Now we know Labour will be taking the political reigns over government and hailing in a new era of policies and promises, particularly in the housing and property markets, what does this manifesto outline in their plans to address the chronic issues of housing affordability, renters’ rights and homelessness?
IMPACT OF THE GENERAL ELECTION ON THE UK PROPERTY MARKET:
Despite the anticipation and uncertainty of the general election, the UK property market has shown resilience and strength. For June, UK house prices for homes sold subject to contract (SSTC) remained sturdy at £348/sq.ft, a 5.1% increase compared to December of 2023. So, from the outset, the UK housing market is still showing growth even with political change.
The volume of property listings has also seen a notable rise, with 7.5% more homes on the market compared to the same period between 2017-2020. This suggests homeowners are remaining confident in the market, despite the recent election.
To summarise, the general election has not significantly impacted the UK property market. With house prices continuing to rise, and listings and sales still increasing, the market remains strong and provides a positive outlook for the future.
ADDRESSING THE HOUSING SHORTAGE:
Labour has set an ambitious target of building at least 150,000 council and social homes each year. This move aims to tackle the severe shortage of affordable homes in the UK property market. Many of these new homes will be council homes, providing an affordable option for families and individuals. However, there is a severe lack of clarity on where the finances to fund these extensive development projects will come from. The lack of any idea where this £18bn a year will come from is casting doubt on the ability to achieve such an ambitious goal.
ENHANCING RENTERS’ RIGHTS:
With Labour’s plan to abolish Section 21 evictions, which currently allows landlords to evict tenants without a reason, renters can expect more stability. However, this change will only be implemented once the government has reformed the courts, aiming to provide more security for renters. This legal proceeding could take years. Additionally, Labour is seeking to introduce rent control caps to eliminate excessive rent hikes, which has proven contentious in other markets. Historical data from Scotland and worldwide indicate that rent controls often lead to decreased investment in rental properties and a reduction in the overall quality of available housing, causing more harm than good.
Another significant change for the rental sector is the creation of a national landlord register. An initiative aiming to improve the standards and accountability in the private rental sector, ensuring landlords maintain their property to a decent standard.
SUPPORTING FIRST TIME BUYERS (FTB):
Labour’s manifesto also promises to support first-time buyers by reducing the barriers to homeownership. This includes increasing the availability of affordable housing and offering financial incentives. Such measures could stimulate market activity and make it easier for FTB’s to get their first home, although the specifics of these policies remain vague.
PROMOTING HOUSING STANDARDS AND SUSTAINABILITY:
To ensure that homes provide a safe and decent living environment, Labour plans to enforce a Decent Homes Standard.
This standard will focus on improving safety, decency and energy efficiency, setting clear criteria for what constitutes a ‘decent’ home. Additionally, millions of homes will be retrofitted with measures designed to enhance energy efficiency, reduce CO2 emissions and lower energy bills. The initiative reflects and strong commitment to sustainability, which could also create new opportunities and challenges for the property market in Bath.
REGULATING THE HOUSING MARKET:
Labour also intends to reform land and property taxes to ensure fairness and efficiency in the housing markets. Additionally, they aim to curb property speculation and reduce the number of vacant homes by imposing higher taxes on empty properties. These measures could stabilise the market and make housing accessible to more people.
IMPLICATIONS FOR BATH LANDLORDS AND HOMEOWNERS:
These policies will bring changes in the market, especially for landlords. Increased regulation, particularly in the rental sector, will require landlords to ensure they are extracting the maximum value of their investment. With many of these changes on the horizon, Bath landlords should seriously consider making those changes in the coming months.
The push for affordable housing and support for first-time buyers might alter market dynamics in the rental and lower-priced starter home markets. Furthermore, shifting the focus on sustainability in homes will present new and interesting challenges in property development and management, especially in areas with a high level of listed buildings such as here in Bath.
Post-election and beyond, the changes for homeowners will be minimal. The proposed development of new houses across the country will see a slowdown in house price growth, yet this is not always a bad thing. People tend to move when they deem it a necessary change and not based on the price of housing. So, over the next 5 years, it is unlikely that we will see a huge change for homeowners.
Historically, not all manifesto promises come to fruition. So overall for all property owners, it is essential to remain realistic about the changes that may occur over the next five years and potentially beyond.
In conclusion, while Labour’s manifesto presents a comprehensive plan to address the housing issues this nation faces, it will likely take a lot of time until changes are felt in Bath and beyond. Landlords should prepare for a slightly more regulated environment. Yet, we have seen increased regulation over the last decade, so the immediate impacts may be limited for some time as the new government navigates the vast complexities of implementing these ambitious policies into practice.
