‘Devil in the detail’ – reaction to Conservative manifesto

Prime Minister Rishi Sunak has launched the Conservative manifesto for the General Election on 4th July, at Silverstone race circuit. His speech held few surprises for property professionals with many of the policy commitments announced in the national press over the past couple of days.

The Labour party are yet to publish their manifesto but what is known is a commitment to launch a ‘Freedom to Buy’ scheme to help first time buyers on to the market.

In response Mr Sunak confirmed on Tuesday a Conservative government would make permanent the current temporary nil rate band stamp duty land tax threshold at £425,000 for first time buyers; a policy introduced by Liz Truss in 2022 and scheduled to finish on June 2025. The party would also commit to build a further 1.6m houses, and reintroduce the Help to Buy scheme.

Commenting on the policy proposals, Nick Hale, Chief Executive Officer at Movera, says the policies ‘sound promising on paper but the devil will be in the detail.’

“The abolition of stamp duty for first time buyers on properties up to the value of £425,000 will give some relief but will not alleviate the significant and higher moving costs for other buyers which are often a blockage in the rest of the housing market. The proposed new Help-to-Buy scheme could give first-time buyers another boost but, given today’s property prices, a 5% deposit is still likely be a significant sum for these buyers to find, especially if they are already renting. It is clear that affordability and housing supply still remain a big issue.”

“Even though Mr Sunak has promised that, should the party form the next Government, the Conservatives will deliver 1.6 million new homes in the next parliament, it is uncertain how this will be achieved. The Government has missed its annual housebuilding targets since 2019 and there is already a focus on developing brownfield sites. Whatever happens after 4th July, our focus at Movera will continue to be on supporting those looking to move or remortgage to make the homebuying experience as easy as possible.”

Simon Brown, CEO of Landmark Information Group suggested the current work to improve the home moving process must continue to create a ‘healthier’ property market.

‘It’s encouraging to see commitment from the Conservatives – giving much-needed clarity of direction for the property industry and home-movers alike. Whilst cutting Stamp Duty Land Tax will go some way in temporarily stimulating housing demand and generating economic activity, there remain systemic issue with the home-moving process that must be addressed to prevent further stress and uncertainty.”

“Siloed processes, insufficient digitalisation, and overburdened professionals are impacting the volume of completions. Our data shows that home-moves still take 123 days on average to complete – with inefficiencies across the transaction chain and leaving the property market susceptible to external shocks. A cross-market effort is needed to address this – with increased digitisation and information-sharing – to create a healthier property market that works for home movers.’

Anthony Codling, Managing Director RBC Capital Markets says

“Following the mini-budget of 2022 comes the big-manifesto of 2024, as the conservatives seek to minimise the gap in the polls with big manifesto pledges. Playing into our seemingly ingrained and cultural love of property the conservatives are trying to win over renters, first time buyers and landlords alike whilst also rebuilding their relationships with the housebuilders through a combination of equity loans, tax breaks and increasing security of tenure. If the Conservatives win the election the housebuilders will benefit, but will the big pledges be big enough to bridge the big gap in the polls?”

Nathan Emerson, CEO at estate agency membership body Propertymark added

“It is encouraging to see the Conservatives making commitment to consumers via proposals to overhaul the threshold for when Stamp Duty is applicable. Propertymark is keen to see homeownership be a workable proposition and not an aspect that is ever out of reach.”

“It’s also encouraging to see strategies for the fast-track regeneration of brownfield sites and urban areas. However, Propertymark awaits further clarity on how any ‘Help to Buy’ scheme would assist first-time buyers when taking their steps onto the housing ladder. Ultimately, we need a fully robust supply of new sustainable housing that is keeping pace with an ever-growing demand.

“Any renewed ambition to pick back up on the Renters (Reform) Bill must come with full disclosure and a workable timeline regarding vital court reform before aspects such as Section 21 evictions can sensibly be abolished.”

Those hoping for further commitments to leasehold reform were left disappointed. While the Liberal Democrat manifesto pledged to abolish leasehold tenure and cap ground rents the Conservative manifesto says it will ‘complete the process of Leasehold Reform,’ which given the rushed nature of the Freehold and Leasehold Reform Act passed on the final day of Parliament has left some fearing further dilution of reform. Linz Darlington, MD of Homehold says

“Ahead of the 2019 election, the Conservatives promised to “continue with our reforms on leasehold” and “cap ground rents at a peppercorn. Their 2024 manifesto entitled “Clear Plan – Bold Action – Secure Future” ironically is a clear plan on leasehold to boldly action a watered-down version of what they promised in the past. For example, their 2019 pledge to set ground rents at a peppercorn immediately, has been downgraded to setting the cap at £250.

“When taken in isolation, the Conservatives’ commitment to “Complete the process of Leasehold Reform” doesn’t sound too bad. But, it is arguably just a concession that they left leasehold reform too late in the last parliamentary process, and that the bill they hurried through in washup is half finished. In the last parliament the Tories both made and broke promises to abolish leasehold, reinvigorate commonhold and cap ground rent for existing leaseholders. While the ban of ground rent for new leases is in effect, almost none of the Leasehold and Freehold Reform Act is in force – and there is no firm timeline of when it will be.

“What we need from the next Government is to concentrate on a successful implementation of the Leasehold and Freehold Reform Act 2024. They should start with the provisions that are easy to enact and don’t require further consultation, such as longer lease extensions. The current Government has estimated most key provisions will be in place by “2025-2026”, and whoever is in power, it will take time to get this right. Once the 2024 Act is properly in force, a full commitment needs to be promptly made to legislate and put into effect the Law Commission recommendations, which were published in 2020. These include a repositioning of Commonhold as the default tenure flats. For leaseholders wanting their situation to improve, they should look carefully at the promises on offer before they cast their ballot.”

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