"Our industry is forever changing, and if one thing is certain it’s that people will always need somewhere to live"
Labour’s housing plans
Over the past few weeks, Labour Leader Sir Keir Starmer has outlined his party’s plans regarding the housing market. With a focus on first-time buyers and tenants, he has made it clear that his overriding aims are to tackle high house prices, to increase housing supply, and to tilt the balance of the rental sector firmly in favour of tenants. And if the Renters Reform Bill does become law before the election it is unlikely Labour will then choose to change it if they get into power.
Boosting housing supply
It appears that Labour's primary goal is to address rising house prices by boosting housing supply. This would start with some significant land reforms, allowing local authorities to purchase greenbelt land for housing at agricultural land prices, a fraction of the price they currently pay under CPOs (compulsory purchase orders) and of course a fraction of the price currently paid by developers who frequently build their land bank many years into the future.
Along with this Sir Keir Starmer has expressed openness to building on green belt land, increasing the availability of housing and possibly curbing the continuous price growth.
Helping first-time buyers
Labour is keen to tackle the issue of affordability and availability for first-time buyers. They have raised the possibility of providing first-time buyers with a six-month exclusive opportunity to purchase new build properties along with restrictions on buyers from abroad. Sir Keir’s plan for “no more buy-to-let landlords or second homeowners getting in first” of course has a potential knock-on impact for the rental market.
Tackling the rental market
The Renters Reform Bill is already full of anomalies and omissions, and in truth fails to deliver better security for tenants. However, on top of this bill, Labour plans to introduce a Renters’ Charter, tilting the balance further in favour of tenants. This is likely to include further restrictions on evictions for rent arrears, a four-month notice period for landlords, and possibly a return to Labour’s previous support for rent controls and caps.
An unclear picture on capital gains tax
Something which is relevant to all businesses is any government’s future plans on Capital Gains Tax. Being able to plan for your tax position with confidence is crucial when considering the timing of your exit. Unfortunately, the only thing which is clear about Labour’s intentions regarding CGT is that they are unclear!
Angela Rayner, Labour’s deputy leader, continues to be vocal about the fact that she considers the current government’s approach to CGT to be entirely unfair and in need of change; while on the other hand the party’s shadow chancellor has said on record “I don’t have any plans to increase capital gains tax”. Sir Kier has been silent on the matter, raising concerns about where Labour may end up when it comes to policy on CGT.
What does this all mean for estate agents and lettings agents?
While many people support the ambition of Labour to enable more first-time buyers to get on the housing ladder, and for renters to benefit from affordable rents and more secure tenancies, there is some concern over the unintended consequences of the proposed policies.
In an environment where millions of people are already having to deal with major increases in their mortgage payments the prospect of ‘government-induced’ house price falls pushing them into negative equity is politically fraught and economically risky. Land reforms which potentially disrupt the business models of large developers could in fact reduce, not increase, the housing supply.
And in the private rental market, the possibility of rent caps and challenges to landlords on top of those already introduced by legislation and rising borrowing costs could in fact lead to private landlords selling out, reducing rental stock further and increasing rents. Adding to this mix Labour’s less than clear approach to capital gains tax leads to further uncertainty about the future.
Lucy Noonan comments: “Of course, we are not suggesting it is all doom and gloom. Our industry is forever changing, and if one thing is certain it’s that people will always need somewhere to live.
“Businesses and individuals in the property sector will continue to change and adapt. It might be that some decide an exit before the next general election is the right choice for them, while others might see the changes as an opportunity. At the very least now is a good time to think through the possible impact on your business and to weigh up your options.”
