With Labour now in government, a fresh wave of policies and promises is set to reshape the housing and property markets. Their manifesto outlines ambitious and hopeful plans to tackle housing affordability, enhance renters’ rights, and address homelessness, aiming to create a fairer and more inclusive housing landscape. While these changes bring opportunities, they also come with some questions. Before looking into the specifics, let’s take a closer look at the recent impacts of the election.
According to the latest UK Property Market Stats Show on YouTube for the week ending Sunday, 4th August 2024, the UK property market continues to demonstrate resilience and strength. UK house prices for homes sold (subject to contract) in July have remained robust at £348 per square foot, reflecting a 6% increase since January 2024.
Property listings are also on the rise, with 35,100 new listings recorded this week. This figure is 7% higher year-to-date than the average from 2017 to 2019 and 7.5% higher than the same period in 2023. This suggests a continued confidence among homeowners to list their properties in the current market.
Sales figures further reinforce this positive trend. Total gross sales reached 25,700—an impressive 21.3% increase compared to the same week in 2023. These sales are also 6.7% higher than the 2017 to 2019 year-to-date levels and 11.3% higher than year-to-date levels in 2023. Net sales stood at 19,300 this week, marking a substantial 27.8% increase from the same week in 2023 and a 13.6% rise compared to year-to-date levels in 2023.
When looking at the percentage of homes exchanging versus those unsold, the data reveals that in July 2024, 52.47% of homes that left UK estate agents’ books successfully exchanged contracts, while 47.53% were withdrawn from the market unsold. This indicates that while there is still a solid chance of selling, the outcome is akin to a flip of the coin for many homeowners.
Sale fall-throughs have slightly decreased, dipping to 25% of gross sales agreed this week, down from 26.7% the previous week. While this is above the long-term seven-year average of 24.2%, it is a marked improvement from the over 40% fall-through rate seen during the Truss Budget. This decline suggests increasing stability in the market, despite recent fluctuations.
In summary, the general election has not significantly impacted the UK property market. House prices continue to rise, listings and sales have increased, and the market remains strong, providing a positive outlook for homeowners and landlords.
Addressing the Housing Shortage
Labour aims to build at least 150,000 council and social homes each year to tackle the severe shortage of affordable housing. Many of these new homes will be council houses, offering affordable options for families and individuals. However, there are concerns about the feasibility of this ambitious goal, especially regarding funding.
Labour’s manifesto includes reinstating housebuilding targets for local authorities, hiring 300 more planning officers funded by increased stamp duty for overseas buyers, and selecting sites for new towns by year-end. They also plan to revise compulsory purchase rules to eliminate ‘hope value’, reclassify some green belt areas as ‘grey belt’ for potential development, give local buyers priority for new homes, and propose a permanent mortgage guarantee scheme.
While these ideas have potential, Labour’s approach faces challenges. Using compulsory purchase powers could help provide affordable housing, but balancing property rights and addressing opposition from local communities will be difficult. Previous governments have struggled with ambitious housebuilding plans, and Labour’s stance on issues like nutrient neutrality rules remains vague, raising doubts about their ability to implement these changes effectively.
Enhancing Renters’ Rights
Labour plans to abolish Section 21 evictions, which will provide more stability for renters. However, this change will only be implemented after the courts are reformed, which could take years. Labour also intends to introduce rent controls to cap excessive rent hikes, though this has proven contentious in other markets. Historical data from Scotland and elsewhere suggests that rent controls often lead to decreased investment in rental properties and a reduction in the overall quality of available housing.
Other key Labour measures include ending bidding wars for rental properties and mandating that all rental homes meet an EPC rating of C or above by 2030. These policies aim to provide more stability and affordability for renters, with Labour estimating that energy efficiency improvements could save tenants £250 annually. While these changes benefit tenants, they also impose new responsibilities on landlords, requiring them to invest in property upgrades and adhere to stricter rental practices.
Another significant change for the rental sector is the creation of a national landlord register. This initiative aims to improve standards and accountability in the private rental market, ensuring landlords maintain their properties to a decent standard.
Supporting First-Time Buyers
Labour’s manifesto promises to support first-time buyers by reducing barriers to homeownership. This includes increasing the availability of affordable housing and offering financial incentives. Such measures could stimulate market activity and make it easier for young people and families to purchase their first home, although the specifics of these policies remain vague.
Tackling Homelessness
Labour is committed to ending rough sleeping within five years by increasing support and housing options for people experiencing homelessness. This pledge highlights a significant focus on social welfare and community well-being.
Regulating the Housing Market
Labour also intends to reform land and property taxes to ensure fairness and efficiency in the housing market. Additionally, they aim to curb property speculation and reduce the number of vacant homes by imposing higher taxes on empty properties. These measures could stabilise the market and make housing more accessible.
Implications for Cambridge Landlords and Homeowners
These policies will bring changes, especially for Cambridge landlords. Increased regulation, particularly in the rental sector, will require landlords to ensure they are getting the most value from their investments. With some of these changes on the horizon, Cambridge landlords should seriously consider making necessary adjustments in the coming months. Get in touch with the Bush & Co lettings team on 01223 508085 if you need any advice.
The push for affordable housing and support for first-time buyers might alter market dynamics in the rental and lower-priced starter home markets, potentially impacting property prices and rental rates.
Furthermore, focusing on energy efficiency and sustainability will likely lead to new opportunities and challenges in property development and management.
For Cambridge homeowners, the changes are expected to be minimal. Building more homes will temper house price growth, but this isn’t always a bad thing. People tend to move when they need to, not based on house prices. So overall, significant changes for Cambridge homeowners and house sales over the next five years are unlikely.
In conclusion, while Labour’s manifesto presents a comprehensive plan to address housing issues, it will likely take time before significant changes are felt in Cambridge. Landlords should prepare for a slightly more regulated environment but given the gradual increase in regulation over the last decade, the immediate impacts may be limited as the government navigates the complexities of implementing these ambitious policies.
