What does the General Election mean for the UK property market?

The UK Prime Minister, Rishi Sunak, announced that a general election will take place on July 4th, 2024. Housing has been a big factor of focus in the UK with rising mortgages, and other proposed policies, such as renter’s reform bill and issues concerning social housing, have come to light, too. 

But what does the general election mean for the property market?

In this blog, we compare the two official parties, Conservative and Labour, and their positions regarding UK property.

The Conservative government

The current leadership

In the UK, the Conservatives have been in primary leadership for the past 14 years since 2010. Rishi Sunak is currently leading the Conservatives.

In 2010, the Conservatives pledged to build 300,000 houses by the mid-2020s. But they have consistently failed to meet this target. Michael Gove (who has announced his resignation ahead of the general election) has since changed this pledge to be advisory.

Leaseholds

More recently, the government introduced a leasehold reform law, but it will not have a ground rent cap. This reform is designed to make it more affordable for people to extend their leases. However, there was initially a plan to introduce a ground rent cap of £250, which has now been dropped.

This means that leaseholders could face hiking ground rents in addition to the already soaring  service charges.

The Renters Reform Bill

Regarding rent controls, the Renters Reform Bill initially planned to ban Section 21 (no-fault evictions). However, the passing of this has been delayed further meaning there is no confirmation on when/if it will be passed. 

Help to Buy scheme

The Help to Buy Scheme closed to new applicants on 31 October 2022. However, Rishi Sunak said he is considering bringing back this scheme to help first-time buyers. The scheme offered buyers an equity loan to help them buy a new-build home.

Short term lettings

Local residents of tourist hotspots have seen a surge in holiday lets or short-term rental homes. To help those who have been hit hard by holiday homes in their area making it harder to afford to live, the Conservatives have begun taking steps to create more rules surrounding short-term and holiday lets.

This has been reflected in tightening the rules of accessing business rates for short-term rentals, for example.

The Labour Party

The official opposition in the UK government is Labour, led by Sir Keir Starmer. Starmer himself said: “I want Labour to be the party of home ownership”, highlighting that home ownership is a key focus for the party. 

Building new homes

Under Starmer’s leadership, Labour has promised to build 1.5 million homes over the next parliament. They plan to execute this by using greenbelt and some greybelt areas (brownfield sites and poor-quality areas in the greenbelt) to build properties.

Another method Labour has said they would implement is updating housing planning laws to help local authorities have more say in the housing planning process.

Affordability

In addition, Deputy Labour leader Angela Rayner has announced a plan to make 40% more affordable homes available for new development. This is part of Labour’s plans to build a new generation of New Towns.

This plan is called the New Towns Code and includes a mix of “social and council homes, robust design codes that fit in with nearby areas, high-density housing with good links to town and city centres, and access to nature and parks.”

Buy to let landlords

Keir Starmer shared plans to make a change to buy-to-let landlords with “no more buy-to-let landlords or second homeowners getting in first.”

Appealing to first-time buyers, Keir Starmer has said he would support younger people in homeownership through a mortgage guarantee scheme.

Leaseholds

Regarding leaseholds, Labour has also expressed disdain for the leasehold laws in the UK. The party previously pledged to abolish leasehold within the first 100 days of government but recently dropped this pledge. However, they still insist they are after leasehold reform, as Labour MP Lisa Nandy MP described the rules as “archaic”.

What should first-time buyers be aware of for the general election?

Although it has yet to be confirmed, the Bank of England’s interest rate is expected to reduce sometime this summer. Economists say this is due to the drop in inflation to 2.3%, which is closer to the BoE’s 2% target. 

As a result, mortgage lenders have started to lower mortgage rates, which could help therefore make it more affordable for first-time buyers to enter the property market. 

According to YouGov, 52% of homeowners with a mortgage (52%) say they’ll vote Labour, compared to just 15% who support the Conservatives. Age has an effect on this, as younger generations seek security in home ownership. 

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