The state of the property market is a major issue at any time, but the aftermath of a general election, especially one where power changes hands, is a particular time to take notice. That is certainly true now.
Among the slogans of the Labour government is to ‘Get Britain Building’. This pledge is not just about housing; in the aftermath of the curtailment of HS2 amid soaring costs by the previous Conservative administration, reform of planning law is a broad issue. However, there are specific elements that have great relevance to housing.
For example, there is the controversial pledge to reclassify parts of the green belt as the ‘grey belt’, enabling home building on ‘unattractive’ land.
London’s green belt won’t be alone in being targeted, but it is certainly set to play a significant part in meeting housing demand amid a pledge to construct an extra 1.5 million dwellings over the course of a parliament. Knight Frank has calculated that the capital accounts for 40 per cent of the ‘grey belt’, on which up to 200,000 homes could be built.
It remains to be seen just how this affects the borough of Richmond, which has five small stretches of green belt on its western fringes. Nonetheless, many industry bodies, not least the Construction Industry Council, are keen on the idea of reassessing the green belt, as it highlighted in a submission to a House of Lords Committee investigating the issue.
Grey Belt reclassification alone will not meet the extra housing needs, so further measures will be needed to meet the new homes target. Such pledges have been made by a succession of governments over the years without being met, most recently when the Conservatives set a target of 300,000 a year by the mid-2020s.
If reforms to boost construction work, even partly, this could have a significant impact on the market. By increasing supply, a primary factor in house price inflation will be eased. This will improve affordability and could have a knock-on effect on the rental sector, as more tenants will be able to buy sooner and therefore no longer have to rent.
However, the rental sector situation is complex. The new Renter’s Rights Bill retains some major elements in the Conservatives’ Rental Reform Bill that fell when Parliament was dissolved, including a ban on section 21 evictions, the tenant’s right to keep a pet and an ombudsman for the sector.
In some areas, Labour plans to go further than the Conservatives, including a requirement that rented properties have an energy performance rating of C by 2030.
Although many reforms will get cross-party support, there are expectations that some landlords may feel the burdens on them go too far and want to sell up. That could mean an abundance of available properties, creating a buyers’ market for investors of owner-occupiers.
In recent months the property market has been recovering, with the latest Halifax House Price Index revealing prices were almost back to their historic high in June 2022, while mortgage lending was up 40 per cent year-on-year.
However, this is most likely due to cheaper home loans following the August base rate cut and the prospect of more to come as inflation has eased. In the longer run, the strength of the property market will depend heavily on the impact of Labour’s policy programme.