What does a new Labour Government mean for the housing market? (2 minute read)

Now that the dust has settled from the election a few weeks ago, here is a summary of what we think the housing market will look like now we have a new government in place.

Before we go into our thoughts, here are some headlines of Labour’s pledges

1.5 million new homes built in the next 5 years (300,000 per year). Under the previous government we were seeing roughly 212,000 homes per year. The pledge to increase this figure by 30% is ambitious according to Oliver Knight of Knight Frank. Applications for new build developments are at the lowest for a decade, driven mainly by planning regulations and red tape that need to be navigated by the major builders.

Reduction of first-time buyer stamp duty threshold. This was increased from £300,000 to £425,000 by the previous government however Labour have not committed to keeping this in place after the proposed expiry date of March 2025.

80,000 more people on the property ladder. This will be achieved by a comprehensive mortgage guarantee scheme and preference given to locals wanting to buy a first home in a new development.

Removal of no-fault evictions of tenants in rented property.

The reality is there hasn’t been a labour government for 14 years so the cabinet will be relatively inexperienced in running the country. Our gut feeling is there will be no big reform in the UK property market until Kier Starmer et al have their feet well and truly ‘under the table’.

A bigger impact will be felt from the drop in the Bank of England base rate. We think that the base rate will fall gradually over the next 18 months and buyer confidence will return gradually following a new government being in situ.

In summary, all things are relative, and lenders have a robust process that factor in stress tests, so if you really want to know if you can afford to buy that dream home, the brokers and/or lenders will give you a yay or nay.