WHAT IMPACT WILL THE NEW GOVERNMENT HAVE ON THE HOUSING MARKET?
With the election called and decisively settled and a new Prime Minister safely installed in Downing Street with a massive majority, both sellers and landlords should be looking to the future.
But what does that hold? What impact will the new government have on the housing market?
A Promise To Get Britain Building Again
Certainly, the housing market is a priority. Since coming to power on July 5, Labour has expanded on its commitment to ‘get Britain building again’ with a promise to build 1.5 million houses over the next five years.
In her first speech, new chancellor Rachel Reeves said that planning reform would play a major role in the expansion of available homes to buy and would include the review of greenbelt boundaries.
Over the longer term, the greater availability of stock will reduce the current demand and supply imbalance evident in both the buying and rental markets.
Support For First-Time Buyers
Labour has also committed to a permanent mortgage guarantee scheme, rather than the temporary one which was in place under the Conservatives. Its scheme, Freedom to Buy, will aim to provide greater assistance to those first-time buyers struggling to save for the deposits they need.
This, coupled with the wider availability of stock, will enable more renters to move from renting to getting their first steps on the property ladder.
Market And Economic Stability
Another consequence of the new government on the housing market is the prospect of market stability. The fact that the election is now over means the focus has moved to implementing policies outlined in Labour’s manifesto. And that brings greater clarity and stability to the market rather than the uncertainty faced previously.
This is coupled with the fact that with inflation finally hitting its 2% target, base rate cuts are now likely in the next Bank of England review on 1 August. Although mortgage rates have already begun to fall in anticipation of this, it will be base rate cuts that prompt more substantial reductions.
More reforms for landlords
In the short term, rental demand is likely to continue to restrict supply – especially until mortgage affordability improves. Landlords will, however, have to prepare for rental reform. Labour has pledged to end Section 21 no-fault evictions although, to date, it has yet to outline how it will do that. It had previously pledged an immediate end when it came to power.
The government is also calling for improved standards in private rented properties, particularly around life-threatening hazards such as damp and mould, by imposing stricter deadlines on when such issues get resolved. The reality is that responsible landlords will be sorting out such problems quickly anyway.
Labour has also said it will enable a fairer system for rent reviews, although with a tribunal system already in place, it’s not yet clear what this will entail or how that will impact landlords. In the short term, expect Labour’s version of the Conservatives’ Renters (Reform) Bill (which was abandoned when the election was called) coming soon to a Parliament near you.
Proctors is an independent network of individual estate agent businesses with branches in Beckenham, Bromley, Park Langley, Petts Wood, Shirley and West Wickham. We’ve been helping our customers with buying, selling and letting in these areas since 1946. Get in touch to find out how we can help you with your property requirements.