With the General Election looming ever closer, we wanted to give you an insight into the policies from the two main political parties and how these will affect landlords in the Private Rental Sector.
We’ve done our best to not impose any political opinion and allowed the manifestos to speak for themselves.
For starters, we've created a table laying out the policies that will directly impact the Private Rental Sector if you're just looking for a quick snapshot:
The conservative manifesto sets out what Theresa May would like to see change in the rental market. One of these changes would be an adoption of longer term tenancies. Although the manifesto doesn’t deviate too much from the White Paper that was issued earlier this year, it marked a somewhat dramatic change in policy direction in terms of housing. Departing from David Cameron’s policy of ‘home-owning democracy’, May looks to encourage landlords to offer longer term contracts. This could be done through a combination of legislation and incentives in the form of tax breaks, however we can assume its impact on the student market is likely to be minimal with our tenants facing different obligations to residential tenants.
The Conservative Party will go ahead with proposed plans spear headed by Sajid Javed MP and Greg Clark to reduce corporation tax from 20% to 17%. In addition to this tax cut the Tories will increase the threshold for the higher rate of tax to £50,000 per annum.
Conservatives will renew their commitment to banning fees for letting agents, which is supported also by the Labour party whom have included this in their manifesto.
Another aspect of the Conservative manifesto that caught our eye is the concept of ‘fair debt’. This scheme (which has been put forward for implementation in the event of a Conservative win) would allow vulnerable tenants who are caught in snowballing debt to apply for legal protection from further interest, charges and enforcement action for a period of up to six weeks. However, there is some ambiguity on how this will be implemented and its ramifications on landlords and tenants alike, but we do think it is likely that this part of the manifesto would potentially have a direct impact on the Private Rental Sector.
If the Tories win on Thursday, we will see a bolstering of the rules surrounding equality of tenant selection. The law will be strengthened to ensure that private landlords do not discriminate tenants on the basis of ethnicity, religion or gender. Anyone found to be in breach of this legislation will be investigated and prosecuted.
In terms of Energy Performance Certificate, the current government have also reiterated the desire to bring properties up to a minimum E standard by 2018-2020.
Jeremy Corbyn’s Labour Party manifesto has, like the Tories’, vowed to improve on existing energy efficiency regulations. This builds upon existing policy to make properties in the Private Rental Sector conform to a minimum standard of efficiency, as is required when properties are sold. However, to offset this Labour will reintroduce the Landlords Energy Saving Allowance (LESA) in order to incentivise landlords to make energy efficiency improvements in their properties by offsetting the cost against income tax (up to a limited amount, which is as yet undefined).
Although this won't impact us directly with our student rentals in Chester, the Mayor of London will be granted extra powers to give London renters additional security. So although this may not affect the local area, this could set an important precedent for the rest of the country.
While what is in the manifesto is important, what is omitted might prove to be equally as important. For instance The Labour party's omission of a review or reversal of the "Tenant Tax"/Section 24 restriction to mortgage interest relief.
Although they haven't discussed Section 24, Labour has stated that Conservative plans to reduce corporation tax to 17% by 2020 will be scrapped, and instead will be raised as follows:
To 21% from 2018-19
To 24% from 2019-20
To 26% from 2020-2021
In addition to these tax increases Labour has promised that the lower small-business rate of corporation tax (below £300,000) will be reintroduced and raised as follows:
To 20% from 2018-19
To 21% from 2020-21.
Corbyn has put forward a measure to exclude small businesses (turnover under £85,000) from the Government’s Making Tax Digital scheme, which will mandate digital quarterly reporting.
Labour (similarly to the Conservatives) also want to introduce longer standard tenancies; their manifesto sets out plans to introduce three year tenancies, and making these the norm. Again, while this might not be directly applicable to the student rental sector, the plan of introducing an inflation cap on rent rises may have an impact.
Empowering tenants further is also on the Labour Party’s manifesto. They will seek to introduce new rules that will give tenants greater consumer rights, including a ‘minimum standards rule’ that will mean that all rental properties must be fit for human habitation. In addition to this Labour will empower tenants to take action against their landlord if their rented home is substandard. In addition to this Labour will match the Conservative policy to scrap lettings administration fees.
We’ll be looking to create a more detailed blog about the winning party’s manifesto after the results come out on Thursday, laying out what landlords can expect over the next few years.
Either way, it appears that landlords will be required to meet higher standards of accommodation laid out by the government. One of the things that we’re most proud of is the standard of houses that we provide to Chester students, so if you’re interested in knowing how we can help you increase the standards of your property then please get in touch.