Key Highlights

Just two months ago, Labour won the UK’s 2024 general election by a landslide, winning a majority of 411 seats in parliament. Wherever you sit on the political spectrum, it has been an interesting time for UK politics. Now, with a new Labour government ushered in, what does the future of the property investment industry look like and what has happened in the past couple of months that have affected it? What’s happened? What’s changed? What hasn’t?

Here are a few things that Labour has either announced in their manifesto or intended to review, which investors and landlords should be aware of.

What Has Labour Announced?

Build New Homes

A key takeaway from their manifesto is their pledge to build a total of 1.5 million homes over the course of the next five years. This is certainly a tall order and it currently remains to be seen as to whether this will actually be achievable. It is worth pointing out that this initiative will focus specifically on affordable and social housing. The housing demand has become particularly acute in recent years as the UK’s population has grown and grown. The UK population is soon to hit 70 million people (the current figure is exactly 69,187,847 as of August 2024 if you want the specifics). London is already predicted to hit 10 million residents by 2030.

In the past few years, due to the lack of affordable housing for many UK residents, the government has looked to the private sector to help meet this demand through private rentals. With a drive for social housing, the private property rental market would experience a reduction as more people become able to purchase their own homes, should Labour’s pledge be fulfilled. However, this is only in the event that the government would meet this quota and that is still a long way off, meaning that investing in property is still a lucrative business idea.

Stricter Regulations

Part of their manifesto also included sweeping reforms in the property industry, in all its forms. This can only be a welcome change for developers, investors, agencies, landlords, and tenants alike. There is to be a greater focus on increasing transparency within the residential property market, along with improving consumer protection. This will benefit everyone in the property market chain. It is expected that more thorough checks on agencies and developers will be introduced, along with more severe penalties for those who do not meet these new standards. While all of this might come with a lot of red tape and some learning curves, it can only be a welcome addition as it creates a much more honest and accountable industry that benefits everyone.

Stamp Duty And Taxation Changes

Another interesting and notable change the government has pledged to implement is the changes to Stamp Duty and its exemptions. Currently, their plan is to reduce the Stamp Duty exemption threshold to £300,000 at the start of the next fiscal year in 2025, reducing it from the current £425,000. This is a positive and welcome change for many as it will directly benefit first-time buyers and those purchasing their first property with the idea of renting it out.

However, different rules will apply to overseas investors. Stamp Duty tax is higher on purchases of residential property by non-UK residents. As part of their manifesto, there are plans to increase this rate by 1%. While this may dissuade investors, 1% is only a small change and is not expected to massively impact their investments in the future.

Green Policies And Sustainable Housing

Sustainability has become a key focus for the government as we look to make a greener and cleaner planet for all. While this doesn’t necessarily impact everyone, it will be something to consider for investors and especially for developers. So far, it is expected that developers will have to focus more on making energy-efficient homes and adhering to green building practices. This could be a net benefit for investors, as they will be able to market their properties to tenants as being green, efficient, and cost-effective.

Renter’s Charter

Another major policy that those in the property industry need to know about is the proposed Renter’s Charter. The Renter’s Charter has been proposed to protect tenants’ rights and it is something potential investors should understand. It pledges to end Section 21 evictions, extend notice periods, and more. Ending Section 21 evictions is set to protect tenants from being evicted for no reason. Section 21 enables a landlord to evict a tenant without providing a specific reason, which is why it is often referred to as a “no-fault” eviction.

Other things expected to be potentially part of the charter include letting tenants keep pets and make “small and reasonable” changes to the property they reside in. Currently, it is not overly clear what changes will be permissible, but it is something investors should be aware of. It will also potentially include a mandatory 4-month notice period to give to tenants.

Rent Capping

It has been previously announced that the government would look into rent capping. It means that while a tenant is situated in a property, a landlord will be able to increase rent but these increases will be capped. Landlords will only be able to make significant increases between tenancies.

Leasehold Reform

Just before leaving parliament, Rishi Sunak introduced the Leasehold Reform Act 2024. The reform was set out to give homeowners more rights and power over their homes. The Act makes it easier and more affordable for leaseholders to buy their freehold. It also enables the increase of standard lease extension terms to 990 years for houses and flats, as well as providing much more transparency over service charges. Homeowners will also be able to more easily challenge unreasonable charges from their landlords at Tribunal.

According to the government website, this reform will further ban the sale of new leasehold houses (not flats) unless only in truly exceptional circumstances.  It will end excessive building insurance commissions for freeholders and managing agents. It will also remove the requirement for a new leaseholder to have owned their property (for both houses and flats) for two years before they are able to either buy or extend the lease.

With Labour now in power, what now? The new government has previously outlined that it was committed to ending the leasehold system, though this pledge was dropped from being actioned within the government’s first 100 days after taking office. However, it is still apparent that they wish to continue with and uphold this reform. They have announced that they will enable all of the Law Commission proposals on leasehold enfranchisement, right to manage, and commonhold. The party has said it would also solve ground rent charges and unfair maintenance costs. Currently, there is no strict timeline but it is on the horizon and will bring a lot of benefits to those who already have properties or are looking to invest.

Summary

North Property Group is a premium end-to-end property investment and lettings agency with bases in London, Leeds, and Manchester. We service multiple cities across England and liaise with the UK’s best developers to bring investors the best deals and properties on the market today. We are a tight-knit team of experts who can offer critical and insightful guidance, especially as the property industry will see some big changes in the coming years. But don’t worry, we’re here for you.

We can offer advice on securing fantastic homes across England, helping investors unlock their potential, and tap into a fast-growing market. We can manage the legal and financial aspects, providing peace of mind at a time when you need to focus on what really matters – your investments. Book a call with us today to find out more about how we can help.