Housing is always a hot topic politically. As Labour begins its time in Government, what can we expect from their plans for housing, and how will those plans affect homebuyers?
Intentions to increase housing supply
The pledge Labour shouts most loudly about is its intention to build an additional 370,000 new homes for every year it is in Government. That’s a target of 1.5 million new homes over the course of the next five years.
In theory, this will make things easier for first time buyers, and home-owners looking to move. There will be more high-quality housing stock available, so house prices should either stabilise, or even fall slightly, as supply catches up with demand.
Labour pledges to “build homes local people can afford” by focusing on brownfield-first policies, grey belt development, and more affordable housing. Under their plans, any development on green belt land must include 50% affordable housing. They’ll also fund more social housing, and provide more shared ownership schemes.
Help for first-time buyers
Labour’s manifesto included specific commitments to support first-time buyers.
For example, this new Government plans to introduce a permanent, comprehensive mortgage guarantee scheme, which should provide lower mortgage costs.
There will also be more scrutiny in the house-buying process to favour first-time buyers over international investors. Labour intends to work with local authorities to prioritise first time buyers, and stop entire developments being sold off to international investors before the houses are even built; a practice they describe as a “farce”.
Stamp duty: First-time buyers will have to pay SDLT on houses over £300,000
However, it looks as though the nil-rate band for stamp duty will revert to £300,000 for first time buyers in April 2025. That’s a reduction from the current level of £425,000.
The £425,000 threshold was initially introduced by the Conservative Government in 2022 as a temporary measure.
Labour intends to keep this as a temporary measure only, and will allow the tax break to expire in 2025. First time buyers who want to buy a house worth more than £300,000 will be subject to stamp duty of at least 5%.
Building greener homes
It’s not just about building more homes though. Labour is keen to build more energy-efficient homes, and help people improve the energy-efficiency of existing homes.
That means that there will be higher standards for new builds. New properties will be EPC-rated C and above, so that they retain their warmth in the winter, and the cost of heating your home is reduced.
There are plans to reintroduce grants for improving the energy efficiency of existing properties too, making it more affordable to invest in upgrades (which are often costly).
More security for renters
One of the most pressing housing concerns for this Government is to abolish section 21 ‘no fault’ evictions. Instead, landlords will need a valid reason to evict a tenant. This is welcome news for renters, and gives you more security about your living arrangements.
These legislative changes are being rushed through Parliament, and we may see this become law within the next few months.
Tenants will also be able to challenge unreasonable rent increases, giving them some redress against soaring rent prices. In a similar vein, Labour plans to bring an end to bidding wars for tenancies, so that tenants no longer compete with one another in increasing bids, leading to higher and higher rent.
Landlords will be held to a higher standard of accountability and will have to sign up to a national register. This means that there will be a greater standard of compliance in the houses they rent out, including strict time limits within which to investigate and address damp and mould in their properties.
Is it a good time to buy a house?
For first time buyers, there is a short window in which to capitalise on the higher nil-rate band for relief on stamp duty. If you buy a home now, you won’t have to pay stamp duty on it unless the property is over £425,000. If you wait until after April 2025, then you will have to pay stamp duty on your property if it is over £300,000.
So if you’re a first time buyer, and ready to buy a property in the next six months, then now is a good time to buy.
However, if you’re not quite ready to buy, or you’re an existing home-owner looking to move, then there’s no immediate rush. If Labour does manage to build as many homes as it hopes to, then there will be more choice of new energy-efficient homes in the near future. With more homes available, house prices may level out, so you might get good value for money.
If you’re currently renting, then the plans under Labour will make your living situation more secure. That may mean that you feel happier renting for longer. You have more time to save money, and wait for this pledged surge in new homes to materialise.