Now that one of the most accurately predicted General Election results of all time has been confirmed, what impact can we expect the incoming Labour Government to have on the property market, particularly when it comes to investors?
The first point to note is that all markets hate uncertainty of any kind, and however likely the outcome might look at the start of a campaign, a General Election always brings uncertainty. The fact that one party won such a commanding majority will provide certainty; on this basis alone, we can look forward to a bounce in the market in the second half of the year.
When it comes to specifics about Labour’s approach to housing policy, here are some key points from its manifesto:
Leasehold reform
- Abolish the leasehold system and replace it with a commonhold system.
- Cap existing ground rents and make it easier for leaseholders to purchase freeholds.
- Ban the sale of new leasehold properties.
Home buying and selling
- Streamline conveyancing to make it faster and more efficient.
- Introduce a seller’s pack to provide up-front information and reduce delays.
- Expand support for first-time buyers, including deposit assistance via a new mortgage guarantee scheme.
Affordable housing
- Build 1.5 million homes over the next decade.
- Increase the supply of social housing and building 300,000 new homes per year.
- Ensure 100,000 affordable homes for first-time buyers through a ‘First Buy’ scheme.
Rental Market
- Implement a national register of landlords. Introduce rent controls and longer tenancies to provide security for tenants.
- Ban ‘no-fault’ evictions and improve tenant rights.
The key consideration for investors will clearly be the proposed register of landlords and greater levels of regulation that fit around that, as well as the banning of ‘no fault’ evictions. This, however, has been the direction of travel for the private rented sector (PRS) for quite some time now, and a housing tenure that provides a home for a fifth of the population is always going to come under some scrutiny.
Perhaps, then, the biggest takeaway for investors from this new Government is that its manifesto has taken a relatively hands-off approach to intervening in the PRS, maybe recognising the important role that private landlords play in housing the population. While steps are being taken to improve standards, which is no bad thing, there has been no noise about punishing tax rises for property investors.
It should be fair to assume then, that the certainty provided by a new Government with a large majority is likely to be the overriding factor contributing to sentiment in the property market currently. In a year when there was always going to be a General Election and all the uncertainty that brings, we now have political certainty – and that can only be a good thing.
Anna Lewis is commercial director at Castle Trust Bank