The Labour Party has won the United Kingdom General Election with a sizeable majority, ending 14 years of Conservative Party leadership of the country.

The financial markets already priced in the landslide victory with the pound trading flat in the hours after the victory was announced. But the immediate questions for the property industry are what it should be preparing for in terms of policy changes with a seeming move from right of centre politics to the left, and how can it build a constructive dialogue with the incoming administration.

While the party will no doubt have been keeping many of its policies close to its chest in the lead-up to voting, enough has emerged on the issues most important to real estate to get a sense of what a Labour government will mean. Based on the reactions of commercial property professionals, the implications of the election could range from shifts in planning and investment priorities, tax changes and relations with the European Union.

Tom Bill, head of residential research at real state services firm Knight Frank, said do not expect too much too soon: "One general point to make is that a combination of inexperience and instinctive caution means the new government is unlikely to make big decisions quickly.

"There will be no mini-Budget moment, avoiding the type of adverse reaction on financial markets and spike in mortgage rates seen after Liz Truss took power in September 2022. There has been minimal reaction on markets so far, which had expected a Labour victory."

He adds that a clearer sense will emerge "in the autumn Budget once the Office for Budget Responsibility has examined its numbers. An even fuller picture will emerge at the spring Budget in 2025. Until then, we will have to rely on what Labour says to anticipate what its victory means" for the United Kingdom housing market.

Stephanie Hyde, the United Kingdom chief executive and EMEA markets advisory chief executive at real estate brokerage JLL, said: “The change of Government creates the real chance for renewal. We expect this Labour Government to use this opportunity to reset economic policy in several important ways, with direct impacts on property markets. As is frequently the case, there will be a difference between ideas and commitments made pre-election, to those implemented in Government."

So what did the Party say, pre-election?

In terms of the United Kingdom's housebuilding problems, the Labour Party is pledging to build a slightly smaller amount than the Tories were in their manifesto — 1.5 million homes — over the next parliament and said it will immediately update the National Policy Planning Framework, through which the government provides planning guidance, to enable this.

However, for successive Labour and Tory administrations, saying they will build millions of houses has proved a lot easier than actually doing it and the party will need to hit the ground quickly with the details of how it will achieve its targets.

Labour has said it will be able to meet its figure by restoring mandatory housing targets which were removed under the Conservatives.

As with all of the leading political parties it is promising to take a "brownfield-first approach" that makes a priority of the development of previously used land "wherever possible, and fast-tracking approval" of urban brownfield sites.

Labour said it will go further as brownfield development alone "will not be enough" and it will be taking a "more strategic approach" to the designation and release of the green belt land that is intended to protect the countryside from urban sprawl. It has also said it will make as a priority the release of lower quality land it has termed "grey belt" even as it has not provided much detail of what will fall into this latter category.

Labour has certainly put improvements to planning at the forefront of its election campaign, promising to "get Britain building again" as it calls the current planning permission system a "major brake on economic growth" and has pledged to update national policy to ensure it meets modern needs.

It said it will ensure planning authorities have "up-to-date local plans" while it will fund the recruitment of 300 new planning officers, via increasing the rate of the stamp duty surcharge paid by non-United Kingdom residents.

Labour will introduce what it calls "new mechanisms for cross-boundary strategic planning" and it's promising to give the United Kingdom's Combined Authorities, where several local authorities are banded together, new planning powers along with "new freedoms and flexibilities to make better use" of grant funding.

Labour is promising to extend compulsory purchase compensation rules to "improve land assembly, speed up site delivery, and deliver housing, infrastructure, amenity, and transport benefits" in the public interest.

Other pledges include strengthening planning obligations to ensure new developments provide more affordable homes, those that are subsided to make them cheaper to rent or own, and change the Affordable Homes Programme managing this, so that it delivers more homes from existing funding. It also wants to support councils and housing associations to build more and make a greater contribution to affordable housing supply, plus make a bigger priority of building homes for social rent, where the level is set according to a government formula.

Melanie Leech, chief executive of the British Property Federation, has said that Labour is right to focus on improving the planning system as the key enabler of growth.

She said: "Introducing effective strategic planning means that decisions are made at the appropriate national or regional level, rather than just locally, which will allow us to deliver more homes against a clear target and also provide the logistics infrastructure and business spaces we need to support sustainable communities.

"Measures to ensure up-to-date local plans are in place and a new approach to ‘grey belt’ land are also welcome, as is the commitment to more local authority planners so that existing projects can be unblocked, and local authorities are better able to engage with our sector to provide for future needs."

Nicola Gooch, a partner in Irwin Mitchell's planning team, said that what Labour is promising for planning is markedly different to what the Conservative party has pursued. It's "a more strategic approach to planning that is heavily focused on delivering more housing. This is backed up by promises to reverse the December 2023 NPPF revisions, introduce effective mechanisms for strategic planning, review green belt land (where necessary) and increase resources" for local planning authorities.

In terms of commercial property, Labour has promised to introduce an industrial strategy and revise national planning policy to ensure the planning system makes it easier to build laboratories, digital infrastructure and gigafactories. It is promising a 10-year infrastructure plan backed by a body specifically set up to look after this kind of development.

Will Matthews, head of commercial research in the UK at Knight Frank, said: "Looking at the manifesto, we can expect a relatively small investment into ports, supply chains and green industries. Financial services is mentioned in a positive light. Labour has also recognised the importance of life sciences to UK growth, while data centres will be reclassified as nationally significant infrastructure projects, allowing planning decisions to be made by ministers rather than local councils.

Critics however, can argue that the plans lack the radical, transformative changes needed to achieve Labour's ambitious target of the highest sustained economic growth among G7 nations.

“The underlying assumption is that economic and political stability, combined with targeted government backing in specific areas, will be sufficient to entice investors back" to the United Kingdom, benefiting real estate demand.

Mark Hall-Digweed, head of infrastructure at property consultancy Carter Jonas, said: "Labour's commitment to developing a 10-year infrastructure strategy to improve transport, digital connectivity and other critical infrastructure is welcome, however, I encourage the new government to take an even longer-term approach, one that acknowledges the significant timescales required to implement infrastructure projects.

"We need to plan for delivery in line with socio-demographic change and housing development. Long-term planning over at least eight parliaments is a necessity, and this reinforces the need for a non-political body to manage national infrastructure projects over the long term."

On sustainability, the Labour Party has said moving to a net zero carbon environment is key to creating economic growth and has pledged to deliver a clean power system by 2030. Angela Rayner, the-then shadow secretary of state for levelling up, housing and communities, updated on a commitment to creating "non-identikit" new towns at the UKREiiF property conference in Leeds. In April, the party unveiled a five-point plan it said would "transform the landscape of the" business districts around the country

Labour has been proposing to radically shake up the business rates system for some time. Few in the property industry would argue the system is not in need of major changes but there is concern about the lack of clarity from the party about how it would do this.

Labour has said the current system "disincentivises investment, creates uncertainty and places an undue burden" on business districts.

The Party said it will look for a "fairer way" to overhaul the business rates system to raise the same revenue. As with the Conservatives, it said it wants to "level the playing field between the high street" and online retailers.

It says its plans will also create better incentives for investment, tackle empty properties and support entrepreneurship. However, it does not go into particular detail on how it will look to redress the balance. John Webber, brokerage Colliers head of business rates, has said the Labour promises are difficult to measure, given the lack detail.

“Successive Conservative governments have promised to reform the tax, but none have delivered, just making the system more onerous and expensive for the ratepayer as time has gone on. Whilst it is encouraging to read of Labour’s aspiration to breathe life back into our high streets, unless they tell us what they plan to do, how can anyone" bring scrutiny to their plans or take their calls for change seriously" at this point, he added.

Labour has made clear that it will look to use public investment to "unlock additional private sector investment" to provide a return for taxpayers. The party said its 10-year infrastructure strategy will be pieced together alongside plans for industrial and regional development to give the private sector "certainty" about the project pipeline.

Labour also said it will work with the private sector, including banks and building societies, to provide more private finance to accelerate home upgrades and low carbon heating. Lizzy Galbraith, political economist at global investment firm Abrdn, said in a statement that this represented a "notable shift in Labour's strategy" compared with previous years.

She said: "Labour has shifted to a vision in which the state aims to direct investments towards high-value projects and restore investor confidence through a combination of clearer planning documents, fewer fiscal events and in some cases, joint financing. Labour believes they can rectify the current challenges of fluctuating government policies and inconsistency, which have previously undermined private investor trust."

Labour has said the nil rate band for stamp duty will revert to £300,000 from the current temporary level of £425,000 in April next year. The Tories had planned to make the tax break permanent.

In better news for first-time buyers, Labour has said it will make it easier to secure a deposit under its Freedom to Buy scheme, an extension of a plan started under the Conservatives.

Knight Frank said that as such it is unlikely to boost demand in a meaningful way.

The Labour manifesto also said overseas buyers will pay an extra 1% stamp duty surcharge, something Knight Frank added highlights the "tightrope they will be walking between attracting and deterring overseas capital as it seeks to be a government of" wealth creation.

Knight Frank said either pledge on its own is likely to have a significant impact on transaction volumes or property prices.

On a broader level, property and investment markets want clarity on the political direction of travel and what that means for the economy and interest rates, which appear to be among the biggest brake on investment at present. A strong victory by either major party, which business in general had welcomed as being broadly centrist administrations, has been seen as a good thing.

Mat Oakley, head of commercial property research at real estate services provider Savills, has played down the likely impact on transactional activity saying "ultimately political change seldom impacts" the commercial property market.

"Our analyses suggest that transactional activity is generally lower than normal in the three months prior to the election date, and then recovered in the following six-month period. There is little evidence that a" United Kingdom general election has ever had a measurable impact on commercial property pricing, he said.

Speaking to CoStar News as he unveiled full-year results when the Conservative party called the election, London-listed developer GPE Chief Executive Toby Courtauld said while GPE remained avowedly apolitical both Labour and the Tory Party appeared "broadly central" something that was important for real estate investors.

"I do not think it will have much of an impact other than sometimes change is as good" as renewal, he said.

Stephanie Hyde, UK CEO and EMEA Markets Advisory CEO at JLL, said it is likely that fiscal policy will need to identify new revenue sources, generally through taxation, to support spending plans.

"There has been wide speculation on the varying ways that this might be achieved. What seems likely is that Labour will avoid anything that is overtly punitive to 'hard working families' and will seek out solutions that appear administrative, such as tightening of avoidance loopholes. Equally, there has been very clear messaging on ambitions to be a Government for business and innovation, which restricts any significant moves that would be a constraint on private sector investment.

“The 'Levelling Up' agenda will be retained, and likely renamed, and will have a focus" on the national network of innovation in areas such as life sciences, data hubs, advanced manufacturing and the green energy transition, she said.

"This approach should focus on the direct linkages between innovation in places like Cambridge and Oxford, with employment in Manchester, South Wales and the North East. We anticipate that Labour’s industrial strategy will focus on infrastructure bottlenecks in energy, utilities and transport to unlock the potential of this network and encourage private sector partnerships. Real estate is ready to work with this new Government to deliver long term and strategic and sustainable growth for our towns and cities,” she added.

Walter Boettcher, head of research and economics at Colliers, said "seldom are government policies aimed directly at commercial real estate. Usually, the impacts we feel are incidental."

But he suggests a few noteworthy exceptions.

"Labour may target aggressive tax avoidance structures and private equity remuneration practices (carried interest). This could work to undermine the already weak trajectory of real estate investment in a few asset classes.

"The residential market will be a target as housing is one of Labour’s key raisons d’etre. Look for more tenant protection but rent caps on the initial level of new leases look less likely [...]. Social housing may receive a welcome boost.

"The good news is that increasingly it looks as though there is a cross party consensus on regional regeneration and development, especially a recognition that that long-term projects have to be able to span beyond a single" parliament.

Boettcher adds that he hopes that the recent legislation on the Reserved Investor Fund survives the change in government. "This has the potential to supercharge regional regeneration and development.

"The greatest worry is that Labour may find themselves in power without having completed their ongoing policy review. I also wonder about Labour’s foreign policy plans in light of numerous growing threats."

Etienne Prongué, CEO, United Kingdom at BNP Paribas Real Estate, said while yesterday’s election result had been telegraphed by the polls for a while, the importance of the opportunity to draw a line under years of turmoil cannot be overstated.

"Above the manifestos and fiscal rules, long-term certainty is the thing most craved by UK businesses and investors. The volatility we are seeing in Europe makes this all the more poignant.

"The tone of my discussions with clients is noticeably more upbeat. Investors can see the dislocation between real estate pricing and the leasing market fundamentals and are encouraged by lead indicators pointing in the right direction, he added. "Looking ahead, Labour has made potentially game-changing pledges on business rates and planning reform, as well as outlining a bold vision for unlocking private investment" across the United Kingdom.

Knight Frank points out another outcome, particularly in light of the election result in France: a new United Kingdom government could agree improved relations with the European Union. Any renegotiation could potentially lead to a major strengthening in sterling.

Justin Young, chief executive of the Royal Institution of Chartered Surveyors, said in a statement: “As Labour prepare to appoint ministers in the coming days, and look to department structures, it’s vital that they bestow an urgency to translate the plethora of promises made over the last five weeks into sound and workable policy."

Young added: “Real, meaningful change requires long-term stability. Regardless of who is assigned to key positions across our sector, they must be given the time to executive their mandate; one of the reasons why we’ve seen such a lack of progress in housebuilding and construction is because we’ve had 16 housing ministers since 2010. 

“To speed-up decision making, policymakers must ensure planning departments are properly resourced. Labour has promised 300 extra planning officers. While collectively a big number, this amounts to less than planning officer per local authority. Resource will be key to achieve significant planning reforms. As well as speeding up decision-making, planning reform is needed to ensure we empower SME housebuilders to add additional capacity and expertise. Smaller builders require much more certainty, something the current system does not deliver."

On commercial property Young said: “There must also be a focus on reforming the business rates regime. Commercial real estate plays a fundamental role in fuelling economic growth, creating jobs and supporting communities. These properties are not just buildings; they are essential, diverse spaces where businesses, from shops and offices to factories, operate and thrive. The RICS 2022 Commercial Real Estate Impact Report illustrates that commercial real estate directly generates £66 billion in GVA, over £15 billion in tax revenues and employees more than 1 million people. However, with valuations dropping by as much as half due to a high interest rate environment, both small and large investors are having to grapple with tightening yields and margins. Therefore, policymakers must reduce business rates, which have become too high, complex and burdensome, and threaten to suppress growth and discourage much needed inward investment.”

Daryl Perry, head of UK research and insight at Cushman & Wakefield, said government working for business is paramount now.

 “Much of Labour’s rhetoric is good for business, including commitment to net zero and strategic investment in innovation," he said. "Judging by recent comments, a new government will look to ‘shape’ markets and create a basis for partnership with the private sector. With ambitious industrial and climate targets, this will likely require significant investment from the private sector.”

“While a new Government will have many conflicting interests, the suggestion is that economic growth will be prioritised."

Landsec CEO Mark Allan said his message to the new Government is "we are here to get Britain building again".

"We’ve set out the targeted reforms required to help us unlock the growth the country needs and hope to see these brought forward in the coming weeks. Alongside these reforms, it’s important the Prime Minister also understands the need to provide stability. Stability of leadership. Stability of strategy. Stability of regulation. With these in place, we will not only be able to unlock economic growth, but also deliver beyond growth, whether that is shaping safer, thriving high streets, driving towards net zero or spreading opportunity around the country.”