June 8th is fast approaching and we have already looked at each party’s manifesto offerings to landlords:
When it comes to the private rented sector, each party has an offering that would appeal to the tenant more than the landlord. With 20% of all households now living in the sector, a sizeable chunk of the electorate is being schmoozed with promises of pro-tenant reforms.
Importantly, unlike previous elections, all the major parties are seemingly in agreement on the main issues that need attention. For landlords, this could mean that no matter who wins on June 8th, the direction of travel for private rented sector policy is inevitable.
Prior to the 2015 general election, NLA research showed that the majority of landlords (57%) would be supporting the Conservatives. Interestingly, over two-thirds (69%) believed that the Conservatives best “understood” the private rented sector. This is in stark contrast to the 8% who thought that Labour or the Lib Dems had the right vision for the sector.
However, as most landlords know by now (or will find out when they next calculate their taxes owed), the Conservatives stole Green Party policy by introducing the Section 24/”Tenant Tax” restrictions on mortgage interest relief. Whether this will have an impact on how landlords vote next week remains to be seen.
In bad news for landlords, no matter who they vote for, none of the parties are proposing the scrapping of this financially damaging (and in some cases ruinous) restriction. In fact, no party is proposing to do anything extra specifically on landlord taxation.
That is of course apart from the Green Party, which is proposing to help first-time buyers by “axing buy-to-let tax breaks”. While the Greens are quite unlikely to form the next Government, the Conservative’s record of imposing Green Party economic policy on landlords could prove worrying over the next few years.
Letting Fees to Tenants
The banning of charging letting fees to tenants has formed part of the private rented sector policy discussions for a number of years. At last year’s Autumn Statement, the Chancellor took the wind out of the sails of Labour et al. with the shock announcement that the Conservative party will be interfering in the market and banning fees to tenants.
This policy was repeated in their long-awaiting Housing White Paper earlier this year, and their election manifesto simply states that they “will shortly ban letting agent fees”.
Pretty much every party agrees with Theresa May and has committed to the banning of fees in their respective manifestos (apart from UKIP). Letting fees to tenants are being banned, no matter the outcome next week.
The only point on where there may be difference between the parties is the extent to the ban – i.e. will self-managing landlords be able to charge prospective tenants for referencing fees. Incidentally, the Government’s consultation on its proposed ban closes tomorrow night (June 2nd).
Improving the energy efficiency of housing stock, and the private rented sector housing stock in particular, is also a shared theme throughout the majority of manifestos.
From April 2018, regulations come into force that will ban landlords from granting new tenancies, or renew existing ones, for properties with an EPC rating of F or G. Although wide-ranging exemptions apply (such as the “no upfront cost to landlords” exemption), with the failure of the Green Deal on which these regulations were based the Government has committed itself to reviewing these exemptions.
Current Government thinking has a cost-cap at £5000 for energy efficiency improvements per property. As such, this could be a very costly review for landlords. At least Labour have taken one of our suggestions to ease the burden by promising to reintroduce the Landlord Energy Saving Allowance (LESA) to give landlords a tax break on energy efficiency improvements.
Improving security of tenure for tenants will be the next hottest topic in the private rented sector, now that letting fees are being banned.
Most parties have promised action on it, although some policies are a tad more drastic than others. The Conservatives promised to improve protections for those who rent, in particular “…looking at how we increase security for good tenants and encouraging landlords to offer longer tenancies as standard.”
Labour proposed a more stringent scheme by promising to “make new three-year tenancies the norm, with an inflation cap on rent rises”. Equally, the Liberal Democrats sought to “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.”
However, none of the parties have seemingly grasped the reasons why 6 or 12 month initial tenancies are more usual and why landlords are reluctant to offer longer tenancies from the start. No party is offering to ease the pressure on the courts and reduce the cost and time of repossession procedures, for example.
With such a political consensus across the parties on these key PRS policies, it almost seems inevitable that change is on its way, and it might not be a change that landlords will love. So, who are they going to vote for now?