What could a Labour government mean for the housing market?

Caz Blake-Symes • July 11, 2024

Adapted from a Rightmove Property News article 5 July 2024

This week Rightmove spoke exclusively to Sir Keir Starmer about Labour’s housing promises, asking him how they would help home-movers. You can read what he said here.


Now that a Labour government has been confirmed, we take a closer look at what they’ve pledged to do for the housing market.


Building new homes

Labour plan to build 1.5 million homes over the next five years, and update the National Policy Planning Framework.

 

Stamp duty

First-time buyers currently pay no stamp duty on homes priced up to £425,000. However, this relief is due to end next year. Previously, the threshold for first-time buyers to pay stamp duty was set at £300,000. Labour plan to keep the current stamp duty exemption for first-time buyers that’s in place, but haven’t committed to extending it beyond the end of March 2025 expiry date.

 

Help for renters

Labour has pledged to ban no-fault evictions. They are also looking to have ‘Awaab’s law’ – which currently applies to social housing only – apply to the private rental sector. This requires landlords to investigate and fix reported health hazards within specified timeframes.

They’ve also pledged to ‘empower tenants to challenge unreasonable rent increases’.

Help for first-time buyers

Labour hope to help 80,000 more people get onto the property ladder with a comprehensive mortgage guarantee scheme, as well as offering ‘first dibs’ to locals looking to buy their first home in a new development.

 

Mortgages

Labour has pledged a ‘Freedom to Buy’ mortgage guarantee scheme, aimed at first-time buyers with smaller deposits.

While not a pledge in itself, Labour have also outlined a commitment to keeping mortgage rates ‘as low as possible’.

 

Making homes greener

Labour has said that all private rental properties will need to be rated EPC C by 2030. It’s worth noting that they’ve said no one will be forced to remove their old gas boiler as part of these plans.

They also plan to deliver a national Warm Homes Plan over a decade which could apply to up to 5 million homes, with the aim to eliminate fuel poverty by 2030.


Other housing legislation

Labour has pledged to reform the leasehold system, making commonhold the default tenure on new-build flats, and banning new leasehold flats.

 

Commenting on the election result, Rightmove’s property expert Tim Bannister, said: “The certainty of having the next government in place will be good for the market, and we wait to see the housing policies that are prioritised. We can see in our data that in previous election years, there has been a slight bounce in home-mover activity after an election has taken place – so the same could happen this year in the short term, particularly against a background of a potential Bank Rate cut on the horizon, and lowering mortgage rates.


“It is crucial that the government considers the impact of any new policies on the wider market, as a policy designed with one group in mind often has knock-on implications for another group of home-movers. Earlier this week Rightmove quizzed Keir Starmer about what he would do to help housing, and it’s encouraging to see that Labour’s manifesto focused on building more homes and planning reform. Creating more homes for sale and for rent quickly, whilst maintaining quality is a pressing issue, to ensure there are more homes to meet the demand.

“We think there is an opportunity to go further in giving support to first-time buyers. 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. 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.”


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Boost to buying power from changes to affordability tests

By Caz Blake-Symes • May 1, 2025
Adapted from Zoopla’s April 2025 Housing report I mage: The analysis uses average house prices from the house price index and for first-time buyers to assess mortgage payments at different mortgage rates applied to a 30- year mortgage, at different loan-to-values. One emerging trend that we expect to positively support market activity in the coming months is a relaxation in how lenders assess the affordability of new mortgages. While buyers focus on the mortgage rate they will pay, lenders also check whether the borrower can afford a 'stressed mortgage rate' at a higher level than the borrower will pay. ​ While the average 5-year fixed rate mortgage is around 4.5% today, many lenders are currently 'stress testing' affordability at 8-9%. This makes it harder to secure a mortgage without a large deposit. If average mortgage stress rates were to return to pre-2022 levels of 6.5% to 7%, this would deliver a 15-20% boost to buying power. ​ An average first-time buyer with mortgage repayments of £1,020pcm at a 4.5% mortgage rate would typically have to prove they could afford monthly repayments of £1,550pcm at an 8.5% stress rate. If the stress testing is relaxed to 6.5%, repayments would fall to £1,275pcm, boosting buying power. It's a similar pattern for the average homeowner, while the actual impact will vary by lender and type of borrower. ​ This change would consequently supporting demand and sales volumes, helping to clear the stock of homes for sale, rather than boosting house prices. Other existing rules and regulations that remain in place will continue to impact the availability of mortgage finance.  Comment from Phil Clark “This is potentially very exciting news and will give borrowers a greater choice of products if these rules are relaxed. Regardless of whether you are a First-time Buyer, Looking to move, remortgage or invest in property, there are a huge range of competitive mortgage deals on the market. I will be delighted to discuss your specific requirements and offer you the most suitable deal!” Please call Phil on 0117 3251511 or email info@swmortgages.com For more information about the Mortgage and Protection products we offer, please visit www.bristolmortgagesonline.com Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.

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