It\u2019s been a busy start to the election campaign, with all major political parties looking to present and assert their visions for the country to the electorate.<\/p>\n
Until last week, the campaign had been relatively light on substantive policy proposals, but now that all the manifestos have been launched, there is plenty for investors<\/a>, brokers and lenders within the UK property market<\/a> to mull over and consider.<\/p>\n Despite the Conservatives\u2019 efforts, their manifesto has made little impact on their standing in the polls, as Labour, led by Sir Keir Starmer, maintains a 25-point lead in the latest figures.<\/p>\n As a result, it was Starmer\u2019s Labour manifesto that attracted the most attention last week, particularly as some key property-related policies were revealed.<\/p>\n One of the Labour manifesto’s main property-related policies is the target of building 1.5 million homes within the parliamentary term (5 years). As part of this policy, the planning system<\/a> will be overhauled \u2018immediately\u2019, and mandatory housing targets for local councils will be restored.<\/p>\n These policies come as no surprise. The UK has long faced a housing crisis, with demand consistently outstripping supply. Consequently, political parties routinely pledge to increase the housing stock during elections.<\/p>\n However, history shows that such targets are seldom met. It will be interesting to observe whether the Labour Party can fulfil their promises if they succeed on the 4th of July.<\/p>\n Reforming the planning system will be crucial to achieving this level of housebuilding<\/a>, so it’s encouraging that the party plans to free up the system to prioritise brownfield development where possible. Additionally, the commitment to fast-track the approval of urban sites should help alleviate the excessive demand seen in some major cities<\/a>.<\/p>\n The Labour Party has also announced a replacement for Help to Buy, called the ‘Freedom to Buy’ initiative, which aims to help around 80,000 people onto the property ladder according to the Labour manifesto.<\/p>\n The policy is aimed at families who struggle to save for a large deposit for a property and can\u2019t rely on cash gifts from relatives via a permanent mortgage guarantee scheme. It would make the current mortgage guarantee scheme a permanent initiative, which sees the government act as a guarantor for people\u2019s mortgages.<\/p>\n In today’s challenging market, it’s encouraging to see that the likely next government is committed to helping more people buy their first home.<\/p>\n However, the issue of low housing stock remains critical. If demand rises too quickly due to this policy and supply fails to keep up, house prices could continue to exceed the financial capabilities of many first-time buyers, effectively nullifying the benefits this scheme aims to provide.<\/p>\n One of the least unexpected policies to be announced in the Labour manifesto was the scrapping of Section 21 no-fault evictions<\/a>, which the party says would be achieved \u2018immediately\u2019.<\/p>\n Elsewhere in the private rental sector, the Labour manifesto committed to \u201cprevent private renters being exploited and discriminated against, empower them to challenge unreasonable rent increases, and take steps to decisively raise standards\u201d.<\/p>\n It’s difficult to argue against the necessity of these policies. Raising standards and professionalising the industry<\/a> is beneficial, especially for responsible landlords.<\/p>\n However, the implementation of a replacement for Section 21, which has not yet been revealed, will be crucial. It’s essential that the new policy is fair and effective for both renters and landlords who have legitimate grounds for eviction, which will be a difficult line to tread.<\/p>\n From an investment perspective, one of the primary concerns surrounding the Labour manifesto was whether the party would commit to raising capital gains tax<\/a> (CGT).<\/p>\n While it wasn\u2019t directly mentioned in the Labour manifesto, and the party stated there were \u2018no plans to raise taxes beyond those set out in the manifesto\u2019, speculation grew throughout the week that a levy would be imposed on the sale of primary residences.<\/p>\n Sir Keir Starmer has now ruled out this policy, but the Labour Party has stopped short of ruling out a more general increase in CGT rates. While the former clarification should provide some reassurance to homeowners, brokers should monitor developments closely to keep their clients informed about how their investments might be affected by any potential CGT hike in the future.<\/p>\n Interest rates will have more of an impact<\/strong><\/p>\n My key observation from the launch of the Labour manifesto is that it doesn’t introduce anything major that hasn’t been tried or promised before. Consequently, I believe that a Labour victory, if it occurs, would not significantly disrupt market activity. In fact, a strong majority for the party could bring much-needed certainty after years of political instability.<\/p>\n However, I believe that the actions of the Bank of England on Threadneedle Street, will wield greater influence over the property industry than decisions made by the Labour party in Westminster. The cost of borrowing<\/a> has a profound impact on market dynamics compared to political policies, and the relatively conventional nature of the Labour manifesto suggests that business can largely proceed as usual.<\/p>\n For brokers and investors, therefore, the primary focus is likely to remain on monitoring economic indicators and changes in monetary policy. I do not anticipate the Bank of England to lower rates this week due to the ongoing election cycle, but economists still predict that the Monetary Policy Committee will implement rate cuts at least twice this year.<\/p>\n Whatever the outcome of the vote on the 4th of July, the ability to adapt and remain flexible will continue to be crucial for investors. Therefore, brokers and lenders must collaborate closely to ensure their clients navigate the post-election landscape confidently, regardless of the next incumbent of No. 10 Downing Street.<\/p>\n Paresh Raja is the founder and CEO of Market Financial Solutions (MFS),<\/a> a London-based specialist lender that provides bridging loans and buy-to-let mortgages. Prior to establishing MFS in 2006, Paresh worked as a senior professional consultant in one of the top five management consultancy firms, and also set up an independent investment group.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" There were a number of clues as to how Keir Starmer would tackle the property market in his Labour manifesto, which\u00a0Paresh Raja, CEO, Market Financial Solutions, explores. It\u2019s been a busy start to the election campaign, with all major political parties looking to present and assert their visions for the country to the electorate. Until… Read more »<\/a><\/p>\n","protected":false},"author":2888,"featured_media":6095246,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[699,59,6],"tags":[74,730,216],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6101347"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/users\/2888"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/comments?post=6101347"}],"version-history":[{"count":5,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6101347\/revisions"}],"predecessor-version":[{"id":6101354,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/posts\/6101347\/revisions\/6101354"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media\/6095246"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/media?parent=6101347"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/categories?post=6101347"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/en-gb\/wp-json\/wp\/v2\/tags?post=6101347"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}1. House building targets in the Labour manifesto<\/strong><\/h3>\n
2. Mortgage guarantee scheme<\/strong><\/h3>\n
3. Rental sector reform<\/strong><\/h3>\n
No capital gains increase on primary residences<\/strong><\/h3>\n
\n