At first glance, it seems that our new Labour government could create headaches for landlords.
There’s certainly going to be some challenges to iron out. Few like change, and there will be plenty of it over the coming months.
According to Labour’s manifesto, it plans to immediately abolish section 21 no-fault evictions, raise standards across the industry, and extend “Awaab’s Law” to the PRS among other things.
It remains to be seen how, or even if these changes will be implemented. Larger concerns linger over how the market will react to all this. If we’re to go by the rhetoric seen in the press, landlords and property investors have no choice but to panic, abandon all hope, and exit the market entirely.
However, this alarmism appears to be having a limited impact — across the economy, cooler heads are prevailing.
In fact, many are likely to be surprised by a looming flurry of potential investment activity. Rather than being scared away entirely, many investors have been patiently sitting on the sidelines, waiting for the best time to act.
According to Savills, prime buyers were cautious in the run up to the election, embracing a “wait-and-see” approach before firming up their plans. As such, there could be heightened buyer demand over the autumn months as most of the uncertainty is put behind us.
We also know there’s plenty of savings set aside out there, just waiting to be put to good use. The ONS reported that the average UK household saving ratio was estimated to be 11.1% in Q1 2024, up from 10.2% in the final months of 2023. It also noted that we have now experienced the second quarter where non-pension savings contributed more to the savings ratio.
Could some of this be put to use in the property market as the dust settles, and we all adjust to a new political environment? It’s certainly possible, especially with all the coming options available to property investors.
Average rents across the UK are hitting record highs, sitting at £1,316 outside of London, according to Rightmove. In London, the average rent is advertised as £2,652 a month at the moment, 4% higher than what it was this time last year.
What’s driving this growth? Supply and demand imbalances. We all know there are not enough rental homes available to meet the needs of the market, and with some landlords selling up to avoid a perceived challenging environment, patient investors could take advantage. We may be entering a period where the rental investment scene is flooded with stock, just as rents are at all time highs, and tenants are desperate for optionality.
For those looking for specific, targeted entry points, student housing could offer relatively quick results. The next academic year isn’t too far away, and this is another corner of the market in desperate need of supply. UCAS expects higher education applications could rise by as much as 41% by 2030, when compared to 2022. All these students will need somewhere to live and Savills warns that UK cities already need much higher rates of student housing delivery.
Also, it may be worth taking another look at that manifesto from a more optimistic angle. Say Labour does effectively utilise “grey belt” land for development — could this mean we’ll see new towns or economic hubs emerge for targeting?
Labour also plans to overhaul business taxation rules, aiming to incentivise investment, support entrepreneurship, and, crucially, tackle empty properties. Will this open the door for a commercial property rebound, or encourage largescale conversion strategies?
There’s much to figure out, but we can be cautiously optimistic. There is never such a thing as a perfect property market, but there are always opportunities. Specialist lenders such as MFS understand this — it’s why we embrace flexibility and openness regardless of whoever’s in power, or how the wider economy is faring.
