Reflecting on the landslide general election result today, we wanted to dive into the Labour governments initiatives impacting the property development market. We are pleased to see Starmer prioritising the building of 1.5 million new homes, as well as the continuation of policies giving first-time buyers greater access to the housing market.
In this post we will share the main initiatives of the Labour government impacting property development and housing.
Build new homes
Labour are in support of new build development, promising to build 1.5 million homes in the next 5 years. This is quite a major part of Starmers growth plan although exact details are yet to be announced.
Increase planning officers
By increasing stamp duty on purchases of non-residential property by non-UK buyers, the Labour government hope to create a £20 million fund for 300 additional planning officers. This should help to plug the existing shortfall and allow planning applications to speed up, although it is argued that much more than this is needed for real growth.
Extend the Stamp Duty higher threshold for first-time buyers
The conservatives previously raised the stamp duty threshold for first-time buyers from £300,000 to £425,000. This relief is due to end next year. This has been great for the property market, opening up demand for properties in popular areas and giving property developers more room for profit on smaller renovations and builds.
The labour government plans to extend this relief until at least March 2025, with no announcement on what will happen beyond this date.
First-time buyers help
Labour has an ambitious plan to get 80,000 more first-time buyers onto the property ladder. They will be offering ‘local’ buyers VIP access to new build property developments, over and above international investors who buy the whole lot before anyone else gets a chance.
They will also be offering a comprehensive mortgage guarantee scheme, which compensates mortgage lenders for a portion of their losses in the event of a repossession. The lender only takes on a 5% loss risk and the government fronts the rest, giving lenders much more security to loan to first-time buyers with smaller deposits.
Mortgages
It gets a bit fluffier here, but Labour have plans to keep mortgage rates ‘as low as possible’ which is obviously a huge help for buyers and property developers alike. This is probably more of a wait-and-see policy as it depends what happens to interest rates in the coming years as the economy shifts.
Labour also have a ‘Freedom to Buy’ mortgage guarantee scheme aimed at first-time buyers with smaller deposits. The scheme will give first-time buyers access to mortgages for up to 95% of a property’s value, supported also by the mortgage guarantee scheme to effectively act as guarantors. This could be a real game-changer for those with smaller deposits but the ability to pay monthly mortgage payments.
Brownfield & ‘Grey-belt’ Sites
Labour plan to create a ‘planning passport’ for urban brownfield sites, with fast-track planning approval to deliver high-density housing. Following that, Labour hope to review the potential ‘grey-belt’ areas like car parks which could be developed on.
With planning permission applications currently at an all-time low and new home builds as low as 160,000 per year, the new labour government have ambitious plans to boost the property development market!
Going green with EPC C
The new Labour government plan to ensure all private rental properties are rated EPC C by 2030. For property developers, green initiatives should be a top consideration, ensuring sustainable heating, insulation and power solutions are part of the build so they don’t become an expensive afterthought.
It is also expected that Starmer intends to update the National Policy Planning Framework (NPPF) which will put a more favourable emphasis on sustainable building development.
We write this post on the day of the election result, so let’s watch this space for what our new Labour government have in store.
