As the Labour and Conservative parties continue to court the electorate in the run-up to the general election, amid pitched verbal battles, proposed policies by the two main candidates are being scrutinised by the general public. But what exactly is being proposed by David Cameron and Ed Miliband, and what does it mean for people looking to invest in the UK’s property market?
It’s true that the housing market has seen prices grow exorbitantly since the recovery from the financial crises began and during the past five years, the Conservative party has done little to improve matters. Demand for housing is still very high while supply is becoming increasingly limited, to the extent that the prospect of owning a home is rapidly diminishing for many young adults as prices continue to grow across the country. Recent figures show that 9 million people are now living in private rented accommodation.
The Tory party has proposed an extension to the Help-to-Buy equity loan scheme, originally introduced to the UK public in 2013. The scheme - available for people moving into new build homes with price tags under £600,000 in England and £300,000 in Wales – is a program which allows buyers to apply for an equity loan from the Government of up to 20 percent of the property value. The buyer contributes a 5 percent deposit and typically covers the remaining cost of the property by way of a normal mortgage.
Furthermore, the Conservatives intend to release huge amounts of brownfield land for private house building and expect to construct 275,000 new homes in the next five years, equating to half of the estimated demand. David Cameron also has the idea of pouring a further £1 billion into the Build-to-Rent fund, a scheme that has received its own fair share of criticism since its inception.
The Labour party has repeatedly slammed the Conservatives regarding their approach to the housing issue, with leader Ed Miliband claiming that the Government has presided over the lowest levels of housebuilding since the 1920’s. However, Miliband’s own policies have sparked a great deal of controversy, not least of all by proposing the now infamous Mansion Tax. This could see properties with a value of £2 million to £3 million pay £3,000 tax per annum, while those above this amount would pay considerably more. Many people have criticised the Mansion Tax as ‘rich-bashing’ and claim that the party are promoting it merely to secure votes.
When it comes to the supply of new homes, Labour intend building 200,000 affordable properties per year in order to combat the severe housing shortage. Many of these will be built in towns and cities around all UK regions, with Miliband stating that this will be the utmost priority for an incoming Labour government with regard to residential property. The party has also focused on the rental sector, proposing three-year fixed tenancy agreements to protect tenants from unfair rent increases, effectively a form of rent control. This has caused somewhat of a backlash amongst the UK’s 1.63 million private landlords, with two-thirds of them saying they will leave the sector should Labour come to power.
Regardless of which party is elected in May, it’s clear that both groups have well-formed plans moving forward, at least in terms of how they would address the woes of the housing market. With the Conservative party intending to build social housing numbers that fall far short of what is required to truly address the housing shortage, and Miliband’s plan to ‘steal from the rich’ with his proposed Mansion Tax, the UK housing market may have darker days ahead.