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

The Labour Party is planning a raft of policies that will have implications 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 are hesitant to buy a home could pay more stamp duty. Buyers who make the first move towards purchasing a property currently enjoy a temporary stamp duty exemption, which frees them from paying tax on property purchases up to £425,000.

This threshold was raised in September 2022 and will remain in place until the end of March next year. However, a Labour Party spokesperson said last month that the exemption would not be extended, meaning the threshold will drop back to £300,000.

According to comparison website Finder, the average price paid by first-time buyers in the UK reached £288,136 last year. However, in many areas buyers would struggle to find homes below the £300,000 threshold.

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

Those entering the housing market in the east and south-east of England are also likely to pass the Labour threshold and pay stamp duty.

First-time buyers who can afford to do so may want to make their purchase before the lowering of the stamp duty threshold leaves them with a tax bill to pay. Jamie Lennox, mortgage broker at Dimora, says: “You should buy sooner rather than later.”

Owners risk paying high capital gains tax

Investors must pay capital gains tax when they sell or dispose of an asset. Everyone has a tax allowance of £3,000, up from £12,300 just two years ago.

The fees charged vary depending on your income and the type of asset you are selling.

Changes to capital gains tax have not yet been confirmed, but there are rumours that Labour could increase the amount of tax investors pay, either by further reducing capital gains tax allowances or by raising rates.

Justin Moy, of brokerage Essex Home Finance, says: ‘Homeowners will be nervous waiting for clarity on tax policies.

“We could see a significant number of transactions in the coming months before there are any potential tax increases, which would potentially drive up prices and even inflation a bit, while keeping tax rates roughly where they are now.”

Lennox urges property owners to seek tax advice now to explore their options.

Lock yourself into a mortgage deal

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

Ben Perks of Orchard Financial Advisers said: “A landslide Labour victory has been a given for months, so Friday’s election result shouldn’t rock the boat too much. I think mortgage rates will continue to edge lower.”

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

David Hollingworth of brokerage firm L&C says brokers’ attitude toward mortgage rates remains generally positive following the election.

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

Prepare for a rise in housing prices

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

First, it has committed to building 1.5 million additional new homes over the next five years.

That means 300,000 homes will need to be built a year, more than double the number built in 2022-23. Labour says it will do this by reducing backlogs of planning applications, helping first-time buyers and building on the “ugly” green belt.

If this is achieved, the large influx of housing could push prices down in some areas, says Lennox.

If there is a large exodus of homeowners leaving the sector due to changes that make their investments less profitable, that could also push down home prices.

However, on the contrary, people who have put off moving or buying a new home due to political uncertainty may now be prompted to act in the coming months.

“If the election is accompanied by a boost to consumer confidence, that could be reflected in a gradual improvement in house prices and activity levels in the market,” says Hollingworth.

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