Labour’s landslide election victory will have major ramifications for the British public, with the UK property market expected to experience some huge shifts in the next few months.
Below we break down how the property market will likely be impacted over the next few months.
Stamp duty land tax
While the Conservatives had planned to make the stamp duty land tax break permanent, Labour has announced the threshold for stamp duty will revert to £300,000 from the current temporary level of £425,000 in April next year.
Labour’s manifesto had also previously stated that non-UK residents buying residential property in England or Northern Ireland will soon pay an additional 1% surcharge on top of the stamp duty rates paid by UK residents, bringing the surcharge total to 3%. This makes now the ideal time for non-UK residents to move ahead with UK property market plans and ambitions.
International investment will be a priority
The incoming Labour government’s manifesto also emphasises the need for public and private investment to ensure economic growth. Incoming chancellor Rachel Reeves’ proposed economic platform suggests that securing fresh capital from foreign investors will be instrumental and David Lammy, the new foreign secretary, is enjoying a whirlwind tour of Germany, Poland and Sweden in a bid to begin to ‘reset Britain’s relations with Europe’ and entice investors back to British sectors.
Rental sector changes
Based on Labour’s manifesto and election campaign messaging the market will experience an almost immediate change in legislation in the rental sector. Labour plans to abolish Section 21 ‘no-fault' evictions, which currently allow landlords to evict tenants without providing a reason. This allows tenants greater security and could greatly reduce the turnover rate in rental properties but also limits landlords' ability to manage their properties flexibly and deal with problematic tenants swiftly.
Additionally, Labour aims to empower tenants to challenge excessive rent increases, providing them with a mechanism to dispute hikes they deem unfair, a significant new suggestion considering the ongoing UK rental crises and housing shortage.
House building as a priority
Labour campaigned with a promise to deliver 1.5 million over the course of the next five years, aiming to change the National Planning Policy Framework and restore previous targets.
The new government is so committed to the cause it is also aiming to allow local authorities to earmark more green-belt space for home developments, beginning with ‘brownfield sites’ and then a new category of ‘grey belt’ land made up of pockets of green-belt land that are not as naturally rich. The new green-belt plans are part of several Labour planning policies that also include reintroducing mandatory local housing targets scrapped by the Tories, giving planning powers to combined authorities, and publishing new design codes to raise the quality of new builds.
Only time will tell if the new government can hit the ambitious number, but there’s no doubt an increase in available housing will impact the UK property market.
Non-dom tax status
Speculation has been rife for months regarding the replacement of the old non-dom tax system, affecting 68,800 individuals living in the UK who are non-domiciled and don’t pay tax on their worldwide income. The new Labour government has pledged to scrap the non-dom tax status to raise more money for the NHS and other public services, but not much else is known about the proposed changes.
The term ‘non-dom’ describes a UK resident whose permanent home for tax purposes is outside the UK, meaning they only pay UK tax on the money they earn in the UK, not money made elsewhere in the world.
The Conservatives has previously proposed that people who moved to the UK from April 2025 would not have to pay tax on money they earned overseas for the first four years after which they would pay the same tax as everyone else should they remain in the country.
Labour has pledged to strengthen these planned reforms and has hinted that it would remove a 50% discount in the first year of the new rules and include foreign assets held in a trust within the UK inheritance tax framework.
While new legislation is likely only to appear around March or April 2025, incoming Chancellor Rachel Reeves claims the changes could raise £2.6 billion over the course of the next Parliament.
Increased certainty for the domestic market
With a new government officially announced and a set vision for the market put into place, many buyers and sellers who had been waiting for certainty in the market are now choosing to move ahead with their plans, allowing much more home-mover confidence heading into the second half of the year.
The UK’s property market is showing signs of resilience and potential growth as it heads into the autumn. Supported by political stability and anticipated rate cuts, the market can likely look forward to increased activity and improved affordability in the next few months.
With post-election optimism at an all-time high and a number of major changes on the way, now is the ideal time to move ahead with plans to invest in UK property, especially for non-UK residents and expats who might be impacted by anticipated stamp duty and non-dom tax changes.
As always it is highly recommended to consult with a professional to ensure you navigate the current market and its opportunities accurately. Tailor my Property has a professional network of financial, property and investment specialists who are able to assist and tailor a strategy suited to your individual needs.
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