What will Labour do for the housing market?

Several factors including inflation, the increased cost of borrowing and skill shortages have caused a decline in construction output in recent years, putting pressure on property and construction businesses. It’s well known that the UK has a shortage of good housing stock available, which is something Labour has said they will address.

Since the election result, UK housebuilding businesses have risen on the FTSE as investors welcome the news that Labour plan to build one and a half million houses over the next five years.

Labour has stated it is firmly committed to preserving the green belt. Without changing its purpose or general extent, Labour will prioritise the release of lower quality ‘grey belt’ land and introduce ‘golden rules’ to ensure development benefits both communities and nature.

In Somerset, development has previously been challenging due to the phosphate crisis, and the green belt around Bristol and Bath.

With new land opening up, there will be opportunity for landowners, developers and those working in construction to build more residential homes.

Labour has also said that all private rental properties must have an EPC rating of C by 2030, and they have a national ‘Warm Homes Plan’. This could mean opportunities for those working in the property and construction industry to retrofit homes to upgrade their efficiency.

Labour plans to build one and a half million new homes within the first five years of a Labour government.

They have stated one thing they will do is overhaul planning restrictions, which The National Federation of Builders has said is ‘the first step to restoring new housing supply, supporting builders and stopping hundreds of millions being wasted on bureaucracy.’

However, Labour has  also said that they want ‘grey belt’ areas to have at least 50% affordable housing, and houses let for below market rent – which may discourage developers and investors who will be looking to build properties on which they can make a reasonable profit.

Labour has said that the nil rate band for stamp duty will revert to £300k from the current level of £425k for first-time buyers, and the nil rate threshold for everyone else from £250k to £125k. This, coupled with the recent abolition of multiple dwellings relief, makes Stamp Duty Land Tax an important consideration for home buyers.

Labour is unlikely to reverse the more stringent regulations brought in for private landlords under the Tory government, and with increasing property standards comes increased costs and an impact on profitability.

However, Labour has said they will take steps to keep mortgage rates as low as possible. The increase in rates in recent years had led to many buy-to-let landlords being in an annual loss making position, with many choosing to sell their properties. A decrease in mortgage rates will also minimise the impact of the tax restrictions on mortgage interest relief, which would be a welcome change for investors.

Labour has also pledged to ‘empower tenants to challenge unreasonable rent increases’ – but what this will mean in practise remains to be seen.

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