Will the UK General Election affect me buying a house?

As the UK heads to the polling booth on the 4th of July to vote, many of us will be thinking about housing. According to YouGov, housing is currently the fourth most important political issue facing the country, after the economy, health, and immigration.

Given it's so important, lots of politicians are talking about it, but what exactly are they promising and how will it affect you if you are buying a home (or interested in buying)?

We've included policies from all the parties with more than 10% share of the vote according to the latest polls. This means that we've included Labour, the Conservatives, the Liberal Democrats, and Reform.

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Stamp Duty & Financial Help for First Time Buyers (FTBs)

Helping First Time Buyers get on the housing ladder is a priority for Labour and the Conservatives, with various schemes proposed to make it easier to get on the housing ladder.

These policies only require parliament to vote on them so are likely to affect house buyers first (other things like increasing home building will take longer).

• FTBs currently don’t have to pay any stamp duty if their property price is £425,000 or lower. But this threshold is due to decrease to £300,000 in March 2025.
• Labour has not said anything about keeping the FTB stamp duty threshold at £425,000, so we can probably assume it's going to expire in March 2025. This will negatively affect you if you are buying a property between £300,000 (the old threshold) and £425,000.
• Labour also plans to increase stamp duty by 1% for non-UK residents, which they say is to make it easier for locals to buy homes.
• Introduce a permanent Mortgage Guarantee Scheme* where they will offer support to enable more banks to offer mortgages that only require a 5% deposit.
• Prioritize access for First Time Buyers in new developments.

• Introduce Freedom to Buy, a new Help to Buy scheme requiring only a 5% deposit.*
• Permanently set the threshold for stamp duty for FTBs at £425,000.
• They also commit to protecting Right to Buy discounts.

*It should be noted that this 5% deposit scheme that Labour and the Conservatives mention is something that already exists (the Mortgage Guarantee Scheme) and has been used by nearly 43,000 people since April 2021. Also, 5% mortgages do exist outside this scheme, but the scheme aims to increase the supply of them through the government backing the loans, therefore giving lenders confidence that they won't default.

• Have not made any comments on introducing schemes for FTBs or altering stamp duty.
• Instead, they focus on building more affordable housing as a way to help people get on the housing ladder.

• Commit to cutting stamp duty entirely for properties under £750,000 and introducing a 2% band for properties from £750,000 to £1.5 million, and 4% thereafter.
• On a £280,000 property (the UK average), this would be a saving of £1,500. For a £750,000 property, this would be a saving of £25,000!

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Building More Homes

A key issue facing First Time Buyers is that housing in the UK is incredibly expensive.

Building more homes is a common promise across all parties. The idea being that increasing housing supply should help reduce house prices, making homes more affordable.

Over the past five years, there have been about 200,000 new dwellings built each year in the United Kingdom, with similar levels since about 1980. All the major parties that give a target number are proposing reaching a level of home building not seen since the 1970s.

Number of houses built in the UK with party targets (source: ONS)

• Build 1.5 million new homes over five years (300k per year).
• Building the next generation of ‘new towns’.
• Emphasise the need for more social housing but do not give specifics.

• Build 1.6 million new homes over five years (320k per year)

• Build 380,000 homes per year.
• At least 150,000 of which will be new social homes
• Establish 10 new garden cities.

• They have not committed to an actual number of homes to build (as far as we could find).
• They want to incentivize the use of new technology such as modular construction to help achieve this.

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Planning System Reform

But how are they going to deliver these new homes? Most parties think an overhaul of the current planning system is the way to go.

Last year, about 269,000 housing units were granted planning permission, which you may notice is below everyone's targeted house building volumes. To reach their house-building targets, all parties propose reforms to streamline and improve the planning permission system.

Number of residential units granted planning permission in the UK (source: Gov.uk)

• They aim to fast-track approval on brownfield sites, release some low-quality green belt areas for housing.
• Hire 300 more planning officers to streamline the planning application process.
• Restore mandatory housing targets.
• Centralize planning more and give mayors more power to approve building plans.

• Prioritize urban and brownfield development areas and increase density levels in London.
• Abolish legacy EU ‘nutrient neutrality' rules to unlock 100,000 new homes.
• Renew the Affordable Homes Program. This is important funding for affordable housing, but it should be noted that research shows we need to build 145,000 new affordable homes each year, and the Conservatives have historically delivered far less than half of this (63,600 in 2022-23).

• Build 10 new garden cities and support community-led developments.
• Prevent land-banking by developers through a use-it-or-lose-it scheme
• Introduce binding targets for local authorities.

• Implement fast-track planning decisions
• Introduce tax incentives for brownfield development.

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Leasehold Reform

Leasholds are constantly in the press with countless stories of leasehold homebuyers held hostage to exorbitant service charges and other bills.

This is particularly relevant for First Time Buyers who often end up purchasing leasehold properties. For context, there are 4.86 million leasehold dwellings in England, or 18% of the English housing stock (up to 35% in London).

• Make it easier and cheaper to extend leases.
• Ban new leasehold flats.

• Cap ground rents at £250.
• Support leaseholders affected by historic building safety issues.

• Abolish residential leaseholds.
• Cap ground rents at a nominal level.

• Simplify and reduce the cost of extending leases and buying freeholds.

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Conclusion

It is encouraging that all the parties have recognised housing as a key issue and that helping First Time Buyers get on the ladder is important. Only time will tell if the winner of the election will manage to keep to their promises from their manifestos.

The only thing to take away from this if you are currently buying, or thinking about buying a home is that the Stamp Duty thresholds are likely to reduce in March 2025 so you want to buy before then if you will be affected by this!

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