Almost three quarters of landlords say the parties private renting policies would sway their vote
Melissa York - The Times
There are about three million private landlords in the UK, and their vote in the general election appears to be up for grabs!
Only 45 per cent of landlords surveyed jointly by the National Residential Landlords Association (NRLA) and the online lettings platform Goodlord say they have decided who they are going to vote for on July 4 — 27 per cent are “open” and 19 per cent are in the “don’t know” camp.
William Reeve, chief executive at Goodlord, says of private landlords: “It’s a constituency no politician should ignore.”
Almost three quarters of landlords surveyed said the parties’ policies on the private rented sector would sway their vote, while only 6 per cent said they would have no influence.
Economic competence is what landlords are looking for in a government — 43 per cent of those surveyed cited this as their top priority. But what are the other key issues that will concern them in the coming weeks?
While party manifestos have not been published yet, politicians of all stripes have indicated what they would do if handed the keys to No 10.
The policy that is most likely to win the landlord vote, according to the NRLA/Goodlord survey, is the reinstatement of mortgage interest tax relief for buy-to-let investors, with 24 per cent of respondents saying they would be more inclined to vote for a party that did this.
Section 24 of the Finance Act 2015 removed a landlord’s right to deduct most of their costs, including mortgage interest and arrangement fees, from their rental income. As such, landlords must pay tax on the gross income from a rental property. This means they often end up in a higher tax bracket, which can render a rental portfolio unprofitable.
Buy-to-let investment has fallen since Section 24 was introduced, from a peak of 15 per cent of all property sales in 2015 to 11 per cent in 2023, according to the estate agency Hamptons.
Oli Sherlock, managing director of insurance at Goodlord, says: “A lot of the landlords we talk to who are considering leaving the market reference this as the pivotal point at which they started to reconsider their position.”
Even though reinstating the tax relief could encourage investment and offset the impact of higher mortgage rates, no party has committed to doing so.
A 2023 petition, launched by Simon J Foster, a landlord in the Midlands, sought to get the government to reinstate the relief. It gathered about 40,000 signatures, some way short of the 100,000 needed to trigger a debate in parliament. In response to the petition, the government said it “has a responsibility to make sure the income tax system is fair”.
The only thing landlords can do is sit tight and wait for inflation to fall and mortgage rates to follow suit. According to UK Finance, the average interest rate across all new buy-to-let loans increased from 3.67 per cent in the fourth quarter of 2022 to 5.7 per cent in the fourth quarter of 2023.
And there does not seem to be any political appetite for reversing the 3 per cent stamp duty surcharge on additional homes, introduced in 2016. Ben Beadle, chief executive of the NRLA, says: “It is a nonsense to have an extra tax on new homes given the severe shortage [of stock].”
The second most popular policy for landlords is retaining the controversial section 21 “no fault” evictions, with 22 per cent of survey respondents saying this would influence their vote.
This mechanism allows landlords to remove tenants at two months’ notice, without having to prove grounds such as rent arrears or antisocial behaviour.
The Conservative government promised to abolish section 21 in its 2019 manifesto, but the housing secretary, Michael Gove, postponed the ban, saying that the courts were not ready to deal with an influx of grounds-based eviction notices. But his flagship Renters (Reform) Bill failed to pass before the dissolution of parliament so the pledge was never fulfilled.
The shadow housing secretary, Angela Rayner, has said on several occasions that she would abolish section 21 — “no ifs, no buts” — while other Labour ministers said it would be scrapped within the first hundred days of its government.
The Liberal Democrats and the Green Party have also promised to get rid of these “no fault” evictions, which are already banned in Scotland.
The NRLA accepts that section 21 will be abolished eventually. “Whoever wins the election, section 21 will go,” Beadle says. The membership body is asking for existing repossession and antisocial behaviour grounds to be strengthened, plus it wants reassurance that the courts can handle the additional applications, and that there is time for landlords to prepare for a new regime.
Reform UK says it would have abolished the Renters (Reform) Bill — this suggests it would keep section 21 — and “scrap the 2019 tax changes for landlords”, although it does not specify which changes.
Last September the prime minister, Rishi Sunak, shelved plans to require all landlords to upgrade the energy performance certificate (EPC) rating of their properties to at least C (A is the best rating) by 2028. This could have cost landlords up to £10,000 a property, according to the estate agency Knight Frank.
Labour has said it would like to see every home upgraded to an EPC C “within a decade”, but it is unclear whether the deadline would be the same for private landlords.
The Green Party’s housing policy does not have any specific detail on EPC requirements, but its co-leader Carla Denyer has suggested that tenants could insist landlords apply for green upgrade grants or low-interest government-backed loans to be paid off via savings from reduced energy bills.
Scrapping the EPC deadline for landlords was “unforgivable” for the Liberal Democrat MP Wera Hobhouse. Her party said it would like to see most rental properties achieve an EPC C within five years and EPC B in ten years. The Lib Dems propose that investors should be allowed to offset their spending on energy upgrades against their income tax.
The average rent for a new let has increased 7.2 per cent since last year, the property portal Zoopla reports, which has led to discussions about rent control.
The Conservative Party is opposed to any form of rent control.
Sadiq Khan, the mayor of London, has been asking for powers to freeze rent in the capital since 2019, but says he has “not been able to persuade” the Labour leader Keir Starmer that such controls are necessary. However, Labour’s housing policy is open to exploring inflation or wage-linked restrictions to in-tenancy rent increases.
“Rent smoothing” would be introduced by the Lib Dems, which means rents could only increase in-tenancy in line with the Bank of England’s base rate.
The Green Party, meanwhile, would introduce “Living Rent” controls that would cap rent at 35 per cent of average take-home pay.
The chancellor Jeremy Hunt’s reduction of the higher rate of capital gains tax (CGT) from 28 per cent to 24 per cent in his spring budget did not help most private landlords, and 17 per cent of those surveyed by the NRLA/Goodlord poll said it has made them more likely to sell their rental property.
Neither the Conservatives nor Labour are expected to make changes to CGT, but the Liberal Democrats aim to increase the amount the tax raises by £1.5 billion, by abolishing reduced rates and exemptions for long-held assets.
The Green Party plans to do away with the tax altogether in favour of a new consolidated income tax that also incorporates inheritance tax.
Selective licensing schemes have cropped up all over the country, eating further into landlords’ profits. The average cost of a licence is £500-£700 for a five-year permit, according to onlinelettingagents.co.uk.
One of the concessions to landlords in the ill-fated Renters (Reform Bill) was a review of licensing schemes, partly because the legislation would potentially have made the schemes redundant by introducing a national register of private landlords. Both Labour and the Tories back a separate licensing scheme for short lets to ensure there isn’t a shortage of long lets in holiday hotspots.
All of the main parties back a public database that shows compliance with legal and safety requirements, and a Decent Homes Standard similar to that used in the social housing sector. There is no detail yet on how much this would cost to implement, or what the cost would be to individual landlords.
There is also broad consensus between the parties on making discrimination against tenants with children or in receipt of benefits illegal — it was added to the Renters (Reform) Bill at committee stage — as well as allowing tenants to keep pets at home, with the option to pay pet insurance to cover property damage.
It is also probable that standard one-year fixed-term tenancies will be replaced regardless of which party forms the new government. The Conservatives and the Green Party are both in favour of rolling monthly periodic contracts, but there are concerns these would make letting to students unattractive unless there was an exemption.
Labour’s stance on this issue is unknown, although its MPs were prepared to vote for periodic tenancies in the Renters (Reform) Bill. The Lib Dems want to offer tenants more security of tenure by making three-year fixed-term tenancies the default length of contract.
Above all, it is stability that landlords seek. “Regulatory uncertainty is a cause for concern for many landlords,” Beadle says. “Because of the election, responsible landlords simply do not know what the future will look like"
Investment Synergy - "Economic competence" is something landlords clearly desire, as always reforms and policy changes impact more than just the bottom line - maybe we need to be aware of "ethical competences" for the renter - votes can sway either way - political parties beware of consequences.
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