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A Deeper Dive into the Conservative and Labour Housing Policies




With the general election looming, we’re taking a look at the Conservative and Labour Party Housing policies. How will they impact the Private Rental Sector, and what can we expect from each government? 

In the televised Sunak vs Starmer debate on ITV, very little was said in the way of what to expect from each Party's Housing policies. Despite this, it’s fair to say that the housing crisis will be at the forefront of voters’ minds on election day.

The current market is becoming increasingly tense for landlords and tenants alike. Rising mortgage costs, higher taxes, and tricky legislation are making it harder for landlords to navigate the PRS, and rising rents and unaffordable deposits for first-time buyers are leaving many renters stuck.

As such, the housing policies will be playing a critical part in voters’ decisions on the 4th of July. Below, we look at what we know so far from both the Conservative and Labour Party.

 

Rental Market Reform


If re-elected, the Conservatives should be picking up where they left off with their Renters’ Reform Bill. Having made it to the House of Lords, the Bill was not far off from Royal Ascent, and the opposition would be unlikely to hold this back further. 

One positive for the PRS had been the Conservative’s decision to postpone the abolishment of Section 21 until sufficient court reforms had taken place to prepare for the increase in court-based, or Section 8, evictions.

Should Labour win the election, the ban on Section 21 evictions will face less opposition from the Party’s backbenchers, and therefore it’s unlikely they will hold off on plans to scrap ‘no fault’ evictions any longer. What’s more, the Party’s full Renters’ Charter is tougher on the PRS than the Renters’ Reform Bill, reducing Landlords’ eviction powers for tenants in arrears and allowing tenants to make alterations to a property.

In addition, the Liberal Democrats’ manifesto promises to immediately ban ‘no fault’ evictions, introduce three-year tenancies as the default, and, similar to both the Conservatives and the Labour Party, establish a national register of licensed landlords.

 

Stamp Duty Land Tax and Capital Gains Tax Cuts


Stamp Duty Land Tax (SDLT) will be a central issue for many voters. Currently, landlords and second-home owners pay a 3% additional property surcharge, which is unlikely to change anytime soon, regardless of who wins the election. However, many had been hoping that the SDLT thresholds may increase in line with inflation. Whilst neither party has mentioned whether these measures would be introduced, rumours of the Conservatives raising the threshold for no tax on residential purchases from £250,000 to £300,000 had surfaced around the time of the Spring budget. Despite these rumours, these plans never came to fruition.

The Conservatives have pledged, however, to permanently abolish stamp duty for properties up to £425,000 for first-time buyers, which is currently set to end in March next year.

As it stands, Labour’s stance on SDLT is unclear. Once we have their full manifesto, we will let you know.

Regardless of voters’ hopes for a cut to this tax, it’s unlikely the Treasury will sanction any cuts to stamp duty whatsoever, as the tax brought in £11.61 billion in the 2023-2024 tax year.

As part of the Conservatives' newly published manifesto, the Party has pledged to scrap Capital Gains Tax (CGT) for landlords selling to sitting tenants. The scheme will last up to two years and aims to free up more housing stock from the PRS and help renters get onto the housing ladder.

Whilst it's clear tenants need more support than ever in the current housing market, this feels like yet another blow from the government. This pledge appears to be an attempt to discourage landlords from the property market, yet renters rely heavily on the private rental stock. If many landlords choose to sell, where will that leave tenants? The number of tenants who can take advantage of this is unclear, with the pledge set to cost £20m a year.  

Labour has again refused to rule out raising CGT or corporation tax should they win the election.


Holiday Lets and Second Homes


Neither the Conservatives nor the Labour government are likely to reverse the tightening of taxes on holiday lets and second homes. The Conservatives have already given the go-ahead to allow local councils in England to charge second-home owners council tax at double the rate from April 2025, which Labour are almost certain to uphold.

Furthermore, the Conservatives have both removed the Furnished Holiday Lettings tax regime from holiday let owners and announced plans to introduce a new mandatory national register to monitor the number of short-term lets. This would involve requiring planning permission from the local council to let a property as a holiday let.

Given the current attitudes towards second homes and holiday let properties, it’s unlikely that either Party will promise improvements for this sector.

 

Leasehold reform


The Leasehold and Freehold Reform Bill, announced in the King’s Speech last November, set out to make it cheaper and easier for existing leaseholders to buy the freehold of their properties. Describing the system as “feudal”, Michael Gove planned to phase out leaseholds completely by ensuring all new houses were sold as freehold properties, whilst simultaneously overhauling the process of extending leases.

The Ground Rent Act 2022 already limits ground rents to a “peppercorn” rate to help leaseholders save in the cost of the freehold purchase.

Similarly to the Renters’ Reform Bill, the Leasehold and Freehold Reform Bill is still at the report stage in the House of Lords. As such, it’s likely that the Conservatives would continue with this Bill as it stands if they are re-elected.

Labour may look to go further than the Conservatives when it comes to abolishing leaseholds, although it’s unclear yet what these plans may involve. The Party has committed to enacting the Law Commission’s recommendations regarding Leaseholds, but many campaigners wish to see all flat-owners at least own a share of the freehold or become common holders.

 

Building and Planning: New Homes Targets


Despite setting out a target of building 300,000 new homes every year by the mid-2020s back in 2021, the Conservatives later updated these targets to ‘advisory’ in December 2022.

Looking forward, the Conservatives have introduced ‘design codes’ to give local residents input into rules for “building beautifully.” As part of this new plan, the Party plans to make it easier to get planning permission on previously developed brownfield sites if housebuilding drops below expected levels in Britain’s 20 largest cities.

In stark contrast, Labour has committed to being the “builders, not the blockers,” promising 1.5 million homes over five years, a minimum of 300,000 every year until 2029. This will involve loosening planning laws on “grey belt” land – areas of ‘low-quality’ green belt where building is otherwise banned to limit development. The Party has ruled out building on “genuine nature spots”, although the Conservatives still claim Labour’s policies “ignore the concerns” of residents.

 

Affordable housing


The lack of affordable housing has underpinned the conversations of the property market over the last few years. To boost their campaign, the Conservatives plan to reintroduce their Help To Buy scheme, allowing first-time buyers to get onto the property ladder with just a 5% deposit. In a revision to the old scheme, the government will provide a 20% loan, with the developers also expected to contribute.

Angela Rayner has promised that 40% of every new development will be made up of affordable homes, with a mix of social and council housing and other tenures. Labour has also announced plans to launch a new Freedom to Buy scheme to help 80,000 young people get onto the housing ladder in the next five years.

The scheme allows the government to act as a permanent mortgage guarantor and involved establishing ‘insured’ mortgages as an integral part of the market for lenders and borrowers.

 

Written by Jeni Browne and taken from Mortgage Finance Brokers Online

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