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The five main parties’ manifesto pledges for housing, #GE2024

Last Updated: 27-06-2024

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    So, here we are: a week away from a General Election that no one saw coming. Well, apart from a few government insiders, but the less said about that the better.

    Today, we’re looking at the imminent future of housing and property based on the five main parties’ manifesto pledges. True: it seems that anything but a Tory-style implosion of epic scale will derail Labour’s canter past the winning post. But, for posterity, it’s only fair we document all policies tabled ahead of the 2024 General Election.

    Interest rates: the black hole that pulled the whole housing spectrum onto the main stage

    For the past four General Elections, there’ve been much higher priorities for the electorate than housing. Mortgage interest rates have stayed low since the Global Financial Crisis, thus, off the radar.

    The Conservative government inherited a BoE base rate from the outgoing Labour government (May 6, 2010) of 0.50%. For most of their subsequent 14-year tenure, that Base Rate stayed low, hovering between 0.10% and 1.0%.

    But interest rates began to rise after the pandemic, peaking at 2.25% under Boris Johnson. Then Liz Truss’ 7-week reign doused those slow-burning embers in petrol. During her and Rishi Sunak’s times in office, the Base Rate surged from 2.25% to 5.25% (Sept. ’22 – Aug ’23), where it remains today.

    Whilst interest rates are only a part of the current UK housing problem, they’ve served as an amplifier for the whole shooting match and kaboodle. Everything from Stamp Duty to Rental Reform, Right-to-Buy to Capital Gains Tax, and from first-time buyers to affordable housing, are hot topics.

    Parties’ policies addressing this housing spectrum could well be decisive when we go to the ballot box on July 4th. So, let’s break down each topic by party pledge:

    New and affordable homes

    All parties recognise the desperate need for new, affordable homes. Whilst there’s been a trickle of new developments under Johnson/Truss/Sunak, the total’s nowhere near the target set at the last election.

    Perhaps more importantly, many of the properties favoured by developers during this time have been of the wrong type. Construction firms have optimised profit per square metre, making them unaffordable for most first-time buyers.

    Since the last election, average monthly mortgage repayments have risen more than 60%. The average first-time buyer should now expect to budget £1,000/month for the privilege of owning their own home. This is forcing first-time buyers to either take out exceedingly long mortgages or buy a smaller property.

    Here’s how each party intends to address this high-priority problem:

    Labour: ‘Freedom to Buy’

    Labour has promised to build 1,500,000 throughout the next government, should they get into #10. In addition, their Freedom to Buy policy is aimed at first-time buyers, helping them access the property ladder with just 5% deposit. But, despite their claim that their government will see the “biggest increase in social and affordable housebuilding in a generation”, does this policy go far enough?

    Prior to launching their manifesto, Labour stated that 40% of all new homes built would be ‘affordable’. That figure was conspicuous by its absence, its omission drawing criticism from a wide section of stakeholders.

    Conservative: Help-to-Buy

    The Conservative manifesto promises to build 1,600,000 homes should they be successful next month. That’s not dissimilar to the promise in their 2019 manifesto, which they eventually scrapped when it was apparent they’d miss that target towards the end of last year.

    To achieve the figure this time around, the Conservatives would fall back on their Help-to-Buy policy. Whilst this has had some success in getting first-time buyers onto the property ladder with just 5% deposit, not everyone’s convinced that it’s done new homeowners any favours.

    Lib Dem: 150,000 new social housing builds a year

    Labour and Lib Dems’ housing targets are similar, with the Lib Dems promising 380,000 new homes a year. Of those, 150,000 new properties would be set aside for social housing.

    The Lib Dems, however, are looking at a different way of turning tenants into homeowners. They’d implement a ‘Rent-to-Own’ scheme, which would see tenants own their own homes after renting them for 30 years.

    This is a tried-and-tested method in Europe. And, when you think of the length of some of the mortgages first-time buyers are having to take out, it’s more than feasible that a tenant could own the roof over their head long before their mortgaged peers.

    Reform UK: putting locals first

    There’s a common theme throughout Reform UK’s manifesto: repaying those who’ve paid into the system. Their housing policy is no different.

    Both Labour and the Lib Dems have elements in their manifestos that aim to give people living close to new developments first dibs on those new homes. Reform UK take that a step further, stating “Foreign nationals must go to the back of the queue. Not the front.”

    Greens: “Right Homes, Right Place, Right Price

    Green Party housing policies focus on affordability, sustainability and social housing while addressing the balance of power between landlords and tenants.

    Its “Right Homes, Right Place, Right Price” housing charter mandates local authorities and national government to collaborate on delivering affordable homes, although no specific targets have been set.

    However, in common with the Lib Dems, the party is committed to providing 150,000 social homes through new builds and refurbishments and ending the right to buy local authority housing.

    Stamp Duty

    We’re currently enjoying a Stamp Duty holiday under the Conservatives. First-time buyers are exempt from the tax up to the value of £425,000 (which, on the last year’s figures, accounts for 94% of them). Those who’ve owned property before are enjoying tax relief up to £250,000 compared to the non-holiday rate of £125,000.

    Will the government make these permanent? And what are the other parties offering?

    Labour: foreign buyer surcharge

    There’s nothing in the Labour manifesto to say they’ll cut the Stamp Duty holiday short. But they say nothing about their plans for the tax for domestic homebuyers, either.

    Rather, they’re looking to raise extra money (£40,000,000) by imposing an additional 1% surcharge on foreign buyers. That means foreign homebuyers would pay +3% on top of the current SDLT rates for a first home, and +6% for each additional property they buy.

    Conservatives: Family Home Tax Guarantee

    The Conservatives have promised to make the current holiday rate for first-time buyers permanent. And, under the Family Home Tax Guarantee, they would also lock in the current non-holiday rate bands.

    But the manifesto doesn’t state whether that Guarantee includes the holiday rate of £250,000 for existing property homeowners.

    Lib Dems, Greens, and Reform: little to see, here

    Apart from the Lib Dems ceding power to local authorities to add Stamp Duty surcharges for foreign buyers, there’s nothing specific about SDLT.

    Second Homes/Holiday Lets

    It’s not just in this country that locals in picturesque towns are up in arms about out-of-towners buying up property to use as a second home or holiday let. This summer, we’ve seen Italian residents up in arms about ‘Insta-visitors’. And the protests in the Canaries about English and German ex-pats buying up property to use as Airbnbs are well documented.

    So, what are the parties promising to help locals keep the rental revenue in their parishes?

    Labour: redefining what short let is?

    In their manifesto, Labour don’t specifically mention second homes or holiday lets. But they did float the notion of installing a short-let licensing scheme.

    Through this scheme, they could redefine what type of property qualifies as a short let. In theory, this could exempt owners of this type of property from qualifying for second home council tax exemption. How much this will deter these homeowners will, of course, depend on how much having to pay council tax eats into their profit.

    Conservatives: a pincer attack on second homeowners (oh, the irony)

    The Conservatives have already granted local authorities scope to charge a 300% council tax premium on second homes. You’ll also be disqualified from claiming any higher-rate mortgage tax relief if you own the home in your own name.

    The Chancellor already scrapped multiple dwellings relief at the beginning of the month due to “incorrect and abusive claims”. So, the Conservatives are already squeezing this type of landlord for all they can get.

    Moving forward, the Conservatives are looking to introduce a holiday- and short-let register. If your property is in an already popular destination for holiday lets, you may have to request permission to turn it into a rental property.

    Lib Dems: a robust plan

    The Lib Dems have laid out exactly how they’d deal with second homes and holiday lets. We already know that they’d grant local authorities permission to add a Stamp Duty surcharge to foreign investors. But they go further.

    They would recategorise short lets, as Labour have hinted they might. But they go further than the Conservatives in allowing local councils to add up to a 500% surcharge on Council Tax bills for the property.

    Reform and Greens: see Renters’ Reform Bill

    Neither the Greens nor Lib Dems mention second homes specifically. But they do have specific intentions for renting in general, up next:

    Renters’ Reform Bill

    All the parties recognise that tenants have to be treated more fairly by their landlords. Most manifestos explicitly reference the much-maligned Renters’ Reform Bill in the same breath. So, what can we expect?

    Conservative: toeing the party line

    As such, and at odds with the other four main parties, there’s no mention of the Renters’ Reform Bill in their manifesto. But, they have been the party in charge as this contentious bill has gone through the house. As such, they (probably) wouldn’t stray far outside the current guidelines, creating:

    • a Decent Homes’ Standard (for private tenants);
    • a National Landlord Register.

    They would also abolish:

    • ‘no-fault’ evictions;
    • fixed-term tenancies;
    • the current restrictive barriers faced by pet owners.

    Labour: harder, faster, inclusive

    Rather than rail against the current Bill, Labour would bring elements in more quickly. They’d also go further with certain elements, some of which the Conservatives have dropped.

    Tenants’ rights:

    • Landlords must investigate hazards within a fortnight of a tenant issuing a complaint;
    • Tenants have the right to question objectional rent increases;
    • No-fault evictions would be banned immediately

    Rental properties themselves would have to adhere to strict energy performance standards. Not only will this help the UK reach net zero, but rented properties should also be cheaper to heat. Investment in reusable energy for rented properties is yet another element the Conservatives have abandoned during this premiership.

    Lib Dems: clear standards, clear voice

    Continuing their locals-first philosophy, the Lib Dems would create tenant panels to help inform local authorities of renters’ priorities.

    Like Labour, landlords would also have the onus put on them to carry out repairs in a timely manner. The details would be covered in a set of social housing ‘clear standards’.

    Reform: no change, just better policing

    Reform are the only party that’s categorically stated it would rip up the Renters’ Reform Bill. Instead, the party believes all the correct rules and standards are already in place; they just need administering more efficiently.

    Greens: a fair deal for renters

    With regards to the Private Rented Sector (PRS), the Greens advocate a fairer deal for renters. They would end no-fault evictions and introduce longer and more stable tenancies. Rent controls would be introduced and tenants would be empowered to demand energy efficiency improvements from their landlord.

    Planning and development

    With most parties waving the ‘more social housing banner’, those new properties would have to live somewhere. This is how the parties would manage the planning and construction thereof.

    Labour: brownfield sites and new towns

    Using the additional income from foreign investment Stamp Duty, labour’s first port of call would be to employ 300 new planning officers. This new framework would inform planning authorities of Local Plans and act as a critical go-between.

    With all parties in the supply chain blaming each other for the lack of housebuilding, this could help resolve issues before they occur. In order to reach their target of a 50% increase in homebuilding, these measures must be set in stone from Day 1.

    Labour would also empower local input to ensure the correct types of housing are being built in the right place. Building on brownfield sites and reviewing how compulsory purchases work to create more new towns are high on their priority list.

    This empowerment includes giving mayors more say over local planning and investment and elevating locals’ input into planning and development.

    Conservatives: 1,600,000 new homes

    The Conservatives have promised to build 1.6 million homes over the course of the next government, should they get in. What’s missing from their manifesto is the devolvement of what types of housing and where to local authorities.

    The fact that they’ve not reinstated mandatory housing targets for local authorities is a worry. Exactly who will be accountable for ensuring developers build the homes a council needs?

    Lib Dems: use it or lose it

    Like Labour, the Lib Dems plan to use brownfield sites, incentivising developers to build affordable and social housing across ten new ‘garden cities’.

    Local authorities will be empowered under the Lib Dems, too. They will have:

    • adequate funding to expand Neighbourhood Planning across the UK;
    • the power to buy land from developers based on what it’s worth now, not a projected value.

    To encourage timely construction, developers granted planning permission will have a limited time to build homes or lose that permission.

    To aid developers, the Lib Dems plan on investing in skilled workers and new technology.

    Greens: social housing via new builds and refurbs

    As we’ve said above, the Greens’ “Right Homes, Right Place, Right Price” housing charter mandates local authorities and national government to collaborate on delivering affordable homes.

    No specific targets have been set. But, like the Lib Dems, Greens are committed to providing 150,000 social homes. They’d achieve this with a combination of new builds and refurbishments. Right to Buy would also become a casualty, ringfencing existing social housing.

    Any new developments would protect green spaces. But, investing in local health and transport services would run alongside those developments. All new homes should meet stringent energy efficiency standards to ensure lower climate emissions and lower heating costs.

    Reform: brownfield sites, refurbs and Section 106

    Reform would incentivise tax relief for developing brownfield sites. Like the Greens, this would include refurbs, converting unused offices and high street properties.

    They also plan to review ‘Section 106‘, which councils use to assess affordable and sustainable developments under their jurisdiction. The intention is to assist interested developers and builders in accelerating construction, encouraging dialogue and action.

    Summary

    Upon reviewing each of the manifesto pledges for housing, you’ll have noticed overlaps in policy. Labour with Lib Dems, Lib Dems with Reform UK, Greens with Labour, and so on.

    polling station sign

    The only manifesto seemingly reading off a different hymn sheet is the Conservatives’.

    A cynic might say that their disparity on housing reflects how out of touch the party has become with what the populace actually needs.

    Housing has become such a big part of this election.

    I doubt, on its own, housing will affect the overall outcome. But it could win swing seats, providing whichever party wins with a useful barometer of the electorate’s sentiment.

    I hope you’ve taken something away from this review of manifesto pledges for housing. And that whichever elements ring truest with you, its party delivers as promised. Good luck!

    Author: John Yerou

    John Yerou is the owner and founder of the award-winning Mortgage Quest Ltd and its subsidiary brands.

    In 2004, John began his career in financial services as an independent mortgage advisor and broker. He's since been instrumental in negotiating bespoke mortgage underwriting criteria for professional contractors with many high street lenders.

    As such, John's one of the most respected and recognisable names in securing mortgages for the UK's flexible workforce, incorporating independent professionals and the self-employed.

    His recognition as the go-to mortgage expert has grown exponentially, reflected in citations and his own publications in both national and contractor-oriented press.

    Posted by John Yerou

    on June 26th, 2024 16:28pm in Latest mortgage news & opinions.