The recent appointment of Liz Truss as UK prime minister is set to trigger a raft of infrastructural, legislative, and taxation changes designed to strengthen the British economy and housing market.
The new prime minister is committed to reducing red tape, including planning regulations, to propel the government target of 300,000 new homes built per year. After pledging to invest heavily in the levelling up agenda, planning services are a key facet of the UK real estate ecosystem set to undergo significant changes. A recent Royal Town Planning Institute report shows local authority planning spending is down 43 percent over a decade.
Another key aspect of a Truss government will feature significant infrastructure investment. Spurred by the success of the Elizabeth line crossrail service, the northern powerhouse rail project (including the HS2 line between Manchester and Leeds) is now firmly a priority. Connecting 8 out 10 major UK cities, services will be faster, more convenient, and spur commuter town growth further whilst reducing emissions.
In a boost to the “generation rent” set of potential home buyers, currently locked out of the owning property due to affordability, a new review is planned to determine the feasibility of allowing rental payments to contribute to mortgage affordability assessments. Research by the BVA-BDRC consultancy shows 23 per cent of landlords is set to reduce the number of properties they plan to let over the next year, a fifth more than a year ago.
This new policy would reduce the pressure on the residential rental sector, currently experiencing record demand levels. Furthermore, there is a proposed reduction in corporation tax, currently at a rate of 19 per cent, which will incentivise an uptick in limited company landlords.
A capital economics report suggests that private rental homes have now fallen by 250,000 due to three per cent stamp duty surcharges and buy-to-let mortgage tax relief restrictions. Removing the surcharge would be able to boost rental housing supply by over 900,000 homes, boosting tax revenue by £10bn.
“Whenever a location benefits from a large-scale regeneration project, property prices in the surrounding area tend to mirror that of the regeneration scheme and increase in price once the project is up and running. In comparison to the Crossrail project, they have predicted that if properties are in a 10–15 minute walk of the HS2, that area could expect to see a 30-60% increase once the project is completed”