a result that was widely expected in recent weeks, Labour has won the 2024 General Election. Though the result was no surprise, the evening provided plenty of drama as the scale of the result became clear: with over 400 seats, Sir Keir Starmer’s majority will allow him and his new government almost unfettered power.
It’s the culmination of a six-week General Election campaign that has prompted some home movers to pause for thought.
‘Expect stability and confidence’
Tim Bannister, Rightmove’s property expert, says that the ‘certainty of having the next government in place will be good for the market’. He believes that there could be a slight bounce in housing market activity in the short-term, particularly with the possibility of a cut to interest rates on the horizon and lowering mortgage rates.
‘We now have certainty, and with it we can expect a degree of stability and confidence,’ agrees Sam Butler of Butler Sherborn, a Cotswolds property specialist. ‘For those of us who have lived through a good number of elections, and experienced the property markets under Labour, we know that property can perform better than some may predict under its administration.’
‘The biggest boost to affordable housing in a generation’
With a strong majority, Labour has scope to crack on with its pledges. So what could be in store for the housing market? Well, if you’re not already familiar with Labour’s manifesto, here’s some of its key housing commitments…
New homes — and lots of them. The party has vowed to build 1.5 million homes, including a new generation of towns, over the next parliament. It wants to overhaul the planning system, take a brownfield-first approach and release lower quality ‘grey belt’ land for development.
Nick Leeming, chairman of Jackson-Stops, says that Labour’s pledge to create 1.5 million new homes ‘would be the biggest boost to affordable housing in a generation’. But he cautions that ‘such an ambitious target will take significant time, resource and support to achieve’.
Karen Noye, mortgage expert at Quilter, echoes his views: ‘Such ambitious housing targets have historically been challenging to meet, and this is likely to be no different. Building 1.5 million homes within five years is an extremely tall order which will require significant resources, substantial investment and careful planning.’
Still, if achieved, this tranche of new homes could make housing ‘more accessible and affordable’, Noye adds.
Fresh help for first-time buyers
Labour has got first-time buyers in its sights too, with ambitions to help 80,000 aspiring homeowners onto the housing ladder. It plans to give first-time buyers first dibs on new homes and introduce a permanent mortgage guarantee scheme.
Noye points out that the current mortgage guarantee scheme has achieved ‘very little take-up since launch as it does not tackle the fundamental issue of high property prices relative to average incomes’.
Bannister adds: ‘Whilst a permanent mortgage guarantee scheme provides the certainty that this option will be available, from our research we can see that only a small number of first-time buyers are likely to benefit from it’.
His suggestions? ‘Making the existing stamp duty thresholds permanent for first-time buyers would be a start, and then there is an opportunity to look at innovative solutions to help first-time buyers with both their deposit, and being able to borrow enough from a lender in the longer term.’
The tax factor: Non-doms, Stamp Duty and VAT on private schools
There are also potential tax changes in the pipeline. They include proposals to increase stamp duty for non-UK residents buying residential property, scrap non-dom status, and end the use of offshore trusts to avoid inheritance tax.
Matt Thompson, head of sales at Chestertons, believes the plans to increase the stamp duty rate is unlikely to have a major impact on London’s property market.
He explains: ‘The capital remains a global city that attracts international professionals and investors who will simply adapt their property search by lowering their budget or by buying in a part of the city where they get more property for their money.’
There’s also Labour’s desire to abolish tax breaks for private schools. The party’s pledge to levy VAT on schools will ‘inevitably impact on the property market by boosting demand for properties in close proximity to good state schools,’ points out Nigel Bishop of Recoco Property Search. ‘Properties in these catchment areas can already ask a 20% premium. A politically-caused boost in demand for such homes will create an even more competitive market for buyers.’
Butler says: ‘Undoubtedly, there will be initial concerns in respect of increases in stamp duty, Capital Gains Tax and Inheritance Tax, and only after The King’s Speech on 17th July should matters become clearer.’
The party also wants to revamp the private rented sector, something the Conservatives attempted to do with its Renters (Reform) Bill.
So it’s over to Tomer Aboody, director of specialist lender MT Finance, for the final word: ‘The Labour government has its work cut out. Buyers, sellers and lenders all need reassurance and stability alongside proactive policies. I hope this is what we will receive from the new parliament.’
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