What landlords need to know about the election promises

The General Election is on the 12th of December, and every party has its own specific goals for the private rental sector (PRS). So, what are they? And how might landlords be affected?

The Conservative party

  • Promise to continue with a target of “at least” a million new homes over the next five years
  • Still working on the repeal of the Section 21 no-fault notice which means a landlord can’t evict a tenant for no reason but promises that “good landlords” will see possession rights strengthened
  • Introducing the possibility of restricting ground rent to a “peppercorn rent”
  • Discussions of the possibility of a “lifetime” deposit for tenants that moves with them
  • Will review new ways to support homeownership upon the “Help to Buy” completion in 2023
  • The continued roll-out of Universal Credit.

This restriction of ground rent to a “peppercorn rent” could be welcome news for any landlords owning a leasehold property – although the details have yet to be fully outlined.

If a portable “lifetime” deposit is introduced, landlords will need to feel confident that the system works.

The Labour Party

  • Proposals to have a type of “rent control” which is to be linked to inflation
  • Second homeowners to face higher costs with holiday homes in a bid to combat homelessness
  • Labour has promised to build an extra 150,000 council homes a year. Councils will build 100,000 of these for social rent
  • States they will be enhancing tenants’ rights by introducing open-ended tenancies and the abolition of the “Right to Rent” scheme
  • Labour is also suggesting a “Right to Buy” system where councils can buy back homes from private landlords – FT Adviser recently reported that the government would set a discounted price for private property, likely based on how long the tenant had lived there
  • increasing in Local Housing Allowance (LHA) rates to reduce incidences of rent arrears
  • Plan to end the conversion of office blocks to homes that sidestep planning permission through ‘permitted development’.

The abolition of the “Right to Rent” scheme, which requires landlords to check peoples’ immigration status and an increase in the LHA could save landlords’ time and effort.

Rent controls may improve or impinge on a landlord’s profit. The Residential Landlords Association (RLA) says that rent controls are paradoxically likely to force landlords to increase rent where they would not normally do so. 65% of landlords have not increased the rent in the last 12 months. If rent is capped at inflation, landlords will feel compelled to increase the rent every year.

The “Right to Buy” scheme appears to suggest that landlords will have no control over when they sell their property and, how much for.

The removal of permitted development rights could slow down building times and increase costs and red tape for property developers and investors looking to build/improve.

The Liberal Democrats

  • Lib Dems are stating they would like to see 300,000 homes built every year by 2024 – 100,000 of which would be social housing
  • Would like to introduce a new “Rent to Own” model for social housing where rent payments give tenants an increasing stake in the property, owning it outright after 30 years
  • Introduction of up to 500% in council tax for second homes
  • Promote longer tenancies of three years or more with an inflation-linked annual rent increase built in, to give tenants security and limit rent hikes.
  • Mandatory licensing for all landlords
  • Introduce a “Help to Rent” scheme for first-time tenants under 30 which offers a government-guaranteed loan to cover the rent deposit.

The “Help to Rent” scheme may be useful for landlords, as there will be no ‘issues’ with rental deposits.

The introduction of up to 500% in council tax for second homes will greatly affect those landlords whose responsibility it is to pay it.

Longer tenancies may give landlords less flexibility with their property.

The Green Party

  • In the next ten years’, the Green Party wants better insulation for all homes that need it and the delivery of major heating upgrades for 1 million homes a year
  • Would like an increase of 100,000 new energy-efficient council homes each year
  • Ensure that all 8 million rented homes are ‘A’ rated for energy efficiency, or as close to this as possible, by implementing a Minimum Energy Efficiency Standard escalator to raise the minimum level allowed from the current E rating to A rating by 2030
  • Transform the planning system and building regulations, so that all new buildings built by private developers are built to the Passivhaus standard (or to a standard that delivers energy efficiency at an equivalent or better level).

It is unclear whether landlords will have to bear the brunt of costs associated with energy efficiency improvements or if grants will be available.

The Brexit Party

The simplified planning consents are likely to be welcomed by developers and investors. And a zero-rate corporation tax will be good news for landlords who own a buy to let property via a limited company.

The Scottish National Party (SNP)

  • Plan to restore housing support for 18-21 years old across Britain
  • Also has an emphasis on encouraging councils and individuals to bring unoccupied homes back into use.

More details are needed on these to see how landlords may be affected.

Summary

As you can see, all the major parties have put housing and landlords on their agenda and in their manifestos.  Do make sure you keep up to date with the goings-on here, as the next government’s policy could have a significant impact on your landlord business.

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