The massive Labour landslide election victory revealed overnight, has hardly come as a surprise given that virtually all polls conduced in previous weeks have indicated that the UK was set for a change of government. In its manifesto, Labour had made it clear that initiatives to support the property market in the UK would form a key part of its agenda in government.
So what does the prospect of this new Labour government actually mean to property and mortgage experts? They’ve been sharing their reaction with us as follows:
Simon Webb, managing director of capital markets and finance at LiveMore, commented: “’Landslide victory’ are the clear watchwords for this election. But as Labour settles in the new watch word will need to be affordability. Labour’s manifesto prioritised maintaining current stamp duty exemptions for first-time buyers but has made no mention of extending this exemption to other buyers. Leaving older buyers trapped in large houses they can’t downsize from and locking younger buyers out. Regardless of how the new government plans to address the housing crisis, it is crucial that they listen to the industry first for guidance.
Nick Hale, Chief Executive Officer at Movera commented: “There is no doubt this has been an historic election, and a landslide victory for Labour.
“Big challenges such as affordability lie ahead for the new Government. In its manifesto, Labour prioritised maintaining current stamp duty exemptions for first-time buyers. However, these are set to expire next April which could create uncertainties. If the Government does not extend the higher threshold, first-time buyers could face significant tax increases. Whatever it decides, though, the new Government must ensure it consults with the industry first. The sector needs to time to prepare for change rather than having last-minute announcements sprung upon us.
“As the new Government beds in, our focus at Movera will continue to be on supporting those looking to move or remortgage to make the homebuying experience as easy as possible.”
Paresh Raja, CEO of Market Financial Solutions, said: “The accepted logic is that elections bring uncertainty and are therefore bad news for the property market. But there have been some important differences this time around: Rishi Sunak called for the vote to take place a lot earlier than expected, and the result (a Labour victory) has seemed highly likely from the off. As a result, there has been less uncertainty than there could have been, and now the ballots have closed, we should see a prompt return to more stable, ‘business as usual’ conditions.
“There are enough signs to suggest the market is ready for a post-election uptick in activity. The number of homes coming onto the market in the first half of 2024 is 22.9% higher than last year, while economists are still predicting that the Bank of England will cut the base rate twice before the end of the year, with the first potentially coming on 1st August.
“But, despite these reasons for optimism, there is clearly no room for complacency. Political and economic turbulence remains, so lenders have to focus on supporting brokers and borrowers as best they can. Optionality and flexibility will be key in the second half of this year, and lenders have to commit to providing borrowers with the financial products they need to both benefit from any opportunities that a potentially more stable climate could provide.”
Jatin Ondhia, CEO of Shojin, said: “Labour’s ascendancy to Downing Street marks an important moment for the property sector. Several ambitious pledges regarding housebuilding and investment were made on the campaign trail, but now’s the time for Starmer and his party to back up their words with actions. Ensuring the UK continues to remain a global hub for investment needs to be a key priority, and the real estate sector will remain a crucial market for attracting that inbound investment
“Labour has work to do: interest rates remain high, the cost-of-living crisis has left a toll on people’s spending power, and economic growth needs to turbo-charging. However, following a rather tumultuous end to the Conservatives’ 14 years in power, the UK now has a chance to reposition itself, building strong international partnerships and attracting global investments. Labour’s plans to reform the planning system and pave the way for affordable house building present significant opportunities for greater investment into property development, but the effective implementation of their promised reforms will be key.”
Robin Rathore, CEO, Bamboo Auctions, comments on the election results saying: “While we were certain about a Labour election victory, we’ve been fairly uncertain about how they will help solve some of the systemic problems in the housing and property market, so the first 100 days of government will be crucial in setting out how serious Labour is about change and progress in the sector.
“We know that Labour want to build 1.5m new homes, we know they are committed to removing no fault evictions and we know that Labour will let the 0% SDLT threshold for first time buyers fall back to £300k from £425k.
“Whether you agree with these policies or not, at least the property sector now has clarity of vision and certainty of direction for the country for at least the next five years. This will create more stability, more confidence and ultimately more liquidity in the property market. At Bamboo, we’re looking forward to helping our agent partners take advantage of improving market conditions with our technology and customer success.”
Richard Harrison, Head of Mortgages at Atom bank, comments:
“A general election always brings with it a sense of uncertainty, so it’s welcome to have such a definitive result. The size of the majority should allow the new Government to push on with addressing some of the issues faced by the property market. There’s no question that we aren’t building enough homes to meet demand, so addressing the planning system will be crucial. In addition, I’d like to see time given to whoever is appointed housing minister, given the way it has been a revolving door in recent years – the outgoing Lee Rowley was the 15th housing minister since 2010.
“It will also be interesting to see the detail of the Freedom to Buy permanent mortgage guarantee scheme promised in the Labour Party manifesto, aimed at supporting borrowers with small deposits. Atom bank has long championed these buyers, with a focus on flexible criteria and competitive rates at 95% LTV, so we welcome the prospect of more options for these borrowers.
“More than anything, I think the mortgage sector will relish some stability. The ongoing uncertainty of the last few years has taken a toll on borrowers, who today face higher interest rates when their finances are already stretched. Some economic calm, and the prospect of base rate cuts in the months ahead, will be welcome.”
Sam Lindsay, Mortgage Planning Advisor, My Mortgage Angel, comments: “When the news of the snap election came, many homeowners and aspiring movers took a wait and see approach to see if the new government would bring some stability to the market. Now the results are in, the industry remains optimistic that this will bring the stability and optimism needed.
“The reality is that the property market is largely driven by interest rates, capital growth and house prices. Time will tell us a lot but the reality is the housing market desperately needs some impetus. The new Government needs to make some changes to get the market picking up pace again, and it needs to make those changes sooner rather than later. Changes to stamp duty would be welcomed, greater initiatives for both buyers and sellers alike and bringing a helping hand back to first time buyers would be a great place to start.”
Matthew Robertson, Co-Founder and CFO of Valouran comments: “A lack of planning resource has held the property industry back ever since the austerity measures were introduced post the great financial crisis. It is encouraging to read of Labour’s planned recruitment drive for an additional 300 planning officers, but with the mandate they have received from the electorate, I would encourage them to be more bold and ambitious, and to push through their plans to release lower quality green belt land. Only by doing so will they have a chance of making good on their target of building 1.5m homes over the course of this parliament.”
Daniel Austin, CEO and co-founder at ASK Partners, said: “Housing stands as a pivotal issue for the Labour government, given its correlation with economic stability. Recent upticks in house prices and mortgage approvals hint at recovery, yet the persistent housing shortage threatens prolonged recession. The UK faces a crisis of affordability due to insufficient homes for rent and sale, negatively impacting GDP. Decades of social strain persist with little resolution in sight. We urge the implementation of a radical yet credible long-term plan to assuage market concerns.
“A previously proposed target of 300,000 homes annually echoes longstanding government aspirations unmet since 2004. France’s surpassing construction efforts underscore the urgency, with Capital Economics estimating a need for 385,000 new homes yearly. Four primary factors underpin this crisis: over-reliance on major housebuilders, politicised planning discouraging development, net loss of social housing, and post-Brexit labour shortages.
“Addressing these roots is imperative to alleviate the affordability crisis. Reinvigorating SME housebuilders is pivotal. Incentives should facilitate access to opportunities, including allocating small land plots for development and streamlining planning permissions for brownfield sites. Boosting skilled labour domestically and reforming the planning system are equally crucial. Independent decision-making and private sector assistance can expedite approvals and reduce costs. Prioritising social housing and incentivising brownfield developments are essential steps toward sustainable growth. Lenders must offer flexible financing to smaller developers. Despite potential temporary unpopularity, a steadfast commitment to a pro-growth agenda is necessary. The unique challenges facing the UK demand decisive action. Embrace this opportunity to steer us toward a balanced and sustainable housing market, ensuring prosperity for generations to come.”
Mark Chick, director of ALEP (the Association of Leasehold Enfranchisement Practitioners) said: “So now that we know the size of the Labour majority it seems a fairly safe bet that the next five years will see a more vigorous programme of reform in the residential leasehold sector.
“During the next five years we are likely to see the acceleration of commonhold and possibly legislation to end or put a sunset date on leasehold for new properties.
“It will be interesting to see what Labour chooses to do with the Commonhold project and I expect we will now find out what other drafting has been done by DLUHC in relation to the law commission’s original reports and recommendations.
“In addition we can presumably expect the current reforms in the Leasehold and Freehold Reform Act 2024 to be brought into effect and the question now turns to the timing of these and secondary legislation.
“ALEP remains ready to engage with government and we look forward to meeting with the new Secretary of State for Housing and Ministers to continue our programme of engagement to help ensure that any new legislation is fit for purpose.”
Nicky Stevenson, Managing Director at national estate agent group Fine & Country, said: “Buyers and sellers should be assured by today’s results that the property market is likely to remain robust in the coming months. Further buoyancy in the housing market is expected once the political climate settles.
“Election periods usually cause a hiatus in market activity, but that has not been the case this time around. While there may be some question marks remaining over taxation, the housing sector has shown resilience.
“It is going to be very interesting to see how the new Labour government injects some fresh thinking into the industry, following several years of dramatic ups and downs in house prices and property transactions.
“The big promise is a renewed push on homebuilding, as well as a determination to get more first-time buyers on the property ladder. We welcome this news, so long as consideration is given to helping towns and villages put in the necessary infrastructure to cope with any flux in population.
“While house prices and transaction levels have plateaued this year, a shot in the arm for building and the likelihood of a base rate cut later this year could help to get more people moving into their own home.
“The prime property market has awakened from from its slumber in recent months – with ripples of a cautious recovery spreading across the landscape, particularly in Scotland and the East Midlands with positive annual growth of 10.3% and 1.2% respectively.
“Labour’s proposal to abolish non-dom status could impact the housing market by potentially increasing the number of properties for sale. High-net-worth individuals with properties in the UK may look to sell up if they are affected by the change in regulation, which would in turn expand the prime residential market even further.
“Only about 0.1% of the population has non-dom status, implying a limited overall effect. It is also worth noting that most of the people affected are likely to be based in London.
“The new prime minister has been very careful in his wording on taxes, making sure to not rule out any changes to Capital Gains Tax or Inheritance Tax, both directly affecting the property industry.
“Overall, there is room for cautious optimism for the rest of the year and the property and financial markets will benefit from a decisive majority for the government, as opposed to the instability that could have loomed with a hung parliament.”
