With the first Labour government since 2010, we look at the implications this has on the UK property market, specifically for property investors and landlords. It is no secret that Labour favours homeowners over investors based on their policies, but these are only promises made in the run-up to a general election.

Labour’s Policies and Promises:

• Pledge to Get 80,000 Young People onto the Housing Market in 5 Years
  In Labour’s plan to achieve this, they will encourage lenders to offer high loan-to-value mortgages by acting as the guarantor for the buyer. They hope this will mean lower deposits and banks offering higher loans. The concern here could be that monthly repayments are higher, or mortgage terms are longer, having a long-term negative effect. However, it is typically seen that mortgage rates will come down regardless of new policies and plans, which will work in Labour’s favour.
• Reduction of Stamp Duty Threshold for First-Time Buyers from £425,000 to £300,000
  This policy will actually mean more first-time buyers will end up paying stamp duty, which contrasts with the idea of getting more young people on the property ladder. However, this will affect London and southeast areas where many first-time buyers will be looking at properties over this threshold. Northern and more rural areas will be less affected and may encourage first-time buyers to move to cheaper locations to avoid stamp duty.
• Build 1.5 Million New Home
  This was a Labour pledge scrapped by the Conservatives. It is thought that Labour will try to promise a significant number of new homes, but the figure will likely be far less.
• Abolish Section 21 (No Fault Evictions)
  Labour is well known to be against this notice which gives landlords easier powers to evict their tenants. However, it is widely unknown if this will be easy to scrap as there are many legal complications, and investors have rights over their property.

Pros & Cons for Investors

Knowing the impacts of any of these changes, policies, and ideas is impossible to predict, and quite often they can have the opposite effect of what was intended, as the economy and politics are very complicated matters. So, the positives and negatives below are only speculation.

Positives:

• More new homes will drive the overall new-build cost down, providing a lower entry for investors.
• Stamp duty threshold driving people out of London could bring London prices down in comparison to Northern areas.
• Increase in Northern area first-time buyers could drive property prices up for anyone already invested in these areas, improving capital appreciation.
• The predicted lower mortgage rates will make investment property more affordable for homeowners and investors.

Cons:

• With more young people being able to afford property, we could see fewer renters and more competition in the buyers’ market.
• If Section 21 is abolished, landlords wanting better tenants or having issues with their tenants will have less control.
• An influx of new homes could start to saturate the market, although the housing supply is still far behind where it needs to be.

There is Still Plenty of Time!
Any changes Labour makes will likely take years to make any real difference. The best thing an investor could do is keep an eye on what we know will change; firstly, the mortgage rate is likely to come down before any of the above changes take effect. For now, there are no additional reasons not to invest as an effect of the new government. The best thing to do is keep an eye on individual opportunities. If something fits your requirements, there is little reason not to make a move. The primary aspect affecting the investor market is still the mortgage rates, which do not affect cash buyers.

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