As the UK heads to the polls for the 2024 General Election, all eyes are on the candidates, the parties and their manifestos, and the potential impacts on the property market. Historically, political uncertainty can lead to mixed outcomes for property buyers, sellers, and investors. Here’s an overview from Griffin of what might be in store from four key political parties’ manifestos: Conservative, Labour, Liberal Democrats, and Reform UK.
Conservative Party’s Proposals
The Conservative Party’s 2024 manifesto emphasises homeownership and proposes several measures to support this goal. Key proposals include:
- Stamp Duty Reform: The Conservatives plan to permanently scrap stamp duty for first time buyers of properties up to £425k, supposedly making it easier for first-time buyers to enter the market. However, this can seem like a meaningless promise when there’s a shortage of homes to buy and no similar tax incentives to encourage older homeowners to downsize.
- Housing Supply: The Conservative Party has pledged to address the housing shortage by building 1.6 million new homes to make homeownership more accessible. However, their commitment to unlocking greenbelt land for development raises questions about the locations of these new houses and the potential impact on protected areas.
- Help to Buy Mortgage Guarantees: Extending the Help to Buy mortgage guarantee scheme (which was supposed to end in 2025) to support buyers with smaller deposits is a policy that should continue to make homeownership more achievable for everyone. However, with a lack of housing, young people have no homes to buy.
- Capital Gains Tax: The Conservative Party manifesto includes tax cuts for Capital Gains Tax and Stamp Duty. While this may be a great policy for landlords, it might encourage them to sell up. If this happens, there will be even fewer rental properties on the market, thereby pushing up rental costs for those who can’t afford to access the property market as homebuyers.
Labour Party’s Proposals
The Labour Party’s 2024 manifesto focuses on affordability and renters’ rights, proposing several significant changes:
- Rent Controls: Labour plans to introduce rent controls to cap rent increases. They aim to protect tenants from sharp rises in housing costs.
- Renters (Reform) Bill: Labour intends to advance the Renters (Reform) Bill, which includes abolishing Section 21 evictions. However, no specific timeline has been provided, nor have any details about the much needed court reforms. Progress under the current government has been very slow. Will it be different under a Labour Government?
- Affordable Housing: Labour commits to building 1.5 million homes, promising a generation’s most significant increase in social and affordable housing construction. They advocate for a ‘brownfield first’ approach and a strategic use of ‘poor quality’ greenbelt land to address the housing crisis and offer more affordable living options.
- First-Time Buyer Support: Labour plans to introduce a new and permanent Freedom to Buy mortgage guarantee scheme specifically targeted at first-time buyers, enabling buyers to purchase newly built property with a 5% deposit. However, with high house prices and rent (particularly in the South), even 5% could still be too much for people to borrow from a lender. There are also planned reforms to shared ownership models to make homeownership more attainable, as well as a policy where local people get first dibs on new housing developments before entire developments are sold off to international investors (which happens now).
- Protection for Leaseholders: Labour has pledged to review and enhance protections for leaseholders, who often contend with excessive service charges and ground rents because they do not own the land they live on. The party is also committed to tackling unregulated and unaffordable ground rent charges and unfair maintenance fees to ensure fairer treatment for leaseholders.
- Private Schools Tax Raid and Unintended Consequences: Sir Keir Starmer has made no secret of his desire to impose VAT on private school fees. What does this mean for the property market? In the law of unintended consequences, if parents of privately educated children can no longer afford private school fees, expect to see the house prices in the catchment areas of good state or grammar schools rising.
Liberal Democrats Party’s Proposal
The key points related to the property industry in the Liberal Democrat’s 2024 election proposal include:
- Affordable Housing: A solid commitment to building housing to address the housing crisis. The Liberal Democrats aim to ensure that new developments include a significant proportion of affordable homes.
- Renters’ Rights: The party aims to strengthen renter protections, including measures to combat unfair evictions and high rental costs. The party advocates for longer-term tenancies and rent controls in high-demand areas.
- Green and Sustainable Building: Promoting environmentally friendly building practices, emphasising energy efficiency and sustainability in new housing developments. This includes support for retrofitting existing homes to improve energy performance.
- Land Use and Planning: The Liberal Democrats plan to reform the planning system to make it easier to build homes where they are needed while protecting green spaces and ensuring community involvement in planning decisions.
- Support for First-Time Buyers: The party pledges to introduce measures to help first-time buyers get onto the property ladder, such as financial assistance and more affordable housing options.
- Leasehold Reform: Addressing issues faced by leaseholders, such as high service charges and ground rents, by pushing for comprehensive leasehold reform to provide better protection and fairer terms, is also a promise from the Liberal Democrats.
Reform UK Party’s Proposal
The Reform UK Party has released a manifesto for 2024, described as a “working draft” of a contract with the public. Key highlights include comprehensive reforms in social housing, a review of the planning system, and the abolition of the Renters (Reform) Bill. Here’s a closer look at their key proposals:
- Stamp Duty Overhaul: In stark contrast to the Conservative Party’s plan, Reform UK aims to significantly boost economic activity and housebuilding by implementing significant changes to Stamp Duty: 0% Stamp Duty for properties under £750,000, 2% Stamp Duty for properties valued between £750,000 and £1.5 million, and 4% Stamp Duty for properties over £1.5 million.
- Inheritance Tax Changes: The party proposes to abolish the Inheritance Tax for estates under £2 million and set a 20% tax rate for estates above this threshold.
- Renters (Reform) Bill: Reform UK pledges to abolish the Renters (Reform) Bill, allowing Section 21 evictions to continue. Instead, they propose to reform the court system to enhance the monitoring, appeals, and enforcement processes for renters with grievances.
- Planning System Reform: To stimulate business growth, Reform UK emphasises fast-tracking new housing on brownfield sites and infrastructure projects, particularly in coastal regeneration areas, Wales, the North, and the Midlands.
- Social Housing Law Reform: With a shortage of social housing, Reform UK aims to prioritise local residents and those who have “contributed to the system”, whilst foreign nationals be placed at the end of the queue for social housing.
- Support for Landlords: The party plans to scrap Section 24, which it argues penalises smaller landlords. It advocates for restoring landlords’ rights to deduct finance costs and mortgage interest from their rental income tax.
Long-Term Considerations
While the immediate aftermath of a general election often brings uncertainty, the long-term effects will depend on the policies enacted and their effectiveness. Given its importance to the economy, ensuring a stable and predictable property market will likely be a priority for any government, providing a reassuring prospect for the property industry, property buyers, sellers, and investors.
Conclusion
The upcoming general election presents challenges and opportunities for the UK property market. Therefore, property professionals, buyers, sellers, and investors alike must stay informed and be prepared to adapt to the changing political landscape. By understanding the potential policy changes and their impacts, we can all make strategic decisions in the property market and navigate the uncertainties confidently.
Talk to Griffin today for more information.
(Sources for the above information include each political party’s manifesto, propertyindustryeye.com, BBC news.)
