Forget the much-touted L-word when it comes to property investment. It’s more a case of speculation, speculation, speculation right now in these embryonic days of a new – if not New – Labour government.
Location, though, will be pivotal in investors’ decision-making when Starmer starts to put in practice his promise to build 300,000 new homes for every year of his five-year term.
There are doubts, of course, that such numbers are even possible, given no other Government has managed it (the Tories came close, but no cigar, in 2022/2023 with 234,000 new homes built).
Some also fear that turbo-charging house-building in this way will swamp the market and drive down prices – though wise economic souls mostly agree that it’s unlikely, especially in London and the South East, as restrictions on building and scarcity of land ensure that demand always outstrips supply in Britain.
Wealthy investors may also be fretting over the future of their personal fortunes. But Labour have yet to announce any tax plans that will touch the sides too much (apart from those affected by a proposed additional 1% stamp duty surcharge, on top of the current 2%, on purchases by non-UK residents).
Looking back at Labour
Interesting to note, too, that London saw its joint highest ever period of house price growth under Tony Blair – whose own property portfolio isn’t subsequently looking too shabby.
Of course, the picture has shifted a bit since 1997 when Blair took over office. The average UK house price then was £55,821 compared with £266,604 now. Economic growth was rosier too at 4.9%; today’s is 0.5%. And a pint of beer at the start of the New Labour era cost £1.87. You can nearly quadruple that figure in London pubs now.
But here we are in 2024. And as the first King’s Speech under a Labour government since 1950 outlined this week, Labour’s focus is on building houses and infrastructure, better transport, more jobs and delivering clean energy. And devolution is key, giving back power to local regions and decision-makers. So where should property investors look?
Affordable housing
Affordable housing will be the focus. Getting first-time buyers on to the ladder. But also, good quality rental stock to suit young professionals and families – which means close to public transport, jobs, schools, shops and parks. Gen Z are a very different breed to their age equivalents 30 years ago. They want their homes to be sustainable, just like their workplaces. They want e-bike parking and bike lanes, juice bars (never mind £7 pints; a third of 18-24s don’t drink), round-the-clock HIIT classes and ultra-fast WiFi at every turn.
These will surely all be available in Labour’s “next generation of new towns” – and brownfield sites (previously developed land that’s currently unused) offer the greatest opportunities. Knight Frank find that 41% of brownfield sites are in the green belt that surrounds London – in particular Buckinghamshire, which has 489 such sites, Tandridge and Guildford in Surrey, and Sevenoaks in Kent. Liverpool’s and Manchester’s green belts are also rich in brownfield sites, followed by the verdant fringes of Birmingham, South and West Yorkshire, and Bristol and Bath.
There are also “grey belt” sites to consider – a Labour-coined term they hope will catch on, referring to blots on the landscape such as old car parks and wasteland that lend themselves to infill residential or mixed-use schemes.
Investing under Labour
Investors will also be looking for the next Crossrail opportunity – though while rail nationalisation is a key pillar of Labour’s plans, there is no clarity yet over whether the party will resurrect plans for the Northern leg of HS2, to bring much-needed transport infrastructure to the region.
“Where infrastructure leads, real estate follows,” comments Paul Tostevin, director of Savills’ World Research. “Even in its early stages, a properly funded transport or energy project gives real estate developers and investors certainty… For current and potential occupiers, infrastructure investment represents a show of confidence in their area,” he adds.
What is also clear is that the UK’s tech hubs are the future for training and retaining young talent – something that Labour want to push by making it easier to build data centres, to help cement and promote the UK’s status in the new world of Artificial Intelligence.
For investors, cities with pioneering universities are the place to look. Cambridge and Imperial College London aren’t the only places fomenting AI whizzes. Sheffield is carving a niche in robotics, Leicester is establishing itself in space tech, and Brighton in digital media, gaming and digital health. Liverpool and Manchester both have thriving, growing Knowledge Quarters, where education, business and innovation meet.
To retain the best people, they need to be near good quality homes – whether in the booming area of purpose-built, highly-amenitised student accommodation or privately rented households that people actually want to live in.
“Businesses want to be where brains congregate,” adds Tostevin, emphasising the role that tech-pioneering universities play in anchoring and building thriving communities. Digital connectivity, green energy generation and sustainability projects all chime loudly with Labour’s ambitions – and areas of innovation may yield just want investors are looking for.
Zoe Dare Hall is an award-winning freelance journalist who lives in London, has worked on national newspapers for 25+ years and specialised in writing about global property for the past 20. She covers all areas of UK and international property for the Financial Times, The Times and The Telegraph, delves into the lives of the super-rich for magazines including Telegraph Luxury, Sphere and The London Magazine, and writes about buy-to-let issues for the NRLA’s Property magazine.
