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What does the landslide victory for Labour mean for the property sector?

The Labour manifesto included a commitment to build 1.5m new homes

The Labour manifesto included a commitment to build 1.5m new homes over the life of the current parliament.

However, the only money allocated to deliver against this commitment is £40m – to be raised by increasing the Stamp Duty Land Tax (SDLT) payable by non-residents buying residential property in the UK which will be used to recruit 300 new planning officers.

The funding of the delivery is dependent on the ability for developers to generate sufficient profits from first time buyers and families buying the new homes needed to deliver the increase in affordable housing that is required when planning permission is granted.

Whilst the mortgage guarantee scheme to support first time buyers may help delivery of 1.5m homes from profits of housebuilders, it is going to be extremely challenging, and the new Government would do well to remember that developers need to make a profit to pay their funders and shareholders. It would be extremely unfortunate if developments stall due to arguments about whether they are viable because of an increase in the number of affordable homes to be delivered. It would be more encouraging if the Government planned to release brownfield sites owned by the State on which the cost of delivering affordable housing would be lower – as the land cost would be eliminated.

Buy to let landlords also need to monitor announcements linked to the above commitment, to ensure that all privately let properties will meet minimum energy efficient standards by 2030. Does this mean that landlords will be required to improve standards, whatever the cost? This, combined with the promises to immediately abolish ‘no fault evictions’ and allow private renters to challenge unreasonable rent increases may result in more landlords deciding it is time to exit from the sector and sell their properties.

However, the biggest request of everyone in the sector, developers, and investors, is for the reduction of interest rates. If the Bank of England deliver this then the development and investment appraisals will all start looking far more attractive – and the sector will be able to make a major contribution to the UK economy.

Would you like to know more?

If you have any questions about the above and how it applies to your business, please get in touch with your usual Blick Rothenberg contact or Heather Powell using the form below.

Alternatively, why not visit our Property Hub – an area where insights and articles into current news around the property industry are brought together and made easily accessible.

Contact Heather

Heather Powell
Heather Powell
Partner, Head of Property and Construction
View Heather's profile