“Change begins now” – what have Labour promised on housing?

By Jennifer Harrison, Content Lead

After 14 years of Conservative rule, Sir Kier Starmer has been named the next UK Prime Minister in an impressive, landslide Labour victory. Early this morning, the Labour leader addressed his win in Central London, declaring that he was “ready to restore Britain to the service of working people” and reminding people once again, as he has over the last few weeks, that the values of this Labour Party are “country first, party second.”  

The Labour campaign pledged to build an NHS built for the future, reform our education and childcare systems, and kickstart economic growth. But, for us in the housing and mortgage sector, what does a Labour led government mean? With promises to introduce a Renter Charter, build 300,000 homes per year, and increase the stamp duty surcharge for foreign investors, will the housing market start to recover from its current, volatile state? Casting our political views to one side, I spoke with our Product Manager, Amanda Symes-Reeves, to get her insights on what we might be able to expect from our new Government, as well as what else she’d like to see them deliver.  

Of the policies related to housing in Labour’s manifesto, which do you feel will have the most positive impact and who will benefit most? 

On housing, Labour have stated, “we will partner with combined authorities, local and devolved governments, to roll out this plan. Labour will also work with the private sector, including banks and building societies, to provide further private finance to accelerate home upgrades and low carbon heating. We will ensure homes in the private rented sector meet minimum energy efficiency standards by 2030, saving renters hundreds of pounds per year. Nobody will be forced to rip out their boiler as a result of our plans.” 

In my opinion, Labour’s plans for building a new generation of towns, fast tracking the approval of brownfield sites, and releasing some “low quality” green belts for new developments as part of their manifesto could be the one with most positive impact on the housing sector. They’ve got a proven track record of success with this sort of project. In 1967, the then Labour Government designated an area of over 21,000 acres covering the northernmost part of Buckinghamshire to become the United Kingdom’s biggest new town - this new town was called “Milton Keynes”. Love or hate MK, it is a shining example of what can be done with more relaxed planning.  

Roll forward to 2024, and new towns, which are well planned with a full suite of amenities and services such as schools, hospitals, doctor’s surgeries and recreational areas that can support the population which will provide jobs too, andhave a positive impact nationally, as we have seen in Milton Keynes. 

Labour shared their desire to ‘Get Britain Building Again’. With regard to boosting housing supply, do you think Labour can deliver on their target of building 1.5 million new homes over the next five years?  

Well, this is an ambitious promise. The last time this sort of target was met was in 1969 when 45% of these homes were built by local councils. Historically, private sector builders have only delivered more than 170,000 homes in a year back in the 1970s. For Labour to meet this promise, it will mean building 300,000 new homes each year from 2025 onwards, which means building at a rate that we’ve not seen since the 1960s. 

The question I would pose is “can housing associations and local councils pick up this huge gap?” If we look back over past 12 months, housing associations started building 30,000 homes and English councils started just 3,000.   

Is there anything that wasn’t included in Labour’s manifesto that you feel is an essential for any government wanting to reboot the housing market in the UK? 

Truthfully, there were a couple of things I would have liked to see addressed. Firstly, Labour shared how they’ll gain additional revenues by increasing stamp duty on purchases of residential property by non-UK residents by 1%, yet there is no mention of reviewing the stamp duty band thresholds for UK residents. The Conservatives pledged to keep the stamp duty threshold at £425,000 for first-time buyers if they won the general election. Looking back to post Covid lockdown in July 2020, the stamp duty holiday that was applied – and ended up being extended to end of Sept 2022 – gave the housing market a huge boost. It made the market extremely buoyant and had the desired effect of getting the sector moving again which shows the impact that stamp duty can have. I would love to see Labour pick this up and roll out a first-time buyer stamp duty threshold too. 

Secondly, I was also hoping to see mention of Lifetime ISAs and a review of their terms and conditions to ensure they’re reflective of current house prices. As it stands, LISA savers must pay a 6.25% fine if they purchase a home costing over £450,000 – a cap which has remained the same for seven years. With the average first-time buyer property now costing over £450,000 in four out of five London boroughs it’s no surprise the proportion of savers being fined has more than doubled in three years. I’d like to see this addressed.  

One final observation was that in their ‘Make Britain a Clean Green Superpower’ section, Labour mentions that they will work with the private sector, including banks and building societies, to provide further private finance to accelerate home upgrades and low carbon heating. Let's hope they extend this engagement when they look at how they can help first time buyers who struggle to save for large deposits and take steer from the mortgage industry experts. 

Whether or not Labour can deliver on everything laid out in their manifesto, only time will tell. As Starmer promised to govern as a changed Labour party, he did not shy away from the mammoth task they now face. The new Prime Minister acknowledged “I don’t promise you it will be easy. We will have to get moving immediately”. 

At MPowered we will continue to observe the new Government as it is formed ahead of Parliament’s meeting on Tuesday 9th July, looking particularly at who will step into the role of housing minister, and what they may bring to the position. Follow us on LinkedIn or head to our Content Hub for further articles and updates on the issues surrounding housing as and when we have it. 

All information contained on this blog is for general information use only. It does not provide mortgage advice and should not be construed as being mortgage advice, which can be provided by your mortgage broker and advisor only.