FINANCE
EXPERT COMMENT
Labour’s plan to build 1.5 million more homes is a welcome policy initiative that will surely get more people on the property ladder. The way these targets are delivered is crucial as there is a lack of affordable housing in many parts of the country. However, any planning reforms should ensure that communities are being supported by infrastructure rather than just housing estates. We do not anticipate any immediate changes to the mortgage market. The sticking point for mortgages is the current base rate, and while overall in ation is within target, in ation for core services remains high. The Bank of England is not in a rush to lower interest rates without knowing for certain that in ation won’t be at risk of ticking upwards again. Rate cuts are more effective in stimulating the market than mortgage guarantee schemes. Labour has teased that there may be a new version of the Help to Buy scheme on the horizon. The buy-to-let market may see the most volatility, as potential increases to Capital Gains Tax might cause more landlords to exit the market, or pass the increased costs over to tenants. A proposed ban on “no fault” evictions will be a safety net for some tenants.
Fruits of Labour? The new Labour Government is promising a wave of housebuilding, more affordable homes and reforms to the leasehold system. Kay Hill examines the party’s promises
for landlords to evict tenants, will allow tenants to “challenge rent increases designed to force them out by the backdoor” and will “introduce new laws to end the practice of bidding wars by landlords and letting agents”. Greater security will be welcomed by tenants, but if too many landlords exit the business, prices could go up rather than down. “As landlords adjust to these changes, there could be a temporary reduction in the supply of rental properties,” says Charles Kelly in his Money Tips Podcast. “Some landlords might sell their properties, leading to a more competitive market for remaining rental units.” And the plans to end prospective tenants bidding against each other could also backfire, says Prof Alex Marsh, Professor of Public Policy at the University of Bristol. “Another possibility is that a ban on bidding wars results in a one-off upward adjustment in rents. Rather than advertise a property at £1,500 a month and use the bidding
Labour swept to power in the General Election on a manifesto promising improved rights for tenants, more new houses and an overhaul of leasehold. The election was swiftly followed by a speech by new Chancellor Rachel Reeves, in which she promised to “get Britain building again”, and the King’s Speech at the State Opening of Parliament, which set out immediate plans to reform the planning system, abolish no- fault evictions and “bring the feudal leasehold system to end”. Looking at these policies in more detail, what are they likely to achieve to help first time buyers? TENANTS’ RIGHTS The high costs of renting have been disastrous for those who are trying to save a deposit, and the uncertainty of renting may push people to buy before they are ready. Labour will introduce a Renters’ Rights Bill, which will make it harder
Iain McKenzie, CEO, The Guild of Property Professionals
98 First Time Buyer October/November 2024
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