What the Election Result Means for the Property Market
After weeks of campaigning, the general election is done. The worst-kept secret of 2024 is out.
We have a new Labour government in the UK, with the party winning by a landslide.
Maybe you’re pleased, disappointed or not that bothered.
But the fact the election is done ought to be good news for the market.
Property markets don’t like uncertainty. So, after months of ‘will they-won’t they’, we now have a much better idea of what the government will be doing over the next five years.
History often shows that property markets tend to pick up after elections—whatever the result. This could mean that, once the summer holidays are over, the market could bounce back.
What will happen to mortgage rates?
This is key. Most experts have been predicting the Bank of England’s (BoE) base interest rate will fall this year. But the impending election was likely on the BoE’s mind when they decided to keep it on hold last month. Now it’s out of the way, they might decide to start decreasing rates… perhaps as soon as their next meeting on 1 August.
A report by The Times Money Mentor suggests forecasts show the interest rate down from 5.25% to 4.5% by the end of the year. According to Capital Economics' analysis, rates will hit 4% by the end of 2025.
If mortgage rates follow suit, mortgages could get cheaper fairly soon. And that could tempt more people to think about moving.
What is Labour proposing on housing?
Labour’s manifesto included several big housing pledges: They promise to build 1.5 million new homes and more affordable and social homes over the next five years. They aim to do this by tightening up on housing targets, reforming the planning system, building on what they call the ‘grey belt’, and building some new towns.
All these measures could boost the property market, but they are unlikely to be easy to achieve and will take time to take effect.
If you’re renting now (or an investor), the last government’s rental reforms are now well and truly in the bin. But Labour has plans to reform the rental market, too. Although details of what they will do are scant so far, they are likely to mean more regulation for landlords and more security for tenants.
One piece of new legislation that did get through before the election was the reform of the leasehold system in England and Wales. Labour has pledged to introduce further reforms here. This could be good news if you’re selling a property that is leasehold, looking to buy one, or extending a lease. (But it’s all a bit complex, so take advice from a solicitor or conveyancer if this is you.)
What the result might mean for first-time buyers
First-time buyers are the foundation of the property market. Will the new government help them?
Labour has pledged to introduce a Freedom to Buy mortgage guarantee scheme. This seems likely to be similar to the existing Help to Buy schemes in England and Wales. It will help first-time buyers get a mortgage with just a 5% deposit.
But unlike the existing scheme, it will be permanent. Labour has said this will help 80,000 young people buy a home over five years. In the scheme of things, this is a small number, but broadly, it is a positive for the market.
Labour has said it isn’t planning any new Stamp Duty exemptions for first-time buyers (something the Conservatives promised), but the existing ones will stay until next year.
Will we be richer or poorer?
How much money we have in our pockets affects most people’s decisions to buy a home or move. So, what are the new government’s plans here?
They have already committed not to raise income tax, National Insurance, or VAT, but they haven’t said the same about other taxes, such as capital gains tax, inheritance tax, or council tax.
We’ll probably need to wait until the new Chancellor of the Exchequer’s first budget to find out what their intentions are here.
Should you buy, sell or move home right now?
Overall, is the new government good news or not-so-good news for homebuyers and sellers? If you are thinking of moving, should you buy or sell this year?
Well, at least we all know a bit more about what’s likely to happen over the next few years.
But history tends to show us that it’s best not to take too much notice of what politicians say they will or won’t do. Put your own circumstances first and foremost: Ask yourself if you need to, want to and can afford to move and do what is best for you.
As always, a good estate agent can help you make a sound decision.
If you’re thinking of selling, they can give you a good indication of what your existing home might sell for and how best to find the right buyer.
If you’re considering buying, they can show you what is available around your budget.
Contact us today if you’re thinking of moving now that the election results are in.
