Election Watch: Labour and the Buy-to-Let Market
Things are heating up in the world of politics as we near December 12th, when Britain will head to the polls for the first wintertime election since 1923. Each party has recently released their manifestos, and the UK housing market is a topic of hot debate.
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While the consensus for each political party is on building new homes, the private rental sector (PRS) also features heavily. The Conservatives and the Liberal Democrats have committed to making changes in the PRS, but it’s Labour who is planning on shaking things up the most.
If you’re a landlord or tenant, you might be wondering what the PRS will look like under a Labour government. Which is why this article focuses on Labour and their plans for the buy-to-let market if they win the election.
Fine for negligent landlords
Tenants are the primary focus of Labour’s manifesto, with the party promising to come down harder on negligent landlords, creating what they believe is a fairer environment for private renters. These plans have proven to be controversial, and many landlords believe they’re getting an unfavourable reputation for the actions of a few bad ones.
Perhaps the most eye-catching pledge in Labour’s manifesto is a proposal to fine landlords up to a whopping £100,000 if their properties are deemed substandard. Introduced as a “property MOT”, there would be legal requirements in place for landlords to complete an independent annual inspection on their buy-to-let properties.
If properties don’t meet requirements, landlords could be forced to pay fines up to £100,000 and repay tenants if it’s deemed they have let substandard properties. As yet, there is no indication of the criteria properties will need to meet. But everything should become more evident once the election is over.
Labour feels that rent increases are getting out of control, especially in certain areas where local housing allowance has risen to cover the cost of renting. In an effort to quell runaway rents, Labour has drawn up plans to cap inflation nationally.
The proposal would mean landlords can’t increase rents over UK inflation. The idea behind the plan is to provide tenants with more security when renting, removing any fears that rental increases will put them out of pocket and struggling to pay the rent.
In reality, the majority of landlords favour good-quality tenants over making a few extra pounds per month. From our experience, most rental increases don’t outpace UK inflation. In theory, these changes should not have a dramatic impact on the PRS.
Open-ended tenancies have been suggested as a way of stopping landlords evicting renters unfairly, and it’s something that all three parties agree on. There has been some backlash over these proposals, as landlords believe it will be harder for them to evict tenants who don’t take care of the property.
29% of renters said they would prefer tenancies that last longer than three years, and most landlords are happy for tenants to remain in the property if they are paying the rent and keeping it in good condition.
Speaking about the proposals, which Labour has billed as “a new charter of renters rights”, Shadow secretary John Healy said: “Labour will legislate in year one for a new charter of renters’ rights, with open-ended tenancies, new minimum standards and rent controls to make renting more affordable. We will make private renting a better option for all.”
The future of buy-to-let
Labour winning the general election will certainly see a shift in the PRS, with renters having more of a say. And there’s a discussion to be had about renters’ rights – something which started with the tenant fee ban. However, many landlords will feel like they have been left with the short end of the stick, especially as the overwhelming majority provide good services to their tenants.
As things stand, these policies are light on details, and it’s worth preserving to see how things pan out in the aftermath of the general election – at which point landlords and tenants will have a clearer idea about the future landscape of the private rental sector.