A New Government – What It Might Mean For The Property Sector

Following the general election held on 4 July 2024 the UK has a new Labour government, for the first time since 2010.

What can the property industry expect from the new government? The Labour Manifesto sets out a series of measures that the party committed to implementing if, as has now happened, it formed a new government.

Leasehold and enfranchisement reform

The new government will have to deal with the implementation of the Leasehold and Freehold Reform Act 2024, which received Royal Assent as part of the ‘wash up’ process on the last day before Parliament was dissolved. Most of the Act is to be brought into force through regulations. Many industry commentators have expressed concern that Act has been rushed through and challenges to it seem likely, for example by freeholders who are unhappy at the measure to reduce the price to be paid by leaseholders on enfranchisement.  Labour has confirmed that it will enact the Law Commission proposals on leasehold enfranchisement, right to manage and commonhold by default on new flats. The latter will be interesting as commonhold has never taken ‘hold’ in the past.

Residential ground rents

The controversial provisions relating to the capping and phasing out of existing ground rents in residential leases (a government consultation on this closed in January) were dropped. However, Labour previously confirmed that it would reintroduce the necessary legislation. Labour’s manifesto does not contain the very specific policy of the Conservatives of a £250 cap on ground rents and phasing to a peppercorn, so it will be interesting to see what Labour propose.

Private renters

The Renters’ Reform Bill did not make it through the wash up process. However, Labour confirmed that it would go further and ‘pass renters reform legislation that levels decisively the playing field between landlords and tenants’. This would involve action to abolish section 21 ‘no fault’ evictions immediately, empower tenants to challenge unreasonable rent increases and steps to raise standards, including extending the requirement on landlords to fix reported health hazards within specified timeframes to the private rented sector in addition to social housing tenancy agreements.

Home ownership

First-time buyers are to be given the first chance to buy homes and Labour intend to put an end to entire developments being sold off to international investors before houses are even built. They will also introduce a mortgage guarantee scheme to support first-time buyers struggling to save a deposit.

Building safety

Labour has said it will look at how better to protect leaseholders from build safety remediation costs and will take steps to accelerate the pace of remediation across the country. This will undoubtedly be welcomed by leaseholders; meanwhile commercial property lawyers are currently still grappling with the impact of the BSA 2022 and its long reach into areas such as mixed use acquisitions.

Energy efficiency

Labour has committed to ensuring homes in the private rented sector meet minimum energy efficiency standards (MEES) by 2030. This will be welcome following the uncertainty about future plans for MEES, but no mention was made of commercial properties.

Housing and property development

Labour has committed to achieve the building of 1.5 million new homes, including the creation of new towns. It intends to update the National Policy Planning Framework immediately, including restoring mandatory housing targets and requiring local planning authorities to have up-to-date Local Plans.

Many see the current issues with the planning system as the main blocker to developing new houses, rather than land-banking, which Part 11 of the Levelling Up and Regeneration Act 2023 (providing greater transparency on ‘contractual control agreements’ in England and Wales) was designed to address. So, it will be interesting to see where Labour goes with that (a consultation on it closed in March).

On development, Labour intends to adopt a brownfield first approach, taking a more strategic approach to greenbelt land designation. In addition, release of lower quality ‘grey belt’ land will be prioritised.

Labour also intends to require all Combined and Mayoral Authorities to plan strategically for housing growth in their areas, giving them new planning powers along with new freedoms and flexibility to make better use of grant funding.

Stamp duty land tax

Labour has said that it will support local authorities by funding additional planning officers, through increasing the rate of the stamp duty land tax surcharge paid by non-UK residents.

Business rates

In England, Labour will replace the business rates system, to incentivise investment, tackle empty properties and support entrepreneurship. This development will be welcomed by many who have long seen this as one of the main reasons for empty high streets, rather than landlords unwilling to let their properties, with the new regime for high street rental auctions seen as misguided.

It will be interesting to see what real impact the new government will have on the property sector and how it will impact  Wilson Browne’s clients and residential property and commercial property teams in the coming months/years.