The pre-General Election fall out: 4 things sellers should know

On May 22nd, standing in the pouring rain and with the adopted Labour anthem, Things Can Only Get Better, trolling Rishi Sunak in the background, the Prime Minister called a snap General Election. The days that followed have cast light on how the future of the property market may look.

Here are 4 things owner-occupiers and landlords should know about how the forthcoming election has already – and may in the future – impact the market:-

1. The Renters’ Reform Bill was axed: some landlords have considered selling rental property but they may start questioning their decision as the result of the dissolving of Parliament ahead of the election. Ministers had a matter of days to decide which Bills would be fast-tracked for Royal Assent, and which Bills would be dropped.
   To the surprise of many, including MP Michael Gove, the Renters’ Reform Bill was ditched, taking with it the immediate threat of punitive private rental sector changes. Landlords must consider, however, whether the policies of a Labour Government – should they gain power – are conducive to successful buy to lets. It’s widely thought that if the Conservatives retain control of the country, they will resurrect the Renters’ Reform Bill in its last form, although it will have to be reintroduced to Parliament and go through all its stages again.
2. The Leasehold & Freehold Reform Bill is now an Act: those in power deemed the Bill to reform the leasehold and freehold sector more important than its rental counterpart. The Leasehold & Freehold Reform Bill was in the House of Lords when the Prime Minister called the election but it was rushed through at the last hour, with amends. The abolishment of or a cap on existing ground rents was dropped, as was a ban on new flats being built with leasehold status.
   Sellers who had placed their plans on hold in hope the reforms would make a transaction easier, as we discussed in this blog, should note that there has been no overnight change of law. It is up to the next Government to decide when the changes will be implemented. This is likely to be a phased reform, with activity in 2025 and 2026.
3. The Conservative Chancellor unveiled his pledges: the nation has been keeping its fingers crossed for some time regarding cuts to stamp duty but they were not delivered in the 2023 Autumn Statement or the 2024 Spring Budget. Hopes were raised that the Chancellor would announce some vote-winning strategies before the 4th July but the news was underwhelming.
   Jeremy Hunt opted for a series of freezes instead of cuts. Billed as a Family Home Tax Guarantee, he pledged stamp duty and capital gains tax would not be increased over the next five years, nor would council tax bands be re-evaluated.
   Worth noting is the general threshold at which stamp duty is applied will still change for some purchasers in March 2025. Currently, stamp duty is paid when an existing homeowner moves up the property ladder to a home costing more than £250,000 but this threshold will drop to £125,000 early next year. First-time buyers, however, would specifically benefit from a Conservative pledge to make the temporary threshold of £425,000 a permanent one.
4. Labour set out its property stall: the party has been most vocal about rental reforms. If in power, Labour will ban Section 21 evictions – even without a reform of the court system and as quickly as the first week, as well as introduce a Decent Homes Standard for private rentals, with an emphasis on mould and living conditions. Labour is also keen for tenants to keep pets and make it easier for them to alter the property they live in. Perhaps most worryingly for landlords, the party has not ruled out rent caps in certain areas, and it would return to the requirement for all privately rented properties to have a C EPC rating.
   Despite this, Labour still supports homeownership. If it wins the election, it has pledged to rebrand the Conservatives’ mortgage guarantee scheme to create ‘Freedom to Buy’ - a permanent initiative to help people with low deposits purchase a property. Counterintuitively, however, Senior Labour MP John Healey has not ruled out the prospect of raising stamp duty and capital gains tax rates, which will worry those hoping to buy and sell property.
   Other Labour pledges include building 1.5 million more homes over the course of the next parliament; creating a series of new towns and reforming tax levied on foreign property buyers.

The team at Open Property Group is ready to help all sellers weigh up their options between now and the 4th July. We’re also in prime position to make cash offers and facilitate fast exchanges on properties as a result of any election fall out. Contact us if you’re an owner-occupier, an executor or administrator of a probate property, a landlord or an investor with a property portfolio for sale.