A couple of months on, we reflect on what the recent election could mean for you
As we all know, predicting which election promises will become reality is no easy task! However, we’ve outlined a few pointers to help you understand how the new government might bring changes that could affect you.
Labour has come to power with a landslide majority, while interest rates remain high, and house prices and property sales continue to rise. Sir Keir Starmer delivered his first speech outside Number 10 after Labour’s general election win, emphasising the need for more affordable homes.
Labour has announced that stamp duty will revert to £300,000 from the current temporary level of £425,000 in April next year. On the other hand, Labour has stated it will make it easier to secure a deposit through a ‘Freedom to Buy’ scheme. Prior to the election, labour pledged to help 80,000 young people onto the housing ladder over the next five years and to a version of the current mortgage guarantee scheme – due to expire in June 2025 (details to be confirmed).
Similar to the mortgage guarantee scheme, Labour plans to incentivise lenders to offer high loan-to-value (LTV) mortgages by acting as a guarantor for prospective first-time buyers who cannot afford a large deposit.
For overseas buyers, the Labour manifesto proposes implementing an extra 1% stamp duty surcharge. Currently, 68,800 individuals living in the UK are non-domiciled and do not pay tax on their worldwide income.
Regarding the non-domiciled rules, Nimesh Shah, Chief Executive of tax advisory specialist Blick Rothenberg, commented: “There has been more backlash than expected, and there is a suggestion that Labour may be willing to engage in a new policy approach, which could mean the introduction of the new regime being delayed. However, we don’t yet know Labour’s stance on improving the current proposals, which are in need of substantial revision.”
Labour has also pledged to deliver 1.5 million new houses over the course of the next Parliament. However, there are challenges with green belt issues and strict planning departments.
Housebuilding is demand-led and driven by economic cycles, rather than the planning system. Labour intends to take early action to change the National Planning Policy Framework and restore housing targets. However, private house builders will still be expected to deliver homes based on demand and at market value.
The Labour Party plans to revive the abandoned Renter’s Reform Bill, aiming to end no-fault evictions and also to end bidding wars.
They are, however, adopting a more pragmatic approach to leasehold reform, pulling back on earlier plans to abolish the leasehold system within the first 100 days.
While Labour has ruled out a formal “Wealth Tax,” revenue will be raised through other means. It is anticipated that private schools will be charged VAT (likely from September 2025), and we are yet to see how other taxes might rise.
As with any new Government only time will tell what will come next for our collective finances.
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Sources: https://moneyweek.com/investments/property/labour-election-impact-on-property-market
https://www.knightfrank.com/research/article/2024-07-05-a-labour-victory-what-does-it-mean-for-the-uk-property-market