Polls, pundits and bookies aren’t always right, but they’re all we’ve got to give us an idea of how voting will go on 4 July. Defeat can always be snatched from the jaws of victory, but it’s very likely we will soon have a Labour government. What will this mean for the property sector?
Landlords shouldn’t get too excited
The Conservatives belatedly worked out that pushing landlords to sell up through increased taxation and regulation doesn’t actually help anybody: more properties for sale, but tenants can’t afford to buy them, and with fewer rental units on the market, rents have gone up. Labour’s ‘Freedom to Buy’ is mostly a rebranding of the existing mortgage guarantee scheme, and talk of rent caps will surely scare the horses more. Can the sector take Labour being even less landlord-friendly than the Conservatives have been?
Better prospects for property development?
More and more landlords are shifting from buy-to-let into small-scale property development. For many, the type of projects they undertake are just one step up from those they’ve done previously, such as creating an HMO or doing a refurbishment. Simply putting flats above a shop or converting a small commercial building can be expected to generate a six-figure profit, so no wonder there’s a healthy appetite. It certainly puts the average landlord’s buy-to-let profits in the shade. So, will Labour’s approach to property development differ from that of the Tories, who have actively encouraged it by creating many new permitted development rights in England?
In my opinion, there’s unlikely to be too much change. Last year, Keir Starmer insisted he would take a dim view of any Labour MPs opposing new housing in their constituencies, but as governments of all hues have discovered, when there’s the suggestion of construction work at the bottom of our own gardens, few of us can contain our inner NIMBYs, and they are force to be reckoned with.
Green, brown and grey
Labour wants to build around 1.5million homes using what it calls the ‘grey belt’ – green belt land that already has something built on it, such as car parks or petrol stations. They want 50% of grey belt development to be affordable housing, but it’s not clear how the economics of this will stack up for developers who clearly are going to want to make a profit.
Countryside charity CPRE argues that the focus should be on existing unused brownfield land, converting commercial properties to residential use. These brownfield sites are a rare political win-win. They positively impact the house-building numbers, plus voters are generally happy for these sites to be converted. It also gets more people living in our town centres, which benefits local economies. On that basis, I can’t see Labour deciding that brownfield conversions are a bad idea. It should also be good news for landlords and investors because larger housebuilders won’t touch small commercial conversion projects since most lack the skills or appetite to do them. This leaves more opportunities for first-time property developers.
Ritchie Clapson CEng MIStructE is a property developer of 40+ years, an author, industry commentator, and co-founder of the property development training company propertyCEO.
