What Does a Labour Government Mean for The Residential Property Market?

Now that a few months have passed since Labour’s landslide victory in the General Election in May, many are wondering what the potential changes are, with regards to the property market.

We have set out below a few key points on what has happened so far, and what can be expected to come in the future.

Stamp Duty

Labour has said the nil rate band for stamp duty will revert back to £300,000 from the current temporary level of £425,000 in April 2025, which is not the news first-time buyers will want to hear.

This could push first-time buyers into paying stamp duty, particularly around the South East of England and London where house prices are typically above £300,000.

Labour also intends to increase the already higher stamp duty rate on purchases of residential property by non-UK residents by 1%.

House building/ House Prices

Research by estate agency Jackson-Stops discovered that homebuyers believe a Labour rather than Conservative government would make homes more affordable.

That assumes that the government can get round green belt issues and tough planning departments.

Labour aims to be successful in making homes more affordable and building more housing through their Freedom to Buy scheme

For an in-depth read of what this scheme entails click here: https://labour.org.uk/updates/stories/labour-party-homes-policy-how-we-will-keep-mortgage-rates-low-and-help-first-time-buyers-with-a-new-freedom-to-buy-scheme/

In essence, the scheme should:

• Aim to build 1.5 million homes under a new planning reform.
• Provide a Freedom to Buy scheme to help people secure a mortgage.
• Provide exclusive first pick for local people on new developments, which will prioritise local people over international investors.
• Tax foreign buyers to fund planning officers: by taxing foreign buyers who are pricing out young people, new planning officers can be funded to approve homes which the next generation desperately need.
• Reform compulsory purchase rules to get homes built.

We do not have the in-depth details as to how this will be achieved as yet – but we will continue to monitor progress and provide updates as they come.

Rental Market – Labours Renters’ Rights Bill

The Renters Reform Bill, currently in the 2^nd stage of reading in the House of Lords, is on the verge of being passed.

This Bill will strive to “balance the playing field” between landlords and renters in the words of Housing and Planning Minister Matthew Pennycock. He also stated that renters have been living in ‘substandard’ properties for some time now and this bill will look to eradicate the ‘injustice’ which renters have faced for a number of years.

Some key aspects of the Bill are highlighted below:

• Labour will be looking to protect tenants by implementing Awaab’s Law into the private rental sector, after the tragic death of toddler Awaab Ishak – this will prompt landlords into investigation and remediation of reported health hazards within specified timeframes (especially mould, asbestos and damp issues).
• Labour has already vowed prior to the General Election to scrap section 21 notices, known as ‘no-fault’ evictions, under the Renters Reform Bill. This is to prevent private renters being exploited and discriminated against, which Deputy Prime Minister Angela Rayner reiterated as she said “renters have been let down for too long and too many are stuck in disgraceful conditions, powerless to act because of the threat of a retaliatory eviction hanging over them”.
• All private rental properties will need to be rated at least EPC C by 2030.
• They will eradicate prejudice and discrimination against those on benefits or with children when granting tenancies.
• They will allow tenants the right to request to keep a pet – which a Landlord cannot unreasonably refuse.
• Landlords and agents will have to publish their desired rent to prevent Landlords from inciting bidding wars and driving up the rent.

For an in-depth read of what the entire Bill is constructed of – please click here:

https://bills.parliament.uk/publications/55325/documents/4782

Landlords are recommended to keep up to date with any further details of the reforms as it progresses through parliament to ensure they are compliant and not in breach of the new legislation.

However, there are a rising number of landlords who have since begun serving Section 21 notices, as they pre-emptively look to protect their interests before any legislative changes take effect, with some hoping to secure their rental income or prepare their properties for sale.

This goes hand in hand with the slowdown in rental growth – which has caused many landlords to question whether buy-to-let is still worth their time.

It has yet to be seen how quickly this ‘balance’ between landlord and renters can be achieved or indeed whether rapid demand for rental properties can keep up with the chronic shortage of ones readily available, with countless landlords predicted to step away from the market.

We will ultimately have to wait and see what proposals in the manifesto regarding housing will be achieved, but if Labour want to be successful in achieving their goals, a long-term and strategic approach will be required.

If you would like any more information relating to this article please feel free to contact me by telephone on 020 8221 8037, by email or visit my profile.

This article is not legal advice; it is intended to provide information of general interest about current legal issues.