With less than a week to go until a new Government is formed, we’ve been investigating what the two main parties’ manifestos could mean for property businesses. We’ve not only analysed both the Labour and Conservative documents and what they represent but also spoken to clients to learn what they really want from the next occupants of Downing Street.
Here’s what we’ve learned…
Labour Manifesto
Labour’s Manifesto, which it states is focused on rebuilding the country, includes a variety of measures that will impact the real estate sector predominantly as a result of business tax changes and reforms to housing and planning delivery.
Business tax
In terms of business tax, the Labour party has outlined that it plans to publish a roadmap for business taxation and commit to one major fiscal event (Budget) per year. It claims this will enable businesses to plan investments with confidence, supporting growth.
The party highlighted that it plans to keep corporation tax capped at the current 25% level for the entire parliamentary term as well as retaining the full expensing system for capital investments and the annual investment allowance for small business.
The manifesto also highlighted that Labour will adopt updates to workplace pension schemes so that they take advantage of consolidation and scale to deliver better returns for UK pensioners and more investment for UK plc. Alongside this, the party said it will work to increase investment from pension funds into the UK.
Housing and planning
Labour has pledged to build 1.5 million homes over the next parliament. It also pledges to restore mandatory housing targets and update the National Policy Planning Framework to ensure the planning system meets the needs of a modern economy.
Planning reform won’t stop there, with the manifesto highlighting how Labour will set out new national policy statements, make major projects faster and cheaper by slashing red tape, and build support for developments by ensuring communities directly benefit.
In addition to the above, the party noted it will build a “new generation of new towns”, introduce mechanisms for cross-boundary strategic planning and require all Combined and Mayoral Authorities to strategically plan for housing growth with new planning powers given.
Other points mentioned include:
- Reforms to compulsory purchase compensation rules to improve land assembly and speed up site delivery for the benefit of public interest.
- Ensure planning authorities have up-to-date Local Plans.
- Fund additional planning officers through increasing the rate of the stamp duty surcharge paid by non-UK residents.
- Strengthen planning obligations to ensure developments provide more affordable homes.
- Take a brownfield first approach, prioritising the development of previously used land wherever possible, and fast-tracking approval of urban brownfield sites.
- Take a more strategic approach to greenbelt land designation and release to build more homes in the right places, with the release of lower quality ‘grey belt’ land prioritised.
- Introduce ‘golden rules’ to ensure development benefits communities and nature.
- Abolish Section 21 ‘no fault’ evictions.
- Introduce a permanent, comprehensive mortgage guarantee scheme to support first-time buyers.
- Work with local authorities to give first-time buyers the first opportunity to buy homes and stop entire developments being sold off to international investors before houses are even built.
- Ensure homes in the private rented sector meet minimum energy efficiency standards by 2030.
Conservative Manifesto
The Conservative Manifesto follows similar lines to Labour, although it offers less insight into exactly what business tax reforms the party would deliver, simply noting the party will continue “to ease the burden of business rates for high street, leisure and hospitality businesses by increasing the multiplier on distribution warehouses that support online shopping over time”.
The better comparison between manifestos comes when looking at the housing and planning policy focus of the document.
Housing and planning
The Conservatives commit to delivering 1.6m new homes in England over the course of the next Parliament, a similar commitment to that of Labour. The parties also both want to help first-time buyers, with the Conservatives noting they’ll increase the threshold at which they pay Stamp Duty to £425,000 from £300,000.
The manifesto also outlines plans to create a new and improved Help to Buy scheme, which will be part funded through contributions from house builders.
In another move designed to free up homes to buy, the party plans to grant a two-year temporary Capital Gains Tax relief for landlords who sell to their existing tenants.
The Conservatives, as well as Labour, have pledged to deliver homes on brownfield land in urban areas. Their plan involves providing a fast-track route through the planning system, with a focus on delivering new homes in the 20 largest cities.
The Conservative Manifesto also claims to be supporting local and smaller housebuilders by requiring councils to set land aside for them and by lifting Section 106 burdens on smaller sites.
What property sector really wants
Manifestos are all par for the course during an election campaign, but do they reflect what businesses really want from the next Government? Two of our partners Zoe Roberts and Tom Roseff have been speaking with clients to find out.
“Some of the requests from clients for the new occupiers of Number 10 and 11 are simple and appear firmly in the agenda, such as planning reforms, with the common wording here by both clients and the parties being the word ‘simplified’,” explained Zoe.
Tom agreed: “By far the biggest complaint we hear from clients is around the broken planning system. Even planning officers recognise the system is broken and needs to change.”
He added that the reforms can’t stop there, however, and that both parties need to look at landlords. “They’ve been clobbered by tax changes which make the sector uneconomic for many, but to deliver what should be a universal ambition of reducing and ending homelessness, the country needs a vibrant rental sector, as well as homes to buy and a provision for affordable homes. Ultimately, many people we spoke to believe there needs to be a balancing of the interests of landlords and tenants.”
Zoe echoed Tom, highlighting that many landlords she’d spoken to wanted full tax relief on interest for landlords and incentives for build-to-rent development.
The pair also noted that some clients would like to see changes announced in the Budget earlier this year reversed.
“It’s no surprise that many landlords would like Furnished Holiday Letting rules reinstated and a return of multiple dwellings relief,” Zoe said. “Only time will tell whether the winning party will consider these U-turns.”
Both partners also noted that one request that came up with clients, and featured in both manifestos, was the need for business rates reform. “We need to create a level playing field to help bricks and mortar retailers compete against online businesses,” explained Tom.
He added that at least within the Labour Manifesto this was certainly on the agenda, with the party noting it would replace the business rates system to make it fairer while ensuring it still raised the same revenue.
Tom added that a key topic for any party this election should be how it can increase housing supply and stimulate the market. “Help to Buy has ended and the Mortgage Guarantee Scheme is due to end next year, so something new is needed, whether it’s a new scheme or the introduction of targeted incentives for both first-time buyers and up-sizers,” he explained.
Zoe agreed, noting: “One approach to this could be reform of Stamp Duty Land Tax and another may be to offer green incentives both to homeowners and housebuilders to encourage energy efficient buildings.”
Ultimately the conversations had by Zoe and Tom led them both to conclude that the manifestos of both parties show they understand there is a need for evolution in some areas and revolution perhaps in others to drive forward the sector and the benefits it can bring.
Come 5 July, we’ll know who’ll be in office, but we’ll likely have a while to wait to know exactly what the new Government will bring forward.
If you’d like to discuss your own position, please get in touch with Tom Roseff at tom.roseff@bhp.co.uk or Zoe Roberts at zoe.roberts@bhp.co.uk.
