What could a Labour government mean for the housing market?

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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