Protect your property from Labour! From first-time buyers to second-home owners, the financial experts’ guide to mortgages, house prices… and when to move

Labour is planning a raft of policies set to send waves through the property market with consequences for first-time buyers, homeowners and landlords. We look at what is planned and what homeowners can do to protect themselves and benefit from the changes.

First-time buyers who dither could pay more stamp duty. Buyers stepping on to the first rung of the property ladder are currently enjoying a temporary stamp duty relief, which frees them of paying the tax on property purchases of up to £425,000.

This threshold was increased in September 2022 and is due to remain in place until the end of March next year. However, a Labour Party spokesman last month said the relief would not be extended, which means the threshold will fall back to £300,000.

The average price paid by UK first-time buyers hit £288,136 last year, according to comparison website Finder. However, buyers in many areas would be hard-pressed to find homes to buy below the £300,000 threshold.

First-time buyers in the capital bought homes worth an average of £492,234 last year.

Those getting on to the property ladder in the east and south-east of England are also likely to breach Labour’s threshold and pay stamp duty.

Aspiring first-time buyers who are able to do so may wish to get their purchase under way before the reduction in the stamp-duty threshold leaves them with a tax bill to pay. Jamie Lennox, broker at Dimora mortgages, says: ‘You should buy sooner rather than later.’

Landlords at risk of high capital gains tax

Investors must pay capital gains tax when they sell or dispose of an asset. All have a £3,000 tax-free allowance – down from £12,300 just two years ago.

Rates charged vary based on your income and what type of asset you are selling.

Changes to capital gains tax have not yet been confirmed, but it is rumoured Labour could increase the amount of tax investors pay – either by reducing capital gains tax allowances further or by increasing the rates.

Justin Moy, of brokers Essex Home Finance, says: ‘Landlords will be nervously waiting for clarity on tax policies.

‘We could see significant numbers of transactions over the coming months before there are any possible tax increases, potentially pushing prices higher and even inflation a bit higher, keeping tax rates roughly where they are now.’

Lennox urges landlords to seek tax advice now to talk through their options.

Lock yourself in a mortgage deal

The country may still be digesting news of Labour’s huge win, but experts say the result was anticipated and priced into mortgage rates some time ago.

Ben Perks, of Orchard Financial Advisers, says: ‘A Labour landslide was priced in months ago so Friday’s election result shouldn’t rock the boat too much. I’d expect that mortgage rates will continue to trickle downwards.’

Perks argues that, in fact, rate cuts are far more likely to be driven by a reduction in the Bank of England base rate than Labour’s win. Rates were held at 5.25 per cent last month, and financial markets now expect a cut as soon as August. Five of Britain’s biggest lenders cut rates last week, including Barclays, HSBC and Santander.

David Hollingworth, of brokers L&C, says brokers’ attitude to mortgage rates remains generally positive post-election.

Homeowners who need to remortgage in the coming months could consider securing a new fixed-rate deal now for when their current one ends. However, if rates fall further in the interim, they could reject this deal and seek out an even better one.

Get ready for a house price boost

Labour has proposed a number of policies that could affect house prices.

Firstly, it has pledged to build an extra 1.5 million new homes over the next five years.

That means 300,000 homes will need to be built each year – more than double the amount built in 2022-23. Labour says it will do this by cutting planning application delays, helping first-time buyers and building on ‘ugly’ green belt.

Should it achieve this, the large influx in housing stock could drive prices down in some areas, says Mr Lennox.

If there is a large exodus of landlords leaving the industry due to changes that make their investments less profitable, that too could drive down house prices.

However, conversely, people who have put off moving or buying a new home due to political uncertainty may now be sparked into action over the coming months.

‘If the election is met with a boost to consumer confidence, then that could be felt in gradual improvement to house prices and activity levels in the market,’ says Mr Hollingworth.

‘Assuming the Bank of England can cut interest rates, as is already widely expected, then borrowers should start to feel more optimistic and those who put off a move may come back to the market.’

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