Jim J Davidson July 9, 2023
In the current political climate, it appears increasingly likely that the next government in the UK will be a Labour government. Although a general election is not expected until 2024, it is prudent to examine what this could mean...
In the current political climate, it appears increasingly likely that the next government in the UK will be a Labour government. Although a general election is not expected until 2024, it is prudent to examine what this could mean for the property industry. Specifically, two areas of interest are the buy-to-let market and property development market.
Regarding the rental market, a Labour government is likely to focus on protecting renters' rights and controlling rents. This could involve implementing rent controls or introducing legislation to limit rent increases to a certain percentage. Additionally, there would be continued emphasis on legislation to improve the quality of rental properties and ensure compliance with regulations.
Looking at the property development market, there is both good news and bad news. Labour's previous manifesto commitments, led by Jeremy Corbyn, who had more left-leaning policies than current leader Keir Starmer, provide some insight. While the specifics may be modified, it is expected that certain policies will carry over to a new Labour government.
Labour aims to address the issue of substandard rental homes by introducing a consumer rights revolution for renters. This would bring private renting into the 21st century and ensure that rented houses meet acceptable standards. Rogue landlords would be named and shamed, and heavy fines imposed on those who fail to meet minimum standards.
Another proposal is to make three-year tenancies the norm, with controls on rent rises to prevent them from exceeding inflation. It's important to note that this was written before the recent high inflation rates. Additionally, each of the four nations within the UK has control over its own housing policies, so the impact may vary across regions. Interestingly, while the UK Labour government would introduce three-year tenancies, the Scottish National Party in Scotland has no minimum tenancy requirements, allowing tenants to terminate agreements within a month.
Labour criticizes the Conservative government's handling of the housing crisis and proposes to prioritize smaller developers over larger ones. They plan to implement a "use it or lose it" clause for developers who hold onto land without building on it. They also suggest elevating the position of housing minister to the level of a housing secretary, emphasizing their commitment to addressing housing issues.
To tackle the housing shortage, Labour's target is to build at least one million homes in England during the next parliament. While this policy would initially apply to England, there is a likelihood that devolved administrations may adopt similar measures. Furthermore, local authorities would be given more powers to build homes and use compulsory purchase to acquire land at fairer prices. This could affect larger developers who engage in land banking.
Labour highlights the success of New Towns built by a previous Labour government, mentioning their intention to create a housing department target and support council housing programs. They plan to extend the Help to Buy scheme for commercial house builders and provide certainty by extending it until 2027.
The party also shows interest in the custom building sector, aiming to encourage local authorities to make sites available for custom builders and promote financing options for them. They propose making the land registry system more accessible and transparent, similar to the Scottish system.
While we can't predict the exact policies of a future Labour government, the aforementioned proposals give us an indication of their likely direction. It is crucial for individuals and businesses in the property industry to be aware of these potential changes and prepare accordingly. Even if the Conservative government remains in power, they are also moving in a similar direction with certain policies. Stay informed and adapt to the changing landscape.
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