Labour's landslide win, securing 411 seats compared to the Conservatives' 121, marks a significant shift in the political landscape and brings a renewed focus on the housing and rental markets. With 2.8 million landlords and 8.6 million renters in the UK, the policies of the new Labour government are set to have a wide impact.
Prime Minister Sir Keir Starmer emphasised Labour’s “need to tackle the rented sector” and protect renters, and the Deputy Prime Minister called for a balanced approach: "Our plans will support good landlords, but we are calling time on unscrupulous landlords strangling growth."
How do Landlords feel about Labour’s win?
Landlords are divided in their reaction to Labour's overwhelming victory. Finbri’s 2024 Landlord Report, which surveyed 755 UK landlords, found that 43% thought a Labour win would benefit them, 34% saw it as negative for landlords, and 23% were uncertain. This mixed sentiment reflects concerns about Labour's plans to strengthen renter protections, which is likely to mean more regulations for landlords.
A private landlord for over ten years commented: "Generally, I'm happy about Labour winning, although I do have concerns about their policies for second home and inheritance tax. I understand the concerns of other landlords about how the new government might impact them.
"But, landlords were already feeling the need to leave the market under the Conservatives. There's uncertainty about how Labour will handle the rental market, but I'm willing to give them a chance right now."
In contrast, 34% believe a Labour win will negatively impact them, a growing sentiment in comment sections on landlord sites.
Concerns centre on the abolition of Section 21 'no-fault' evictions, which limits landlords' ability to regain possession of their properties. Additionally, the potential for increased capital gains tax and the uncertain impacts of Labour’s housing policies contribute to their unease.
The survey also highlights that landlords generally supported the Conservatives more, with 48% believing a Conservative win would have been beneficial to them.
How will a Labour government impact landlords?
Under a Labour government, landlords can expect various impactful changes driven by policies to transform the rental sector. The Deputy Prime Minister Angela Rayner has highlighted Labour's commitment to creating a secure rental market and that their plans will ‘support good landlords’.
Labour’s housing policy
Labour has set an ambitious target to build 1.5 million new homes over the next five years, aiming to alleviate the current housing crisis. Their manifesto promises the “biggest boost to affordable housing in a generation” and prioritises first-time buyers. This initiative will increase opportunities for first-time buyers and buy-to-let (BTL) investors.
New Renters’ Rights Bill
Labour plans to introduce a Renters’ Rights Bill, announced in the King’s Speech on July 17, 2024. This bill is an updated version of the Conservatives’ Renters’ Reform Bill and aims to provide greater rights and protections to renters, including:
Abolishing Section 21 ‘no-fault’ evictions.
Allow tenants to challenge rent increases.
Allowing tenants to request pets.
Introducing a Decent Homes Standard.
Extending ‘Awaab’s Law’ to the private sector.
Creating a digital database for the private rental sector.
Establishing a private rental sector ombudsman.
Making it illegal to discriminate against tenants on benefits or with children.
Strengthening local councils’ enforcement powers.
Capital Gains Tax
Labour has pledged not to raise the basic, higher, or additional income tax rates and will keep corporation tax at 25%, with VAT and National Insurance rates unchanged. However, landlords should be aware of a potential increase in capital gains tax rates to raise funds. Although specific changes have not been detailed, the anticipation of higher CGT rates has 62% of landlords concerned about the impact on their investments.
What is the future looking like for landlords?
The outlook for landlords under Labour's government is uncertain. Labour’s plan to build 1.5 million new homes aims to address the housing shortage, potentially easing market pressures, though the supply-demand imbalance may persist in the short term. Rental price growth has slowed to 6.6% and is expected to decelerate to around 5% in 2024. House prices are predicted to rise modestly by 1.5% by year-end, with anticipated gradual buyer activity recovery.
Despite rising investment intentions - where, according to Finbri, 51% of landlords plan to invest in 2024 - new buy-to-let mortgages have halved over the past year. While Labour's reforms, including stricter tenant protections and potential capital gains tax changes, aim to enhance tenant rights, they also pose challenges for landlords.
