Well I’ve said it before and I’ll say it again, Politics and property don’t mix. Invariably however, any political event is bound to have some impact on confidence within the sector and with the recent release of all parties’ manifesto’s, I imagine we can expect some turbulent times ahead.
Before I start, I will make my own pledge to remain as unbiased as possible so as to not alienate part of the audience.
The main area I was concerned with was Housing and with the help of BBC News, I’ve been able to break down all Housing related policies for each party.
In answer to point number one, it is fairly common knowledge that we are experiencing a housing shortage. This in turn is inflating property prices and making it more difficult for certain individuals to get on the property ladder. Whilst I can see the benefit of pledging to build more homes, call me a cynic, but I’m viewing this with some scepticism. This is mainly down to the fact that since 2010, the greatest number of homes built in the UK was last year, 169,070, according to data published by the Ministry of House, Communities and Local Government and on average we’ve not been able to build even 50% of what is being pledged going forwards.
Number of dwellings built in UK since 2010
The other point in the Tories Housing pledge which caused me concern was the abolishment of the “no fault” evictions and the introduction of a lifetime deposit which moves with the tenant. Prohibiting landlords from being able to serve notice on their tenants will create a pre-1988 Housing Act system. Don’t get me wrong, I believe that every person should have a roof over their heads and every landlord I’ve dealt with shares this sentiment. Landlords want long-term tenants in their properties as this is when they are maximising their investments the most. However, pre-1989, there was an imbalance in the private rental sector and I fear this is where we may be heading if this comes into motion.
As for a life-time deposit, again I appreciate the idea of assisting tenants in their onward move between rental properties, but I question the validity of this policy. With the recent Tenant Fees Bill, deposits are now capped at 5 weeks’ rent (6 weeks if the annual rent exceeds £50,000), to make moving home more cost-effective for tenants. Furthermore, most agencies have now buddied up with deposit insurance companies to provide a ‘Deposit Replacement’ service meaning tenants need only pay for circa 1-2 weeks instead, but landlords are provided 1-2 months cover by the insurance company.
I will say I’m pleased that the Labour party have decided not to proceed with forcing landlords to sell their properties to their tenants at ‘reasonable prices’. Had this come into fruition, coupled with their pledges of capping rent increases and abolishing the Section 21 notice, would truly have been the end of the Buy to Let sector. Ultimately, the government look at landlord’s as businesses and businesses exist, more often than not, to turn a profit. Prohibiting a landlord from maximising their rental yield through rent caps and forcing a landlord to sell their property to their tenant at a fraction of what it could achieve, would minimise the capital appreciation which can be made if sold on the open market.
There were two pledges, I wished to scrutinise here. The first is again deposit loans for first-time renters under 30. Like the Tories lifetime deposit policy, with the introduction of the Tenant Fees bill, moving between rental homes is now more affordable than ever so again, I question how effective this policy will be should the Lib Dems come into power.
The housing pledge which I couldn’t quite understand is permitting local authorities to increase council tax by up to 500% where homes are being bought as second homes. I can imagine this policy will have a detrimental impact on the Holiday Lets/Serviced Accommodation sector but generally, in a majority of cases, second homes are bought for the purpose of buy to let where the tenant pays council tax. This policy will either make a second home unaffordable to tenants which contravenes what the government are trying to achieve which is making private renting more affordable to allow tenants to save up for a deposit to eventually buy their own home.
I’ve been harping on about this for the last four years now since I started York Property News, but the Private Rental Sector has come under constant attack from the Government. I am getting the distinct impression that wherever we turn, landlords are going to face hard times, but I still believe Buy to Let is still a profitable enterprise. Like with all the increasing legislation, stamp duty and mortgage interest relief changes, now is the time to take stock of your portfolio and assess how you can mitigate your cost and maximise your investments. If you need any assistance on this, I’m happy to help.
Do bear in mind there are other parties outside of the Tories, Labour and Lib Dem. For more information you can check the link below:
Just out of curiosity, who will you be voting for in the upcoming Election?