NLA in action

NLA in action

This month, Chris Norris, NLA Director of Policy and Practice, is hopeful as the government considers a tax break for landlords that the NLA has been recommending for years. The NLA is working closely with ministers to tackle energy-efficiency challenges for landlords and is also trying to find out what Right to Rent will mean post-Brexit.

The issue: Tax breaks for landlords who sell to tenants

Summary: The Treasury is considering the introduction of a new tax break for landlords recently proposed by right-of-centre think tank Onward. The so-called ‘Chance to Buy’ would exempt landlords from paying any capital gains tax (CGT) if they sell to long-term tenants. Chancellor Philip Hammond is considering the policy as a way of tackling the housing shortage and helping first-time buyers get on the property ladder. With news of the housing crisis never far from the headlines, the Conservative Party needs to be seen to take clear steps to curb the fall in home ownership, particularly among millennials.

NLA view: We have called for a CGT relief of this kind since as far back as the 2015 Budget. It’s reassuring to see ministers are listening to our ideas, albeit belatedly.

Despite our satisfaction in learning that the government may adopt one of our policy ideas, the tax break would only cover a tiny percentage of sales. It would also only apply to landlords whose tenants have been living in a property for at least three years.

That said, it would however benefit both landlords and tenants. Any policy that offers some CGT relief to landlords is great news. Currently, landlords selling a rental property must pay the 18 or 28 per cent rate of CGT on the profits of the sale, depending on their income tax band. The proceeds of this tax relief would apparently be split equally between the landlord and the tenant, who could use it as part of their mortgage deposit. But details of this aspect of the proposal remain unclear. Hammond may use the Budget on 29 October to make changes to capital gains tax.

 

The issue: Climate change challenges in the private rented sector

Summary: A large portion of carbon emissions comes from housing. To meet the government’s Clean Growth Strategy, ministers are focusing their attention on improving the energy efficiency of the housing stock. The Minimum Energy Efficiency Standard (MEES) took effect on 1 April 2018 and other more ambitious targets are potentially afoot.

NLA view: The NLA policy team has seen the issue of decarbonisation of housing become a genuine priority for policy makers in the past few months. Decarbonisation has risen up the government’s priority list. And the publication this month of the UN report warning that we have only 12 years to ward off a climate disaster will only serve to focus more attention on environmental challenges.

We have been working with the Welsh and UK governments to highlight the obstacles that landlords face in ensuring properties are up to standard and can meet the government’s current and future targets. The UK’s housing stock contains a significant proportion of older properties. In Wales landlords face even greater challenges as many properties are built from materials and using techniques that make retrofitting difficult.

The Welsh government is setting very ambitious targets to improve all the housing stock, not just properties in the private rented sector. The NLA is leading the Welsh government’s working group on how to find solutions that are fit for purpose and cost-effective.

If governments want to improve energy standards in all UK homes, they must make sure landlords benefit from clear incentives to encourage retrofitting and that any alterations in rental properties can be achieved at the lowest possible cost.

 

The issue: Brexit and the Right to Rent

Summary: Once the UK exits the European Union the government’s controversial Right to Rent policy will most likely be extended to the 3.8 million EU citizens living in the UK. This means landlords securing one-year tenancy agreements with EU nationals are facing confusion over what documentation will be acceptable after March 2019.

The government has said EU citizens currently in the UK would receive a digital code which a letting agent or landlord would be able to verify on the Home Office website to prove whether an individual was eligible to reside in this country.

But detractors say this system would not be enough, especially when under Right to Rent landlords face hefty fines or a prison sentence if found to have breached the law.

NLA view:

I was invited to the Home Office last week along with other leading housing experts. I wanted to highlight how damaging Right to Rent is for the private rented sector even without factoring in another 3.8 million EU citizens living in the UK. I also wanted to call on the government to clarify the legal status of EU nationals and their right to rent both before and after the UK leaves the EU. We especially wanted clarity on what would happen in the event of a no-deal Brexit, which is a growing possibility.

We were reassured that landlords need make no changes to their approach ‘until told otherwise’ – although this will likely be cold comfort for those making decisions about future tenants.

It is estimated that 66 per cent of all EU nationals in the UK live in private rented accommodation. With or without a Brexit deal, the outcome for landlords under Right to Rent is a total lack of certainty. With this level of confusion, landlords will always opt for the easiest option to avoid a potential prison sentence. This in turn could lead to claims of xenophobia, which would be completely unjust.

 

Do you need advice? The NLA’s Telephone Advice Line is staffed by our team of experienced landlords, who have a wealth of knowledge. The Advice Line (020 7840 8939) is free for members. 

If you’re not yet a member, you can see you options for joining here.

 

2 thoughts on “NLA in action

  1. is there any point in attending any of these when we know the government will impose what they want to impose on us regardless?

    1. It can seem like a thankless task to lobby the government. However, we do play an important role in providing them with valuable research, information and a collective voice for landlords at a local and national level. While we cannot necessarily influence legislation at a high level, we can help to shape the details of how government initiatives are implemented to make a more favourable environment for landlords. A recent example is where we lobbied the government on the Tenant Fees Bill to extend the deposit cap from four weeks to six weeks.

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