At Chestertons, we always strive to keep our clients up to date on economic and political news and changes that will impact the property market and, as the dust starts to settle on Labour’s resounding victory at the General Election, we have analysed Labour’s manifesto to identify some key policies affecting homeowners, landlords and tenants that we might expect to see over the next five years.
The outgoing Conservative government ran out of time to push through the Renters Reform Bill before the election. However, Labour has said that it is firmly committed to reforming renters’ rights and has promised to abolish Section 21 ‘no-fault’ evictions and raise living and building safety standards, so we expect an immediate revival of the bill in some form.
To what extent this new bill will mirror the Renters Reform Bill remains to be seen, however Labour is under pressure from campaigners to go further than the previous government in protecting renters’ rights.
Rent controls have been previously ruled out, but we would not be surprised to see the introduction of some form of rent regulation to ‘empower renters to challenge unreasonable rent increases’ and to prevent bidding wars.
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Labour has promised to build 1.5 million new homes over the next parliament, many of which are expected to be built on brownfield sites (previously developed, contaminated land) and ‘grey belt’ land (poor quality parts of the green belt) as well as part of new towns and ‘urban extensions’. Labour also promises to deliver the largest increase in social and affordable housebuilding in a generation. To do this they propose strengthening planning obligations to provide more affordable homes.
In April, the previous Conservative government announced plans to reduce the tax privileges available to non-doms. Labour reacted by announcing its own plans for abolishing non-dom status and replacing it with a new scheme for short-term residents. However, they also suggested that they would include an incentive to encourage UK investment as part of the new residency regime and said they would consider additional incentives for non-doms to bring their untaxed foreign income and gains to the UK.
We can also expect some form of Leasehold reform within the ‘first 100 days of government’, including the abolition of new leasehold flats in favour of commonhold tenure and the introduction of stronger regulation of ground rents. Labour has been vague about the details of this pledge, however there is considerable work that needs to be done to make commonhold fit for purpose. It is not yet clear how the new government intends to regulate ground rents, which underwent reform in the Leasehold Reform (Ground Rent) Act 2022, which ended ground rent for most new long residential leases.
The Leasehold and Freehold Reform Bill 2024 pushed through by the previous government brought further reforms by making it cheaper and easier for more leaseholders to extend their lease, buy their freehold, take over management of their building, and buy out their ground rent, but timelines for these are not year clear.
We speculate that Labour will look to introduce a ban on new leasehold houses or place restrictions on ground rent, but this is currently conjecture.
Although the outcome of this election was widely predicted since it was announced in May, there are a large number of buyers and tenants - especially at the higher end of the market - who have been putting off moving until the political situation is decided. Now that that moment has come, and with expectations of mortgage rates coming down in August, we expect a significant ‘post-election bounce’ and have already seen a surge of buyers and tenants registering with us with the intention of securing a property within the next few months.