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    Winning Vote

    New Prime Minister Sir Keir Starmer has been voted into Downing Street and has announced several new policies that could affect homeowners, first-time buyers and landlords. Labour received a majority vote in the most recent general election, they have come to power when interest rates are high, and there is a slowdown in house price growth and property sales.

    Delivering his first speech outside Downing Street, Sir Keir stated there is an urgent need for more affordable homes. Some hope that the slowing inflation will encourage the Bank of England to reduce interest rates and help lower the cost of loaning money in the near future. However, there may need to be help from the government when it comes to issues such as a lack of property supply and affording a deposit.

    Freedom to Buy

    Labour’s main housing policy is the Freedom to Buy scheme. This scheme is in place to help get 80,000 young people onto the housing ladder over the next five years by making the current mortgage guarantee scheme which is due to expire in June 2025, permanent.

    Similar to the mortgage guarantee scheme, Labour said this scheme would encourage lenders to offer higher loan-to-value (LTV) mortgages by acting as a guarantor for future first-time buyers who cannot afford a large deposit.

    While Labour’s housing and economic policies are in place to support lower mortgage rates and easier accessibility for first-time buyers, the overall effect will depend on the market’s perception and how they implement their new policies.

    Stamp Duty Changes

    Even though it may be easier to get a low-deposit mortgage, more first-time buyers may end up paying stamp duty on their property. Labour has said it will bring down the first-time buyer stamp duty threshold from £425,000 to £300,000. The threshold had been increased by the Tory Party in 2022 and was due to be reduced in April 2025. The Conservative manifesto stated it will make the change permanent but Labour confirmed that the reduction will continue as planned.

    This may mean more first-time buyers will pay stamp duty, especially around the South of England and London where average housing prices are above £300,000. Labour intends to increase the stamp duty rate when non-UK residents purchase residential property by 1%.

    Building More Houses

    The UK is well-known to have a shortage of homes. The Conservatives previously got rid of the mandatory targets last year but Labour’s manifesto stated that plans to build 1.5 million new homes, will go forward, which could boost supply and slowly reduce prices. This plan relies on the government getting around green belt issues and tough planning departments.

    Building 1.5 million homes within five years is an extremely hard target to reach. It will require a huge amount of resources, significant investment and careful planning. Its success will rely on the engagement and cooperation of local authorities, developers and the communities in which these new homes will be located.

    The Rental Market

    Legislation known as the Renters Reform Bill was going through parliament before the general election, with plans to remove section 21 notices, known as ‘no-fault’ evictions. The notices let landlords evict tenants without having to give a reason. Labour’s manifesto said it would “immediately abolish Section 21 ‘no fault’ evictions, to help prevent private renters being exploited” This will make renters feel more secure and will be willing to pay for rental property as there is no risk of them being kicked out for no reason. 

    Additionally, Labour has stated to not raise income tax, National Insurance, VAT or the headline rate of corporation tax. While a new government is now certain, a lot of information is still unknown about how much of Labour’s manifesto they will be able to implement, and how quickly it will happen. 

    The property market can also take comfort in the resilience it holds, having gone through changing governments and policies plenty of times.

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