As a new government takes shape the housing market is expected to be a key priority for Prime Minister Keir Starmer and his Labour Party. The Labour Government has unveiled a series of ambitious plans aimed at transforming the housing landscape and addressing the pressing needs of first-time buyers and renters.
Mortgage Guarantee Scheme: “Freedom to Buy”
The Labour Party has announced the permanent establishment of the current Mortgage Guarantee Scheme, rebranded as “Freedom to Buy.” This initiative supports first-time buyers and those with small deposits by backing lenders to offer high loan-to-value (LTV) mortgages. By providing state-backed guarantees, lenders are encouraged to offer more 90% and 95% mortgages at competitive rates.
Tim Bannister, a property expert at Rightmove, emphasized the potential benefits of the scheme. “While a permanent mortgage guarantee scheme offers certainty, our research shows only a small number of first-time buyers may benefit. Making stamp duty thresholds permanent for first-time buyers would be a positive start. Additionally, innovative solutions are needed to assist first-time buyers with deposits and long-term borrowing,” Bannister said.
Building 1.5 Million Homes
Labour’s manifesto promises to build 1.5 million new homes over the next Parliament by reforming the planning system and increasing funding for planning officers. This will be financed by raising stamp duty for non-UK residents. The government aims to prioritize the development of brownfield sites and fast-track urban brownfield approval while strategically reassessing greenbelt land to build homes in optimal locations.
Ryan Etchells, chief commercial officer at Together, highlighted the urgency of addressing the housing crisis. “Boosting the UK’s housing stock should be top of the agenda. We need a radical overhaul of the planning system to expedite town hall decisions, remove red tape, and incentivize SME housebuilders to create quality, affordable homes,” Etchells remarked.
David Thomas, chief executive of Barratt Developments, echoed these sentiments. “The country urgently needs more new homes. We look forward to collaborating with the new government to help build 1.5 million homes, streamline planning processes, and provide affordable finance for first-time buyers,” Thomas added.
New Towns Initiative
Labour plans to introduce a new generation of large-scale new towns across England. Recognizing that housing needs cannot be met without extensive growth planning, the government aims to implement effective mechanisms for cross-boundary strategic planning.
Boosting Social Housing
The government has pledged to strengthen planning obligations to ensure new developments include more affordable homes. Changes to the Affordable Homes Programme are intended to deliver more homes with existing funding. Additionally, Labour plans to support councils and housing associations to enhance their capacity to contribute to affordable housing supply. The government will prioritize building new social rented homes and safeguard existing stock by reviewing increased right-to-buy discounts and enhancing protections for new social housing.
First-Time Buyers First
Labour intends to work with local authorities to ensure first-time buyers have the first opportunity to purchase homes, aiming to prevent entire developments from being sold to international investors before construction is completed.
Rental Reform
The Labour Government has committed to abolishing Section 21 ‘no-fault’ evictions immediately, a promise unfulfilled by the previous Conservative Government. This move aims to protect private renters from exploitation and discrimination, empower them to challenge unreasonable rent increases, and improve housing standards. The party also plans to extend ‘Awaab’s Law’ to the private rental sector.
Banning Leasehold
Labour has pledged to end the feudal leasehold system, enacting Law Commission proposals on leasehold enfranchisement, right to manage, and commonhold. The government plans to ban new leasehold flats, make commonhold the default tenure, and address unregulated ground rent charges.
With these comprehensive plans, the Labour Government aims to address the UK’s housing challenges and create a fairer, more accessible housing market for all.