What does the new Labour Government mean for the housing market?

Following Sir Keir Starmer’s Labour Party’s victory in the 2024 general election, the new Labour government has promised to “get Britain building”. What exactly does this mean for the housing market?

What have Labour promised?

1.5 Million New Homes

One of Labour’s first announcements after winning the election was to reiterate its manifesto promise of building 1.5 million new homes over the next parliament. They aim to “deliver the biggest boost to social and affordable house building in a generation.”

Rachel Reeves, the new Chancellor says this will be achieved by reintroducing mandatory housing targets and introducing a new land classification called “grey belt.” This applies to certain areas within the existing green belt that are either brownfield sites or of lower environmental quality. Examples include car parks and scrubland on the outskirts of towns, disused petrol stations, and areas around railway stations.

Greater Support for First-Time Buyers

One of Labour’s key pitches to younger voters in advance of the manifesto announcement was its Freedom to Buy scheme. This would extend the existing mortgage guarantee scheme, which is designed to help people who can’t save enough for a deposit but can afford mortgage repayments.

Labour has pledged to ‘work with local authorities to give first-time buyers the first chance to buy homes’ so they’re not sold off to international investors before they’re even built.

Taxation Changes

Labour’s tax policies will impact the property market, especially the luxury property sector. They propose higher taxes on luxury properties and a potential land value tax to discourage speculative investments. This could lead to a cooling of the prime property market and a shift in investment towards more affordable housing.

Implications for the Market

Housing Supply and Prices

Increasing the housing supply should help address the chronic shortage and potentially stabilise or reduce house prices over time. However, achieving the ambitious target of 1.5 million homes depends on overcoming planning and local opposition challenges.

First-Time Buyers

The Freedom to Buy scheme and other support measures aim to make homeownership more accessible to young and first-time buyers. However, high mortgage rates and house prices remain significant barriers​.

Luxury Property Market

Higher taxes and stricter regulations on luxury properties may lead to a decrease in demand and prices in the luxury property market, making it less attractive to investors and more accessible to a broader range of buyers​.

Overall, Labour’s housing policies are designed to create a more balanced and equitable housing market. However, their success will depend on effective implementation and managing potential economic and political challenges.

Rethync will be keeping a close eye on the market and its development, and what it means for our industry. If you need hoarding for your next construction project, contact our sales team for more information on 03300 535898 or info@rethync.co.uk

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