As a landslide victory puts Keir Starmer and the Labour party into power, we look at what they've promised for mortgages and housing.
As the UK wakes up to a new Government, the housing market will hopefully be high on Keir Starmer’s priority list.
But what can we expect from the new Labour Government?
Mortgage Guarantee Scheme
The Labour Party has already announced it will make the current Mortgage Guarantee Scheme permanent. The scheme helps first-time buyers and those with small deposits, by supporting lenders to offer mortgages at high-loan-to-value (LTV) ratios.
It currently does with a state-backed guarantee to lenders. This gives them confidence to lend more 90% and 95% mortgages. The scheme isn’t directly available to high-LTV buyers; rather, it indirectly makes more mortgages available at competitive rates.
Tim Bannister, Rightmove’s property expert, said: “We think there is an opportunity to go further in giving support to first-time buyers. Whilst a permanent mortgage guarantee scheme provides the certainty that this option will be available, from our research we can see that only a small number of first-time buyers are likely to benefit from it.
“Making the existing stamp duty thresholds permanent for first-time buyers would be a start, and then there is an opportunity to look at innovative solutions to help first-time buyers with both their deposit, and being able to borrow enough from a lender in the longer term.”
Building 1.5 million homes
In its manifesto, the Labour Party pledged to build one-and-a-half million new homes over the next Parliament by reforming the planning system and funding more planning officers. This will be funded by increasing stamp duty for non-UK residents.
The new Government will take a “brownfield-first approach”, prioritising the development of previously used land wherever possible, and fast-tracking approval of urban brownfield sites.
It will also take a “more strategic approach” to greenbelt land designation and release to build more homes in the right places.
Ryan Etchells, chief commercial officer at Together, said: “Top of the agenda should be looking at boosting the UK’s housing stock, which has not kept pace with our increasing population to such a level in recent years that we are now in a deepening housing crisis.
“We want to see a radical overhaul of the broken planning system to speed up town hall decision-making by removing red tape and unlocking opportunities for developers. There needs to be real incentives for SME housebuilders to create quality, modern and affordable homes in the right places to boost local economies.
“Building on brownfield land needs to be a major focus, alongside redeveloping some of the 1.55 million properties in England and Wales that sit abandoned and derelict. Together’s own research shows this could deliver over £500bn of much-needed housing.”
David Thomas, chief executive of Barratt Developments, added: “The country urgently needs more new homes, of all types and tenures.
“We look forward to working with the new Government to help them build 1.5 million homes across the next Parliament, unlocking planning and helping first-time buyers access affordable finance, ultimately helping more families own a high-quality, sustainable, new home.”
New towns
The Labour Party said it will build a new generation of new towns – large-scale new communities across England. It noted that housing need in England cannot be met without planning for growth on a larger than local scale, so it plans to introduce effective new mechanisms for cross-boundary strategic planning.
Social housing
The Government pledged to strengthen planning obligations to ensure new developments provide more affordable homes, make changes to the Affordable Homes Programme to ensure that it delivers more homes from existing funding, and support councils and housing associations to build their capacity and make a greater contribution to affordable housing supply.
It added that it will prioritise the building of new social rented homes and better protect existing stock by reviewing the increased right to buy discounts introduced in 2012 and increasing protections on newly built social housing.
First-time buyers first
The Labour Party said it will work with local authorities to give first-time buyers the first chance to buy homes and “end the farce of entire developments being sold off to international investors before houses are even built”.
Rental reform
The Labour Government made a manifesto pledge to immediately abolish Section 21 ‘no-fault’ evictions, something the Conservative Government promised but failed to deliver.
It said this move will “prevent private renters being exploited and discriminated against, empower them to challenge unreasonable rent increases, and take steps to decisively raise standards”.
The party also pledged to extend ‘Awaab’s Law’ to the private sector.
Banning leasehold
The Labour Party said it will “finally bring the feudal leasehold system to an end”. It plans to enact the package of Law Commission proposals on leasehold enfranchisement, right to manage and commonhold.
And it said it will take further steps to ban new leasehold flats and ensure commonhold is the default tenure, as well as tackling unregulated and unaffordable ground rent charges.
