What will the housing sector look like under Labour?

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Prior to the general election last week, our CEO Nick talked about what he thinks the housing sector would look like under a Labour government. The housing sector has become a key political battleground during the campaigns, and the Labour Party promised significant ‘change’ to address the housing crisis, and many voters said housing is their most important issue.

Stamp Duty

Labour prioritises maintaining current Stamp Duty exemptions for first-time buyers while advocating for robust energy efficiency standards in rental properties. Labour argued its approach would shield tenants from rising energy costs and create a fairer playing field.

Conversely, the Conservatives had proposed an end 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 wouldn’t see as much benefit from those changes.

Under Labour, while the current exemption would remain for now, the lack of commitment to extend it as the Conservatives had 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. 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 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 a rise in first-time buyers entering the market in the shared ownership space, necessitating more streamlined and efficient legal processes.

This influx may also drive changes in mortgage lending practices and financial regulations to accommodate the new demand.

Energy efficiency and regulatory framework

Labour pledged to take immediate action to protect renters, emphasising that tenants will 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 plans 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 criticised the current government for abandoning similar commitments and leaving renters in cold, damp conditions.

Implementing such policies will be a significant challenge, with concerns about the feasibility and effectiveness of improving energy efficiency in rental homes. Labour vows to ensure that funds are spent wisely and with proper regulation.

Deputy leader Angela Rayner expressed confidence that the costs to landlords will be manageable and stressed the importance of providing safe, warm homes. She noted that many landlords have already recognised the necessity of maintaining properties that are not hazardous to tenants’ health.

These measures could improve tenant security and living conditions but also pose challenges for landlords who may feel their ability to manage properties and address problematic tenancies is being constrained. This may 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. Now that Labour is in power, the handling of these policies should shape the future of housing affordability, energy efficiency, and regulatory frameworks.