Labour Government Quick Fire Roundup

It’s now official. We have a Labour government, new prime minister in Sir Kier Starmer, new housing minister in Matthew Pennycook. We know that landlords are waiting with bated breath to see what the next steps will be.

Quoting from LanzlordZone of Matthew Pennycook’s appointment we read how:

“… the relief that someone who understands how the rental market works and the challenges it faces may be short lived given his cosy relationship with tenant charity Shelter.”

“Pennycook’s more pro-tenant approach to the private rented sector that has made some landlords nervous.”

“For example, towards the end of the Bill’s passage through parliament, he tabled an amendment that would have prevented landlords selling a property for two years after a tenancy had begun. And his was instrumental in shaping the party’s policy of abolishing ‘bidding wars’ between tenants and agents or landlords.”

“But the NRLA recently said that behind the scenes he was more placatory, telling its Chief Executive Ben Beadle only a few weeks ago in response to questions about abolishing Section 21 evictions and improving possession times that: “we all want the court processes to be quicker”.”

How the markets reacted

It’s interesting to see how the more UK focused FTSE 250 soared to its highest level since April 2022 following the appointment of Labour.

FTSE 250 12 month tracking

However, looking at the FTSE 100, we see it continue to fall after a peak back in May, dropping by 0.45%.

FTSE 100 12 month tracking

What’s interesting about the FTSE 250 gain is that it was largely housebuilders that drove the increase; most likely in the hopes that Labour will amend planning laws and kickstart development.

Unlike how the markets reacted when Truss was appointed, we haven’t seen the same volatility which could be a positive sign for recovery. Summed up nicely by Dan Coatsworth, investment analyst at AJ Bell, we read:

“There is always a sense of nervousness ahead of markets opening the day after a general election, but we only get extreme volatility when investors are caught by surprise. This time round, there was nothing to get heads spinning as the result was widely expected. Instead, investors appeared to welcome the news with open arms.”

“Political uncertainty is over and this removes one of the key risks around UK equities, so it’s feasible that more domestic and foreign investors are now looking for opportunities on the market. This suggests today’s reaction might not be a one-day sensation.”

What should we expect to see?

Starmer’s comment is that the work starts ‘now’ and we covered some of the key points of what a Labour government might mean for landlords recently that goes into depth, however we think we will need to wait and see for the full details to be revealed.

It would not surprise us however, if the first thing that gets picked up (or re-booted) will be the reform of section 21. Every article we read state it is due to happen quickly, so let’s see what happens here.

Another quick fire summary from the Labour manifesto is how Labour commit to:

  • Overhauling the regulation of the private rented sector
  • Immediately abolishing Section 21 ‘no fault’ evictions
  • Preventing private renters being exploited and discriminated against,
  • Empowering tenants to challenge unreasonable rent increases
  • Take steps to decisively raise standards, including extending ‘Awaab’s Law’ to the private sector.”
  • Get Britain building again, creating jobs across England, with 1.5 million new homes over the next parliament
  • Immediately update the National Policy Planning Framework to undo damaging Conservative changes, including restoring mandatory housing targets
  • Increasing the rate of the stamp duty surcharge paid by non-UK residents
  • Fast-tracking approval of urban brownfield sites
  • Build a new generation of new towns, inspired by the proud legacy of the 1945 Labour government
  • Work with local authorities to give first-time buyers the first chance to buy homes and end the farce of entire developments being sold off to international investors before houses are even built
  • Introduce a permanent, comprehensive mortgage guarantee scheme, to support first-time buyers who struggle to save for a large deposit, with lower mortgage costs
  • Clamp down on what it calls “unscrupulous landlords strangling growth
  • Requiring all landlords to make their properties EPC rating C or above by 2030

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