Starmer quits – property industry reaction

Sir Keir Starmer has announced he is resigning as Labour leader with a new Prime Minister in place by the autumn.

He has asked the National Executive Committee of the Labour Party to set out a timetable with nominations opening for the leadership on July 9, and completed by the summer recess.

This will mean a new leader is in place before parliament returns in September.

Until then Starmer will remain in post as prime minister.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, says:

“I am sure what Andy Burnham and Keir Starmer could agree on is the importance of additional activity in the housing market, which is not only good for property but the wider economy in view of its multiplier effect.

“The key element which has been holding back activity has been lack of confidence and instability.

“After a promising start, unfortunately Starmer seems to have lost touch with what people on the ground want and need from their housing.

“What we are looking for is the shortest possible handover of power to reduce that instability and transition towards a more growth-orientated agenda where prospective owners and tenants can more readily aspire to homeownership and better rentals.

“Unfortunately, the lack of direction has prompted too many people to sit on their hands rather than getting on with their lives when it comes to their properties.”

Becky Fatemi, executive partner at United Kingdom Sotheby’s International Realty, comments:

“Starmer’s departure creates a fresh layer of uncertainty for the property market. Buyers and investors can cope with almost anything if they know what they’re dealing with. What they dislike is uncertainty.

“A prolonged contest risks putting the market into a holding pattern once again. At the top end, where purchases are often discretionary, confidence is everything.

“There is also the prospect of a double whammy: uncertainty over future policy, followed by concern about the policies themselves. If Burnham becomes Prime Minister, many buyers will question what his long-standing support for property tax reform means for higher-value homes.

“The concern is simple: higher costs make the UK less competitive, reducing investment and encouraging globally mobile wealth to look elsewhere.”

Jamie Freeman, director at Haringtons UK, comments:

“ The risk with the Labour leadership change is not necessarily who replaces Keir Starmer, but the possibility of a prolonged period of political limbo while different candidates position themselves with increasingly headline-grabbing policy ideas around wealth, taxation and property.

“The market has already spent the better part of two years in a holding pattern because of elections, budgets, policy leaks and constant speculation. Every time confidence starts to return and people feel there is finally a clear runway ahead, something else arrives to create hesitation again.”

Adam Jennings, Head of Residential at Chestertons:

“In the short term, we may see property sellers and buyers adopt a ‘wait and see’ approach until there is greater clarity on the direction of government policy, particularly around housing, planning reform and the broader economy.

“The devil will very much be in the detail in the coming weeks – not only in terms of who succeeds Sir Keir Starmer, but also the priorities they set out and the speed at which they are implemented.

Tom Bill, head of UK residential research at Knight Frank, is warning that a future Labour leadership contest could involve extensive debate on property taxation.

Andy Burnham – the strong favourite to be Prime Minister by the autumn – has made it clear that he prefers taxation to shift from stamp duty to actual property ownership.

In particular, he wants to move to a land value tax. In the past he has backed a 0.48% annual charge on the value of the land which a property occupies.

Tom Bill says:

“It won’t be a top priority but a move to tax the asset rather than the transaction appears to be on Burnham’s radar.

“The simplicity of the proposal is commendable and scrapping stamp duty make sense given how it hinders social and economic mobility, but the proposal in question feels too overtly political. Shouldn’t the sole aim be to maximise tax revenue?

“Under the plan, landlords, developers, overseas buyers and second-home owners would pay more.

“A similar approach with stamp duty since 2014 has curbed activity in exactly the sort of high-value locations where most revenue is presumably being targeted.

“A regular flow of tax receipts has obvious benefits for the chancellor, but politicizing the housing market feels like an approach that’s been tried and failed.”

Bill concludes: “If any new plan is too financially redistributive, it would also distort decision-making.

“Annual revaluations would turn house price growth into a tax liability and there is a psychological difference between a one-off stamp duty bill and a recurring charge, particularly in London and the south-east where payments would be a proportionately larger share of household income.”

High profile estate agent Trevor Abrahmsohn, founder of Glentree Estates, says of Burnham’s land tax proposal:

“Scrapping Stamp Duty Land Tax would almost certainly unleash a surge in transactions, perhaps a violent one.

“The Treasury would lose revenue upfront, but if enough capital was released into the bloodstream of the economy, much of that loss could return elsewhere.

“But here comes the trapdoor, today’s ‘modest’ mansion tax could very easily become tomorrow’s fiscal ratchet.

“A harmless looking 0.5% can, in the hands of an ideologically enthusiastic government, become 1%, then 2%, then ‘temporary emergency measures’.”

Charlotte Kennedy, Chartered Financial Planner at Rathbones, comments:

“A departing prime minister rarely changes your finances overnight, but political upheaval can create uncertainty that affects markets, confidence and expectations.

“While Andy Burnham appears to be in pole position to take the helm, whoever ultimately takes power will inherit the same difficult fiscal backdrop and quickly discover there are no easy wins. Sluggish growth, stretched public services and strained public finances mean difficult choices have been deferred, not avoided.”

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