Your guide to UK housing politics: Policies, budgets and national initiatives
- Sell your house no matter the political climate
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When selling a house in the UK, one of the key factors influencing supply and demand in the housing market is government policy.
Shifts in political leadership often bring uncertainty with new policies introduced but not always fully implemented, leaving many homeowners uncertain about the right time to sell.
On this page, we’ll explore how current and upcoming government policies, particularly those of the new Labour government are expected to impact the housing market.
We’ll also explain the role of the UK Budget in shaping the property sector, highlight important government initiatives in progress and provide insights from our experts on the current political landscape in the UK housing market.
What are the government policies affecting the housing market?
General elections have long been key in shaping the trajectory of the UK housing market. A change in government often signals shifts in housing policy, taxation and investment priorities, which can either fuel growth or create uncertainty in the market.
Historically, election periods tend to cause a slowdown in the housing market. Buyers and sellers become more cautious due to uncertainty about future housing policies. This “wait and see” attitude can lead to fewer transactions and house prices stabilising or falling in the lead up to elections. However, once the outcome is known, market activity generally picks up as investors and homeowners adjust to the new political landscape.
Labour’s recent victory in the general election marks a significant shift in housing policy. The party has pledged to tackle the housing crisis with a range of initiatives aimed at increasing affordability and addressing homelessness.
Their plans include building more affordable homes, introducing rent controls within the Renters Bill, and expanding the availability of social housing, all of which are expected to have a mixed impact on the housing market.
For homeowners and landlords, Labour’s rent control proposals and potential changes to Buy To Let tax relief could mean less profitability for rental properties. On the other hand, first-time buyers and renters may benefit from improved access to affordable housing and more stable rent prices, which could reduce demand for private property ownership in certain areas.
Labour’s focus on reducing house price inflation may also temper the rapid rise in house values seen in recent years, creating a more balanced market. Similarly, Labour also has ambitious green policies, such as retrofitting homes to improve energy efficiency, could also lead to increased costs for homeowners, but may raise the long-term value of properties meeting eco-standards.
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How does the UK Budget affect home sellers & landlords?
The UK Budget plays a very important role in shaping the housing market, with wide-reaching effects on home sellers and landlords alike. From tax changes to regulatory updates, the policies introduced in the annual budget can have a significant impact on the profitability of selling or renting out a property.
Here are the key areas where the UK budget can influence property owners:
Stamp Duty adjustments
Changes to Stamp Duty are often a central part of the budget and can affect both buyers and sellers. For home sellers, lower Stamp Duty rates can stimulate buyer demand, making it easier to sell property. Conversely, higher rates can slow the market down, potentially leading to longer selling times and lower prices.
For landlords, particularly those buying additional houses, the Stamp Duty surcharge on second homes can make expanding property portfolios more expensive.
Capital Gains Tax
For those selling second homes or Buy To Let properties, any changes to Capital Gains Tax in the Budget are critical. An increase in Capital Gains Tax rates or a reduction in tax-free allowances could significantly impact the profits from selling a property, especially for landlords exiting the market.
This is something property owners need to monitor closely, as higher Capital Gains Tax liabilities may affect the timing of house sales.
New Private Rental Sector (PRS) Regulations
The Budget is often a platform for the government to introduce new regulations affecting the Private Rental Sector. Landlords may face additional compliance costs if stricter rules around energy efficiency or tenant protections are announced. These measures, while beneficial for tenants, can increase the costs for landlords, potentially reducing rental yields.
Inheritance Tax adjustments
For home sellers and landlords with larger portfolios, changes to Inheritance Tax thresholds could impact long-term estate planning. Any reduction in the tax-free threshold for passing down property to heirs could lead to higher tax liabilities, making it more costly to pass on property to the next generation.
Impact on housing supply and demand
Government policies that influence housing supply and demand are often a feature of the budget. For example, increased funding for housing developments or incentives for first-time buyers can affect the housing market.
While sellers may benefit from increased demand in certain segments, new affordable housing initiatives could lead to an oversupply of properties, putting downward pressure on prices.
Green initiatives and Energy Efficiency requirements
The government often uses the budget to promote green initiatives, which can be both a challenge and an opportunity for landlords. On the one hand, landlords might benefit from grants and funding to improve the energy efficiency of their properties.
But, on the other hand, stricter energy efficiency standards, such as higher EPC requirements, could force landlords to invest in renovations or face penalties.
First-time buyer and affordable housing incentives
Policies designed to help first-time buyers, such as Help to Buy, can stimulate demand for entry-level homes, benefiting home sellers. However, the construction of more affordable housing through government schemes could create additional competition in certain areas, affecting house values and sales volumes for sellers.
What is the UK Spring Budget?
The UK Spring Budget is an annual statement presented by the Chancellor of the Exchequer to the House of Commons, usually taking place in March. It serves two primary purposes:
Outlining the government’s plans:
The Chancellor details the government's economic and fiscal strategies for the coming year, including:
Taxation: This includes potential changes to personal and corporate tax rates, allowances and reliefs.
Public spending: This specifies how the government intends to allocate funds to various public services, such as healthcare, education and infrastructure.
Economic forecasts: The Chancellor presents the Office for Budget Responsibility's (OBR) economic projections, outlining expected growth, inflation and unemployment rates.
Setting the fiscal agenda:
The budget lays the groundwork for the government’s financial direction for the year, impacting various aspects of the economy and individual lives.
The UK Spring Budget is different from the Autumn Budget, which focuses on updates and adjustments to the government’s financial plans in the latter part of the year. The Spring Budget is not a legally binding document but it sets the tone for economic policy and influences future legislation related to taxes and spending.
The UK Spring Budget attracts significant attention as it can directly impact individuals and businesses through its potential impact on taxes, public services and the overall economic climate.
What is the UK Autumn Budget?
The Autumn Budget, or Autumn Statement usually takes place in either late October or early November, following the Spring Budget, which occurred 6 months before. The Autumn Statement is announced by the Chancellor, who will then answer questions from other MP’s on the subject of the announcement.
Briefly before the UK Autumn Budget is announced, the Office for Budget Responsibility (OBR) will deliver their economic and fiscal forecasts in which the Chancellor will respond to in the Budget.
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How did past Budgets impact the UK housing market?
Previous Budget announcements have had a complicated impact on the UK housing market. While some measures have acted like fuel to the fire, boosting demand and pushing house prices upwards, others have served as breaking mechanisms, slowing down the market’s pace.
We have seen everything from tax breaks for first time buyers, which incentivised more people to enter the market, to raising interest rates, which made mortgages more expensive and discouraging potential buyers from making impulsive purchases.
Did the Spring Budget 2024 improve the housing market?
The Spring Budget 2024, was part of the Conservatives last hurrah, and looked to make several key changes that aimed to improve the housing market, but its overall impact remains mixed.
On a positive note, the Budget allocated significant funds for major housing developments such as the Barking Riverside and Canary Wharf. These projects were intended to boost housing supply in the long term, potentially easing the shortage and moderating house price growth.
Reforms to Stamp Duty Land Tax, particularly for first-time buyers, were designed to make property transactions more accessible, potentially stimulating market activity. Additionally, the reduction of Capital Gains Tax from 28% to 24% was aimed at encouraging property owners, especially landlords, to sell, which could have increased the number of houses available on the market.
However, the abolition of Multiple Dwellings Relief may have deterred some investors from buying additional properties, reducing demand in the rental sector. The scrapping of tax breaks for Furnished Holiday Lettings, also made short-term rentals less attractive, though this aimed to free up more homes for long-term tenants.
Despite these measures, many experts felt the budget missed an opportunity to address key issues such as affordable housing and mortgage availability. There were no significant reforms to help home-movers, and first-time buyers continued to face barriers, as there were no permanent extensions to buyer relief.
What happened in the Autumn Budget 2023?
Chancellor Jeremy Hunt unveiled the Autumn Budget Statement on November 22nd, 2023. This statement outlines plans for the UK's future through funding allocations and policy commitments.
The key points of the announcement included:
Increases in wages and pensions: This aims to address the cost-of-living crisis and support individuals facing financial pressure.
National Insurance and self-employed tax reforms: These changes are likely to impact both employees and self-employed individuals, but the specific details require further investigation.
Extensive welfare changes: The nature and extent of these changes are not explicitly mentioned, and further information is needed to understand their potential impact.
Focus on housing: The Chancellor's announcement emphasised increasing housing supply and digitising the buying and selling process, suggesting potential efforts to address the housing market's challenges.
Here’s a breakdown of the Autumn Statement’s impact on the housing market:
For homebuyers:
The extension of the Mortgage Guarantee Scheme helped first-time buyers and those with smaller deposits to access the market by making it easier to get a mortgage, which increased the demand for first time buyer housing.
The increased demand, especially amongst young people and first time buyers buying in areas with limited supply like Yorkshire, lead to higher house prices, with some areas experiencing more competitive markets.
For sellers:
The influx of new homes, particularly in demand areas, meant there was more competition and people found it harder to sell quickly when selling through traditional routes.
The streamlining of the buying and selling process has only begun to take its place within the market, and has already proven to increase market activity.
What happened in the Spring Budget 2023?
In the March 2023 Spring Budget, Chancellor Jeremy Hunt outlined the government's plans for public finances focusing on four areas: Enterprise, Education, Employment, and "Everywhere" (referring to national infrastructure and regional development).
This budget aimed to achieve the long-term goal of making the UK "the most competitive tax regime of any major country." It covered various aspects, including corporate and personal taxes, innovation, and economic growth initiatives.
While the Spring Budget 2023 aimed to address various economic issues, it had limited direct impact on the housing market itself. The focus was on increasing workforce participation (potentially freeing up social housing) and providing energy bill support, but no significant measures were directly aimed at the housing market.
However, the National Association of Property Buyers (NAPB) and the British Property Federation (BPF) proposed several indirect measures that could have potentially benefited the housing market:
Stamp Duty Changes
They suggested using stamp duty to incentivise specific behaviours, such as:
Taxing overseas buyers more: This could level the playing field for domestic buyers.
Reducing stamp duty in deprived areas: This could encourage investment and revitalise those areas.
Giving stamp duty relief to downsizing pensioners: This could free up larger homes for families.
Tax breaks for landlords making energy saving improvements: This could encourage a more sustainable housing stock.
Taxing vacant plots: This could discourage developers from holding onto land without building on it.
Planning regulation changes
Easing planning regulations could potentially increase the housing supply, benefiting first time buyers.
Tax breaks for builders & investors
This could incentivise them to build more homes, further increasing supply.
Support for improving EPC ratings
The BPF suggests offering a zero VAT rate on maintenance and repairs related to improving energy efficiency. This could encourage homeowners and landlords to upgrade their properties, making the housing stock more environmentally friendly.
However, these were just suggestions and the government did not implement any of them in the Spring Budget 2023.
How do government initiatives shape the future of housing?
Many government initiatives announced within the UK Budget influence house prices, homeownership trends and the overall housing supply. Recent initiatives, such as infrastructure projects, pandemic-related policies, and legislative changes, have all had significant impacts on the UK housing landscape.
HS2 and house prices
The High Speed 2 (HS2) rail project is a major infrastructure initiative that has already begun to influence house prices, particularly in regions along the proposed routes. While HS2 promises to improve connectivity between London, the Midlands, and the North of England, areas near future stations have seen a surge in demand as buyers anticipate faster commuting times and increased economic activity.
House prices in towns and cities along the HS2 line, such as Birmingham and Manchester, have risen due to this anticipated growth. However, in some rural areas, concerns about noise, disruption and changes to local landscapes have led to mixed effects on house prices/
The Renters Rights Bill & its impact on landlords
The Renters Rights Bill (previously, the Renters Reform Bill), aimed at improving tenants’ rights, is poised to bring sweeping changes to the private rental sector. Key measures include the abolition of ‘no-fault’ Section 21 evictions, the introduction of stronger protections against poor housing conditions, and enhanced security for tenants.
While the bill is designed to create a fairer rental market, many landlords have expressed concerns over how it will affect their ability to manage properties and maintain profitability. The prospect of stricter regulations and longer tenancy periods is likely to lead to a wave of landlords selling their rental properties, particularly those with smaller portfolios.
This shift could reduce the availability of rental homes, putting further pressure on the housing supply. As more landlords exit the market, house prices may see some volatility, particularly in areas where Buy To Let investments are common.
Handling of Covid-19
The Covid-19 pandemic reshaped the housing market in many ways. During lockdown, government policies such as the Stamp Duty holiday helped maintain property transactions, preventing a total market freeze. This led to a surge in house prices as buyers rushed to take advantage of the tax breaks. At the same time, the rise of remote working shifted demand away from city centres, with rural suburban areas becoming more attractive to buyers seeking larger living spaces.
However, selling with estate agents during the pandemic became more challenging. Restrictions on in-person viewings and valuations forced the industry to pivot to virtual tours and remote processes.
Many estate agents had to adapt quickly to digital tools, which has had a lasting impact on how properties are marketed and sold, even post-pandemic. The pandemic also led to delays in sales progression and increased demand for reliable estate agents who could navigate these unprecedented conditions.
What do our experts say about current housing policies?
Our team of experts at The Property Buying Company offers valuable insights into the impact of Labour’s housing policies, following the recent release of their manifesto and the Autumn Budget 2024:
Adam Isaacson
Commercial Director
“Labour’s ambitious goals to reduce the carbon footprint of housing in the UK through retrofitting homes with modern insulation, renewable energy sources, and advanced heating systems is commendable. However, the financial burden of these retrofits is substantial and without the adequate grants and support, the feasibility of individual investments diminishes for many homeowners.”
“For houses requiring extensive upgrades, many homeowners may find that the return on investment, even with the long-term energy savings, isn’t sufficient to justify the upfront costs.”
“This is particularly true for older properties where retrofitting can be both complicated and expensive. In these cases, the lack of financial assistance might drive more people to consider selling their homes, rather than retrofitting, especially when faced with rising costs of materials and labour.”
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Karl McArdle
Founder and CEO
“I see Labour’s ambitious target of building over 300,000 new homes annually as a necessary step in addressing the UK’s ongoing housing shortage. Their commitment to delivering 1.5 million homes over the next five years not only helps to alleviate the immediate pressure on the housing market but also promises to fast-track developments, providing much needed housing for local buyers in their communities.”
“However, while the volume of new builds is impressive, the success of such a scheme will depend on how efficiently these developments can be executed. The prioritisation of local buyers is an essential move to ensure that communities benefit from these new homes, rather than external investors who may drive prices up or leave properties vacant.”
“For us, as a business that specialises in buying properties, this presents both opportunities and challenges. On one hand, we can expect more properties to become available in the market, allowing us to invest in strategically placed developments that align with local housing demands.”
“On the other hand, the increased focus on new builds could shift attention away from existing properties that need investment and regeneration. It’s important that while new homes are being built, equal attention is given to older properties to ensure a balanced housing market and sustainable urban growth.”
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Mathew McCorry
Marketing Director
“Labour's approach to housing supply is poised to have a significant impact on the balance between sellers’ and buyers’ markets."
"Historically, the UK’s housing shortage has driven strong sellers markets, with demand far outstripping supply, pushing house prices higher and limiting affordable housing options for many buyers.”
“For sellers, particularly those with older or less desirable homes, the increased competition from new builds may force a reevaluation of pricing strategies."
"Sellers may find it harder to command the premium prices that were previously the norm in a constrained market. In response, sellers could be more motivated to sell their homes quickly, especially as new developments take shape.”
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UK housing policy FAQs
What is the UK housing policy?
Labour aims to reduce the carbon foot of UK housing by improving sustainability in already existing housing supply, through the retrofitting of properties with modern insulation and heating systems, as well as renewable energy sources.
They also look to increase the amount of social housing available, providing housing for low-income families with more housing options. These homes will be integrated into new developments to ensure a balanced mix of housing tenures.
To make homeownership more accessible, Labour intends to reduce the barrier of high mortgage deposits, helping up to 80,000 first-time buyers enter the housing market. This will primarily benefit younger buyers who often struggle with initial costs of homeownership.
Labour also proposes to reduce the Stamp Duty threshold from £425,000 back to £300,000, reversing the Conservative Party’s previous adjustments. This is intended to make buying homes more affordable for a wider range of people, particularly first-time buyers.
As mentioned earlier in this article, Labour also plans to build over 300,000 new homes annually over the next five years to meet its target of 1.5 million homes. The aim is to alleviate the housing shortage, with a focus on fast-tracking developments and ensuring that local buyers benefit from new projects.
And, finally In an effort to minimise environmental impact, Labour plans to prioritise developments on brownfield sites — previously developed land — and explore the potential of “grey belt” land (low quality green belt areas) for sustainable developments.
What is the housing system in the UK?
The UK’s housing system consists of several types of housing arrangements:
Owner occupied: Around 70% of UK homes are owned by their occupants, with approximately 30% owned outright, and 40% still under mortgage. This category is the largest in the UK housing system.
Social housing: Provided by local councils or housing associations, social housing, often referred to as “council housing,” offers affordable rents to eligible households. The average rent for social housing is £89 per week, significantly lower than the private rental market’s average rent of £196 per week.
Private rental sector: Roughly 12% of UK homes are privately rented, offering flexibility to those unable to buy or access social housing.
To qualify for council housing, applications need a low income, limited savings and a strong connection to the local area, whether through family, work or long term residency.
Why is housing so unaffordable in the UK?
The affordability crisis stems from a combination of stagnant housing supply and rising demand. The demand for housing has grown significantly due rising incomes, population growth and an increased number of households. However, this has not been matched by the rate of new homes being built.
The cost of borrowing for a mortgage also plays a key role. Recent increases in interest rates have made mortgages more expensive, putting homeownership out of reach for many.
What is the problem with housing in the UK?
The UK is facing a severe housing shortage, with supply not keeping up with demand, particularly in urban areas. This has led to rising house prices and rents, making it increasingly difficult for low-income households to secure stable accommodation. Housing charities and organisations work closely with Parliament to push for better housing policies and address issues like homelessness, overcrowding and unaffordable housing.
What is the Housing Act 2024?
There are several important housing-related acts passed or amended in 2024:
Effective from May 2024, the Leasehold and Freehold Reform Act introduced significant reforms for leaseholders, including extending standard lease periods from 90 to 990 years and removing the two year ownership requirement before a leasehold can extend their lease. The act also limits the fees landlords can charge for sales packs and standardised service charge billing.
The Social Housing (Regulation) Act, which came into effect on April 1st, 2024, gives the Regulator of Social Housing stronger enforcement powers. It introduces new standards for social housing providers, including the Safety and Quality Standard, and empowers the regulator to conduct inspections, demand performance improvement plans and issue fines for non-compliance.
What is the new rent law in the UK?
The Renters Rights Bill, formerly the Renters Reform Bill, introduces several important changes aimed at improving tenant rights and limiting landlord powers:
Rent increases: Landlords will only be allowed to increase rent once per year and must provide at least two months’ notice. The bill also eliminates automatic rent review clauses, which have led to unpredictable rent hikes.
Periodic tenancies: All tenancies will be converted to periodic tenancies, meaning tenants will no longer be locked into fixed terms. Tenants will be able to leave with just two months’ notice, giving them more flexibility.
Pet ownership: Tenants will have the right to request to keep pets, and landlords will be prohibited from unreasonably denying these requests.
Rent in advance: Landlords must return any rent paid in advance if a tenancy ends early, and they cannot demand excessive amounts of rent upfront.
What is the biggest cause of the housing crisis?
The UK housing crisis is driven by a combination of factors, including the imbalance between supply and demand, rising house prices, and insufficient affordable housing options. Economic and legislative factors over decades have also contributed to the shortage of new homes, with planning restrictions and Buy To Let investments exacerbating the situation.
What is the UK government doing about housing?
To tackle the housing crisis, the UK government has implemented several key initiatives:
Building more homes: The government aims to build 1.5 million new homes by 2029. They are pushing local authorities to meet mandatory housing targets and reviewing the greenbelt to unlock more land for development.
Affordable housing: The government has committed £11.5 billion to the Affordable Homes Programme, aiming to deliver over 100,000 affordable homes.
Social housing reform: With new regulations from the Social Housing (Regulation) Act, landlords are being held accountable for poor service, and residents have greater access to Redress through the Housing Ombudsman.
Has the UK housing market recovered since COVID?
Although the housing market initially saw a surge following the COVID lockdowns, the market has since slowed. House prices and sales volumes dipped slightly in 2023, influenced by high mortgage rates, the rising cost of living and reduced market confidence. However, signs of recovery are emerging, with some improvement in sold prices reported in 2024.
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