After 50 days of a Labour government, there have been several headline grabbing announcements regarding the property industry. Here we’ll take a closer look at some of the key pledges.
“Get Britain Building Again”
Perhaps the biggest announcement when it comes to housing has been the plan to build 1.5 million new homes over the next five years. This has been met with relief from some and scepticism from others.
Labour aim to achieve this goal in a number of ways including the reintroduction of housing targets, prioritising brownfield and “grey-belt” land and reforming planning processes. It is reported local people and first-time buyers will be given priority when it comes to affordable and social rent housing to help those who may be struggling to get on the property ladder.
Immediate reaction has varied. The Chief Executive of the House Building Federation, Neil Jefferson, told the Financial Reporter he believes the planning reforms proposed by Labour will address the main constraint put on housebuilding in recent years. However, not everyone agrees that this policy is the silver bullet. The Economist has calculated the overall impact 1.5m new homes could have on house prices, looking at comparisons to current building stats, interest rates, population rises and so on. Their results suggest a negligible difference will be made to overall house prices. However, they do note potential for a much more convincing change should this attitude continue past the five-year mark to make a long-term difference.
As the government reveal more details many will be paying close attention. For example, the government have revealed plans to raise social rents to boost the building of affordable housing. Each announcement will have different implications for different groups of people so it will be interesting to watch the reactions of industry professionals and consumers alike.
John Doyle, Head of New Homes at OnTheMarket, said:
“It’s been an interesting few weeks for the new homes sector since Labour won the General Election. The pledge to build 1.5 million new homes presents a lot of opportunities with the well documented lack of housing supply.
“However, with increased opportunity comes increased pressure. There will be targets for local authorities to meet, both in terms of numbers and timings, while properties will need to be built to a high quality and specification as well as catering across all of the demographics from First Time Buyer to Retirement.
“Over the next five years we will see what kind of balance is able to be struck and what effect is had on the housing market in general.”
Reforming the National Planning Policy Framework
In order to achieve their goal of building 1.5m new homes, Labour have announced their plan to reform the National Planning Policy Framework (NPPF). The hope is that this will make it easier and quicker for planning permission to be granted, encouraging more building.
Key aspects of these reforms will include bringing back mandatory housing targets, opening up brownfield and “grey-belt” land and introducing “golden rules” for green-belt land (half of homes must be affordable, the plans must enhance the local environment and infrastructure must be in place to support).
Labour also hope to appoint 300 new planning officers to provide the resources needed to ease planning applications.
While developers celebrate the easing of planning processes, others are concerned about the implications of rushing applications and inexperienced planning officers. Urban Planning professors from the University of Manchester explain experience and attention for detail is needed when considering plans for such large-scale builds. Factors such as the quality and safety of housing, the environmental impact and capabilities of local infrastructure should be included. When new officers are attempting to meet higher than usual targets, these factors risk being overlooked. As the new government continue to settle in, we will see how far they are willing to push the boundaries set by their predecessors.
Renters’ Rights Bill
While we wait for more information about the Renters’ Rights Bill we do know Labour have committed to progress the Bill, first laid out by the Conservatives as the Renters’ (Reform) Bill.
Labour’s vision of the bill aims to “level the playing field” between landlords and tenants. Among other things, they plan to end no-fault evictions, encourage tenants to challenge rent increases and put a stop to bidding wars. Awaab’s Law is also due to be extended to the private rental sector, punishing landlords or agents who don’t fix damp and mould quickly.
Tenants will be looking forward to these reforms, however there are those who believe finding a balance is key. Given the perceived level of dependence on the rental sector at the moment, it is important not to push landlords into selling. The British Landlords Association suggests these measures could dampen investor confidence in the rental market, leading to current landlords selling and prospective landlords deciding against investing. As with any policy, Labour will be learning that there are often competing interests that need to be balanced, and it will be fascinating to see which side they fall on.
Warm homes plan
The new government have pledged to spend £6.6 billion over the next 5 years on improving the energy efficiency of five million homes. This will cut bills for families while helping in the fight against climate change.
The money will be distributed through grants and low-interest loans to allow people to invest in insulation and other improvements, such as solar panels or low-carbon heating. Partnerships are planned with local authorities and devolved governments as well as private sector organisations including banks.
Despite the budget being cut from £6bn a year previously promised, with the help of banks and other organisations this could be a promising initiative. Here, potential customers need to research the options available to them, both from the government and private organisations, to make substantial savings, cut bills and help the environment.
Schools
Finally, a key policy included in Labour’s manifesto was the removal of private schools’ charitable status, therefore adding VAT onto school fees. The schooling system isn’t the only area likely to be affected. OnTheMarket data has already shown a significant increase in the number of searches for homes around some of the UK’s top-rated grammar schools.
Over the course of July this year, many locations have seen volume of interest more than double compared to July 2023. For example, the area surrounding King Edward VI Camp Hill in Birmingham saw the number of searches increase by 166% while Dartford Gramma School in Kent saw an increase of 151%. Other areas in London have seen interest more than double.
This trend is likely to continue as we get closer to the introduction of VAT on school fees in January 2025 so we may see house prices rise in these areas due to increased demand.
Looking forward
Fifty days is a long time in politics but with nearly five years to go there is a long stretch ahead of this Labour government. They have hit the ground running and announced some ambitious targets. Many opinions have been expressed so far but only time will tell how successful the government will be in achieving its stated objectives. We eagerly await the Autumn Budget in October, where we hope for more details about the initiatives proposed and how they will be funded.
