With the Labour Party emerging victorious in the recent UK general election on July 4th, the property market is set to experience significant changes driven by their ambitious housing policies. As the nation now anticipates the implementation of Labour’s comprehensive housing plan, it is essential to understand the potential impacts on homeownership, the rental market, and overall property development.
This article delves into Labour’s housebuilding targets, their support for renters and first-time buyers, and the anticipated reforms in the housing sector, providing insights into what these changes mean for homeowners, investors, and renters alike.
Please note, this article contains no opinion on the winning government. This article is purely informative. As such, links to our research are detailed throughout.
Election Impact on House Prices
Historical data suggests that general elections have a notable impact on house prices. According to a report by Compare My Move, house prices typically rise by an average of 4.6% in the 12 months following an election. This trend is even more pronounced when the election results in a majority government, with house prices rising by an average of 7.4% compared to just 0.5% in a hung parliament. On average, a Labour government sees a slightly larger rise, with house prices growing 1.1% more than under a Conservative government.
One of the critical factors influencing this trend is market confidence. A majority government often provides a sense of stability and predictability, encouraging investment in the property market. With Labour securing a majority, we might see a similar uptick in house prices, benefiting homeowners and investors alike.
Labour’s Housebuilding Plan: What It Means for the Property Market
The prospect of a Labour government brings with it significant promises for the property market, notably the ambitious target of building one and a half million new homes within the first five years of their term. This initiative, detailed in Labour’s housing plan, aims to address the chronic housing shortage and ensure that everyone has access to affordable and quality homes.
Boosting Housebuilding Targets
Labour’s housebuilding plan is not just about numbers; it’s about creating sustainable communities. By pledging to build a new generation of towns and fostering collaboration between different tiers of local authorities, Labour aims to streamline housing development across regional boundaries. This strategy is designed to address both urban and rural housing needs, ensuring balanced growth.
A significant bottleneck in housing development has been the lack of planning officers in local authorities. To combat this, Labour plans to increase the stamp duty surcharge on purchases by non-UK residents by 1%. While the additional £40 million raised may seem modest in fiscal terms, it is projected to be sufficient to hire 300 new planning officers, costing around £20 million. This move could significantly expedite the planning and approval process, making it easier to meet the ambitious housebuilding targets.
Support for Renters and First-Time Buyers
Labour’s housing policy also focuses on supporting renters and first-time buyers. The proposed extension of Awaab’s Law to the private rented sector aims to ensure that landlords address urgent repairs promptly, improving living conditions for many tenants.
For first-time buyers, Labour has pledged to help 80,000 young people onto the housing ladder through its ‘Freedom to Buy’ scheme. This initiative would extend the existing mortgage guarantee scheme, assisting those who can afford mortgage repayments but struggle to save for a deposit. This support could be a game-changer for many young people dreaming of homeownership.
Reforms in the Rental Market
Labour’s plans to reform the rental market are extensive and geared towards enhancing tenant rights and protections. One of the most significant changes would be the immediate abolition of section 21 ‘no fault’ evictions. This policy change would provide tenants with greater security and stability, knowing they cannot be evicted without a valid reason.
Additionally, Labour intends to give tenants the power to challenge unreasonable rent hikes, enforce minimum energy efficiency standards by 2030, and offer greater protections against exploitation and discrimination. These measures aim to create a fairer, more transparent rental market where tenants feel valued and secure.
Leasehold and Commonhold Reforms
Labour also plans to tackle issues surrounding leasehold properties. The party has committed to enacting the Law Commission’s recommendations on enfranchisement, the right to manage, and commonhold. This includes banning new leasehold flats and ensuring commonhold becomes the default for apartment blocks. Furthermore, Labour intends to crack down on unregulated and unaffordable ground rents and maintenance charges, addressing the problem of ‘fleecehold’ private housing estates.
Conclusion
Labour’s comprehensive housing plan represents a bold vision for the future of the UK property market. With its focus on increasing housing supply, supporting renters and first-time buyers, and implementing significant reforms, the plan aims to create a more equitable and sustainable housing landscape. For property investors, homeowners, and renters alike, these proposed changes could usher in a new era of stability and opportunity in the housing market.
As always, staying informed and prepared is crucial in navigating these potential changes. Whether you’re looking to buy, sell, or rent, understanding the implications of Labour’s housing policies will help you make the best decisions for your property journey; and we’re here to help you get to where you want to be.
Jacobs Steel are estate and letting agents with offices in Worthing, Findon, Lancing, Shoreham-by-Sea and Hove. We will guide you through the entire process, communicating with you every step of the way.
Looking to sell or let your property? Get in touch, book your valuation or get an instant online valuation now.
Notes/Research:
Labour’s housebuilding targets will see one and a half million new homes built within the first five years of a Labour government: https://labour.org.uk/updates/stories/labours-housing-plan-how-well-protect-our-natural-spaces-and-free-up-grey-belt-land-for-building/
Alongside these pledges, it has committed to building another generation of new towns, and finding new ways in which different tiers of local authority can work together on housing across their boundaries.
data from Compare My Move looks at house price changes after the last seven general elections. The report shows that house prices rise by an average of 4.6% in the 12 months immediately after an election.
https://www.comparemymove.com/press-and-media/general-election-2024
Compare My Move states, “One of the biggest factors of an election regarding house prices that we have seen since 2005 is whether or not the winning party has won by a majority. When a party wins by a majority house prices rise on average 6.9% more than if the election ends on a hung parliament.”
Labour has pledged to get 80,000 young people onto the housing ladder over the next five years through a ‘Freedom to Buy’ scheme: https://moneyweek.com/investments/property/labour-freedom-to-buy-pledge-housing-ladder
This would extend the existing mortgage guarantee scheme, which is designed to help people who can’t save enough for a deposit but can afford mortgage repayments
Labour would “immediately” abolish section 21 ‘no fault’ evictions, if it gets elected on 4 July. The party says it will also give tenants the power to challenge unreasonable rent hikes, force landlords to implement minimum energy efficiency standards by 2030, and give renters greater protections against exploitation and discrimination. https://moneyweek.com/investments/property/labour-manifesto-property-2024-general-election
It says it will enact the Law Commission’s recommendations for enfranchisement, right to manage and commonhold. In terms of its more immediate priorities, it says it will set out to ban new leasehold flats and ensure commonhold is the default for apartment blocks. The party also wants to crack down on “unregulated and unaffordable” ground rents and maintenance charges, as well as end ‘fleecehold’ private housing estates.