The Labour Party’s ambitious plans for the UK property market are set to redefine the landscape for homeowners, first-time buyers, renters, and landlords alike. With proposals that span from housebuilding targets to tax reforms, Labour aims to address long-standing issues and create a fairer, more accessible housing market. This article delves into the key elements of Labour’s property market strategy, examining how these changes could impact various stakeholders and the broader housing sector.
Housebuilding
Politicians often overestimate their ability to influence the number of houses built in the UK, and this election campaign is no exception. Labour has pledged to deliver 1.5 million homes over the next Parliament.
However, housebuilding is largely demand-led and driven by economic cycles rather than the planning system’s capacity. Despite the rhetoric, the government doesn’t build houses.
Labour plans to take early action to change the National Planning Policy Framework and restore housing targets. While this shift will be welcomed by developers, it doesn’t change the fact that private housebuilders deliver homes based on demand and at prices set by the resale market.
Read More: First-Time Buyer’s Guide to UK Housing
First-Time Buyers
Labour has announced that the nil rate band for stamp duty will revert to £300,000 from the current temporary level of £425,000 in April next year, which might not be welcome news for first-time buyers.
On the other hand, Labour plans to make it easier to secure a deposit through a “Freedom to Buy” scheme.
The party is also pledging to make the existing mortgage guarantee scheme, which sees the government act as a guarantor for people unable to save big deposits, a permanent fixture from 4 July.
This scheme, introduced by the Tories in 2021, encourages lenders to offer deals for smaller deposits, helping those who can afford monthly mortgage payments but struggle to save large sums while renting to buy their first home.
The Institute for Fiscal Studies (IFS) has noted that Labour’s plan has the potential to reduce one of the barriers to homeownership by helping those with smaller deposits.
However, prospective buyers still need a sufficiently high income to take out a mortgage and afford the repayments. Labour’s manifesto also proposes an additional 1% stamp duty surcharge for overseas buyers.
Renter’s Reform
The Labour Party plans to revive the abandoned Renters’ Reform Bill, including ending no-fault evictions “on its first day in power.”
Labour appears to be adopting a more pragmatic approach to leasehold reform, stepping back from earlier plans to abolish the leasehold system within the first 100 days.
There is a risk that policies making it financially punitive to be a landlord could result in more owners selling up and higher rents. Labour also plans to extend “Awaab’s law,” which requires landlords to address reported health hazards within specified timeframes, to the private rental sector.
They have also pledged to empower tenants to challenge unreasonable rent increases.
Making Homes Greener
Labour has stated that all private rental properties will need to be rated EPC C by 2030. They have also assured that no one will be forced to remove their old gas boilers as part of these plans.
Other Taxes
While Labour has ruled out a formal “Wealth Tax,” they plan to raise revenue in other ways. Private schools will be charged VAT, likely from September 2025.
Labour has not ruled out increasing Capital Gains Tax (CGT), which could further deter landlords, but they have stated that CGT will not apply to primary residences.
There is speculation about CGT changes in the first Labour Budget, but opinions vary. Changes to inheritance tax have also not been ruled out.
Read More: The Decent Homes Standard
Comments from Labour’s Matthew Pennycook
Question: How would you help more first-time buyers get on the property ladder?
Labour’s Matthew Pennycook: “Labour’s plan to get Britain building will unlock the dream of home ownership. Our new Freedom to Buy mortgage guarantee scheme will support first-time buyers who don’t have access to the ‘bank of Mum and Dad,’ helping those who can afford mortgage repayments but struggle to save for a large deposit. We’ll also work with developers to give local people ‘first dibs’ on new developments, ending the farce of entire developments sold off to international investors before local people get a look in.”
Question: How would you help renters?
Matthew Pennycook: “We will act where the Tories have failed and make renting fairer, more secure, and more affordable. We will legislate to immediately abolish Section 21 ‘no fault’ evictions, prevent private renters from being exploited and discriminated against, empower them to challenge unreasonable rent increases, and take steps to decisively raise standards, including extending ‘Awaab’s Law’ to the private sector. In the long term, the only real way to take the heat out of the private rented sector is to build more homes to buy and rent, including a far greater number of genuinely affordable social rented homes. That’s precisely why we have a plan to build 1.5 million homes over five years and to oversee the biggest boost to social, affordable and council housing in a generation.”
Question: How would you help landlords to ensure they do not choose to sell their properties?
Matthew Pennycook: “There is some evidence to suggest that a proportion of smaller landlords have exited the sector since 2018 – largely as a result of tax changes introduced by George Osborne and rising interest rates in the wake of Liz Truss’ disastrous mini-budget – but no robust evidence for a mass exodus as some have purported. Good landlords have nothing to fear from Labour’s plan to overhaul the regulation of the private rented sector. We value the contribution that good landlords make, and we will of course consult with them every step of the way about our legislative intentions. We want to establish a better regulated and thriving lettings market, but we are calling time on unscrupulous landlords who exploit tenants and jeopardize their security of tenure, with all the implications that has for national productivity and growth.”
Labour’s comprehensive approach to reforming the UK property market promises significant changes across the board. From ambitious housebuilding targets and support for first-time buyers to renter protections and green initiatives, these proposals aim to tackle housing challenges on multiple fronts.
While the success of these plans will depend on their implementation and the economic context, Labour’s vision seeks to create a more equitable and sustainable housing market. Whether you are a homeowner, a prospective buyer, a renter, or a landlord, staying informed about these potential changes is crucial as they could shape the future of housing in the UK.
