As we fast approach this week’s General Election, the housing sector has become a key political battleground during the campaigns. Many voters say housing is their most important issue.
The Labour Party is promising significant ‘change’ to address the housing crisis. But what would a Labour Government mean for the market?
Stamp Duty
Labour prioritises maintaining current Stamp Duty exemptions for first-time buyers, while also advocating for robust energy efficiency standards in rental properties. Labour argues that its approach will shield tenants from rising energy costs and create a fairer playing field.
Conversely, the Conservatives have proposed a permanent abolition of Stamp Duty for first-time buyers purchasing properties up to £425,000. But the tax primarily impacts those buying larger or more expensive homes so the average first-time buyer might not see as much benefit from these changes.
With the current Stamp Duty exemption for first-time buyers set to expire next April, a potential Labour Government introduces some uncertainties. The Conservatives’ commitment to permanently raising the threshold provides clarity and immediate benefits for those entering the market.
Under Labour, while the current exemption would remain for now, the lack of commitment to extend it as the Conservatives have proposed raises concerns.
If Labour does not extend the higher threshold, first-time buyers could face significant tax increases. This situation could deter new buyers and slow down the market. However, Labour’s emphasis on costed plans might suggest a more balanced approach in the long term.
Freedom to Buy Scheme
Labour’s flagship housing policy is the ‘Freedom to Buy’ scheme. This initiative aims to permanently sustain and expand the existing Conservative mortgage guarantee scheme. Under this plan, first-time buyers without substantial deposits would receive support to get on the property ladder. They would also have priority access to new developments.
Keir Starmer has emphasised that his Government would be “on the side of the builders, not the blockers.”
The scheme would represent a substantial shift that could impact the legal landscape of property transactions. But this still may not be enough for first-time buyers to get on the ladder on their own. There may be aa rise in first-time buyers entering the market in the shared-ownership space, necessitating more streamlined and efficient legal processes.
This influx could also drive changes in mortgage lending practices and financial regulations to accommodate the new demand.
Energy efficiency and regulatory framework
Labour has pledged to take immediate action to protect renters, emphasising that tenants would fare better under a Labour Government. It plans to ban no-fault evictions right away, a promise that the Conservatives also made in the Renters Reform Bill but failed to fulfil due to legislative delays.
Additionally, Labour intends to mandate that all rental properties meet an Energy Performance Certificate rating of C by 2030, aiming to save tenants an average of £250 annually. Ed Miliband, the shadow secretary for climate change and net zero, criticised the current government for abandoning similar commitments and leaving renters in cold, damp conditions.
Implementing such policies would be a significant challenge, with concerns about the feasibility and effectiveness of improving energy efficiency in rental homes. Labour has vowed to ensure that funds are spent wisely and with proper regulation.
Deputy leader Angela Rayner expressed confidence that the costs to landlords would be manageable and stressed the importance of providing safe, warm homes. She noted that many landlords already recognise the necessity of maintaining properties that are not hazardous to tenants’ health.
These measures could improve tenant security and living conditions but also pose clear challenges for landlords, for landlords who may feel their ability to manage properties and address problematic tenancies is being constrained. This could lead to a more cautious approach in renting out properties, impacting the overall availability of rental housing.
Increased regulations and standards mean more thorough due diligence processes, impacting the speed and complexity of transactions. Conveyancers will need to stay abreast of new regulations to provide accurate advice and services.
However, this also presents an opportunity for growth, as more rigorous compliance requirements could increase demand for professional conveyancing services. Successful implementation will require careful balancing of interests across the housing market.
It is clear that Labour’s housing policies not only respond to immediate challenges but also signal a transformative agenda. Should Labour win, the handling of these policies will shape the future of housing affordability, energy efficiency, and regulatory frameworks.
Nick Hale is chief executive officer at Movera, a group including ONP Solicitors
