Labour secured a majority in the general election, and their manifesto included several pledges that could affect the property market over the coming years. Read on to discover three pledges that could have an impact.
Labour has pledged to build 1.5 million new homes
Over the next five years, Labour has pledged to build 1.5 million new homes.
Demand for property outstripping supply has made the property market more favourable for sellers in recent decades. As housebuilding fell behind government targets, it played a role in property prices rising.
Indeed, in 2019, the Conservative manifesto contained a similar pledge – to build 300,000 homes a year by the mid-2020s. However, according to the BBC, the closest the government came to reaching this target was in 2019/20 when 248,591 new homes were built. In 2022/23, the figure was just under 235,000 a year.
Statistics from the Land Registry show the average house price increased from almost £175,000 at the start of 2019 to more than £231,000 in May 2024. That’s an increase of more than 30% in five years.
So, if Labour met its pledge, it could ease some of the pressure on the housing market and lead to a slower pace for property price growth.
First-time buyers have been promised more support
Aspiring first-time buyers face two key challenges – saving the sizeable deposit needed to buy a home and securing a mortgage. Under its “Freedom to Buy” pledge, Labour has promised support that could help more people get on the property ladder.
Freedom to Buy will be a mortgage guarantee scheme that aims to support first-time buyers who don’t have the traditional 10% deposits required to buy a home.
Details about the scheme aren’t available yet. However, the Labour Party has said it hopes its new measures would allow 80,000 more people to get on the property ladder.
Research from 2023, highlighted how difficult it can be for first-time buyers to save a deposit. According to a report in the Guardian, in 2023, it took the average first-time buyer almost a decade to save a house deposit, compared to 6.8 years in 2012.
Pledges to improve tenant protections could lead to more landlords selling
Even before the general election took place, surveys suggested a significant proportion of landlords intended to sell some or all of their property portfolio in 2024 and 2025.
Indeed, according to a survey carried out by Simply Business, a quarter of landlords planned to sell property. Now, some key Labour pledges could mean more consider exiting the market.
As part of their pledge to provide tenants with greater security, Labour plans to stop no-fault evictions. In the survey, more than half of landlords said they believe this legislation would cause more landlords to sell up.
The Labour Party also intends to extend “Awaab’s Law”. Under current legislation, this law requires social housing providers to investigate and fix reported health hazards within specified time frames. This obligation could now be extended to the private rental sector.
In addition, Labour has said they’ll empower tenants to “challenge unreasonable rent increases”.
Many landlords have experienced costs rising in the last three years as interest rates have climbed. According to This Is Money, at the end of 2023, landlords were paying 40% more mortgage interest than they were just a year earlier.
As a result, limiting rent increases could push more landlords to exit the market.
Landlords selling may be good news for aspiring homeowners who are in a position to buy now. However, it could also place pressure on the rental market and lead to prices rising even further, which in turn would make it even more difficult for renters to save a deposit if they want to buy a home.
Contact us to talk about your mortgage plans
If you plan to purchase property soon, we could help you secure a mortgage and offer guidance throughout the process. Whether you’re a first-time buyer looking for your first mortgage or a landlord who may benefit from a new deal, please contact us to speak to one of our team about your needs.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
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