A new Labour government – what next for housing?
Following the Labour Party’s landslide election win, what changes might be in store for the UK housing market?
In the Prime Minister’s introduction to the King’s Speech on 17 July, Sir Keir Starmer stated “Too many people currently live with the threat of insecurity and injustice, and so we will make sure everyone can grow up in the secure housing they deserve. We will introduce tough new protections for renters, end no-fault evictions and raise standards to make sure homes are safe for people to live in.”
Several key Bills relevant to the housing market were announced:
- Renters’ Rights Bill – rent caps and longer-term tenancy agreements to stabilise the rental market
- Planning and Infrastructure Bill – simplified planning procedures and infrastructure funding
- Draft Leasehold and Commonhold Reform Bill – abolishment of ground rent and simplification of leasehold extensions and freehold purchases.
Housing market update
Completions and house prices rose in June, but buyer activity fell as the nation awaits a cut in Bank Rate.
The start of 2024 saw a boost in sales agreed, resulting in positive effects being seen in June, with the highest number of completed transactions since March 2023, according to HMRC.
However, a slight decline in mortgage approvals and sales agreed indicate that buyer activity has waned halfway through 2024. Savills report that supply of homes has continued to increase, thus widening the gap between supply and demand. Buyer confidence should be restored once mortgage affordability improves and is dependent on Bank Rate reducing, which Oxford Economics predict will happen in August.
UK annual rental growth fell to 5.8% in May according to Zoopla – down on the 6.6% recorded in April. Commuter belt regions continue to show the strongest growth, particularly in the north of England.
BTL landlords intend to raise rents
Many buy-to-let (BTL) landlords plan to raise their rents within the next year, according to a survey by Landbay.
Nearly 85% of respondents intend to increase rents over the next 12 months, with 37% of this group planning to put rents up by between 6% and 10%. Meanwhile, 36% said they would raise rents by up to 5% and a further 8% of BTL landlords will put them up by between 11% and 19%. The reasons cited for the increases included higher interest rates and increased operating costs.
According to the survey, half of the landlords raising rents self-manage their properties, 27% use an estate agent and a fifth rely on a professional management company. The survey also found that 42% of landlords have between four and ten properties, while 28% own at least 20 rental properties.
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All details are correct at the time of writing (18 July 2024)