The Conservatives, the Labour Party and the Liberal Democrats have now launched their 2019 election manifestos, which set out the policies the parties aim to introduce should they win the election next month.
Some interesting pledges have come forth: Corbyn has vowed to spend £75bn on the biggest social house-building programme since the 1960s; Johnson has put forward “lifetime” fixed-rate mortgages; and Jo Swinson has unveiled a series of measures aimed at tackling empty properties, including giving power to local authorities to increase council tax by up to 500% on second homes.
We’ve sifted through each party’s declaration of aims and housing policies. In this blog post we summarise what each manifesto says - and, more importantly, what each manifesto means for landlords, sellers, first-time buyers and the general property market.
Labour Manifesto: ‘It's time for Real Change’
Labour made housing a key theme in its manifesto, pledging new controls to protect renters’ rights. Here are the key proposals relevant to landlords and tenants in terms of tenancy reform and standards.
Key tenancy reforms for landlords and tenants
- New rent controls and minimum standards for the PRS, including an annual ‘property MOT’
- Introducing open-ended tenancies
- The abolition of Section 21 (‘no-fault evictions’)
- Limiting rent increases to inflation
- Nationwide licensing - though it’s unclear as to whether this will be for individual landlords or properties
- Ending right-to-rent checks
- Regulating Airbnb and short lets
- Introducing a national levy on second homes used as holiday homes
- Tougher sanctions for landlords ‘who flout the rules’ - £100,000 fine or rent repayment orders for substandard properties
- Preventing landlords from ‘excluding people’ in receipt of housing benefits
- Funding for renters’ unions across the country
Caitlin Wilkinson, Generation Rent Policy Manager, has responded to Labour’s manifesto, stating, “Abolishing Section 21 and introducing open-ended tenancies will cut homelessness and give renters the security they need to plan for their future.”
However, David Smith, Policy Director for the Residential Landlords Association (RLA) believes “Labour’s plans would hurt tenants. It wants longer tenancies, yet is proposing nothing to encourage and support good landlords to stay in the market long-term.”
Were there any positives for landlords?
The pledges are clearly a mixed-bag for the PRS, but landlords will be glad to learn that Labour have dropped their plan to allow tenants to buy out private landlords amid fears it wasn’t workable. However, they did state, “We will give councils the powers and funding to buy back homes from private landlords” - though no more details were given.
Nonetheless, there were some positives for landlords:
- Ending the freeze on Local Housing Allowance (LHA) and raising the LHA to in line with the 30th percentile of local rents
- Ensuring the housing element of Universal Credit is paid directly to landlords, and introducing fortnightly payments
What about taxes?
Regarding tax in the PRS, Labour’s manifesto listed no specific proposals, though they have pledged the following:
- Income tax: an additional rate will be payable for those who earn more than £80,000 a year, and a new "super-rich" tax rate will be payable from £125,000
- Corporate taxation: Labour plans to gradually reverse cuts to corporation tax, raising the rate by 7% within three years to 26% (main rate)
- Introduce a second homes tax: an annual levy on second ‘holiday’ homes equivalent to 200% of the current council tax bill for the property
- Ensuring income from wealth is taxed "equitably and efficiently”
- Aligning capital gains tax (CGT) rates with income tax rates
- Financial transactions tax: extending stamp duty reserve duty
- Reversing cuts to inheritance tax
- Imposing VAT on private school fees
- Scraping Married Persons Allowance
Reforming ‘Help-To-Buy’ to focus on first-time buyers on “ordinary incomes”
Since the Help to Buy equity loan launched in 2013, more than 200,000 people have utilised the scheme to get a foot on the property ladder. Currently, the scheme allows you to borrow up to 20% (or 40% in London) of the cost of a new-build house from the Government. To make up the rest you need a cash deposit of just 5% of the property’s total value, and a mortgage to cover the other 75%.
In their manifesto, Labour state that they will “Reform Help to Buy to focus it on first-time buyers on ordinary incomes.”
While there is no real outline of how they will do so, the party goes on to say, “We will introduce a levy on overseas companies buying housing, while giving local people ‘first dibs’ on new homes built in their area.”
As mentioned earlier, Labour also plans to help young people step toward home ownership through bringing empty homes back into use by giving councils new powers to tax properties that are left empty for over 12 months. The party states, “Labour will end the scandal of leasehold for the millions who have bought their home but don’t feel like they own it. We will end the sale of new leasehold properties, abolish unfair fees and conditions, and give leaseholders the right to buy their freehold at a price they can afford. We will introduce equivalent rights for freeholders on privately owned estates.”
Fact: The average age of a first-time buyer in the UK has risen to 32, according to UK Finance.
Building 100,000 council homes a year
The most notable pledge in Labour’s manifesto was a ‘housing revolution’, the pledge to build 100,000 council homes by 2024, plus 50,000 “genuinely affordable” housing association properties. These homes will be available for social rent and funded using half of Labour’s £150bn Social Transformation pot.
Generation Rent Policy Manager, Caitlin Wilkinson, said, “Building genuinely affordable council and social housing would ensure that high-quality housing is available for those on lower incomes, as well as meeting overall demand, which would reduce rents for those in the private sector.”
Building on this scale has not been seen for 40 years (the country built 168,780 council houses following World War II, then 261,960 social housing units in 1953 under Churchill's Conservatives), so many industry experts have questions:
- Is building on this scale realistic or achievable?
- Are there enough available workers to build these houses?
- Does England have enough land to build these new properties on?
However, the BBC’s (and the general overarching view) is that “If Labour spent the billions of pounds necessary to train workers, offered high enough wages to attract people to retrain and took the time and effort to push through the structural changes needed in local authorities and the planning system, this house-building target would not be impossible.
Fact: Analysis shows that the highest annual house price growth (under a single prime minister) since 1974 was recorded in 1988 under Margaret Thatcher’s government, at 29%.
Other Labour housing policies
- A £1 billion fire safety fund would be introduced to fit sprinklers and other fire safety measures in all high-rise council and housing association tower blocks
- Enforcing the replacement of dangerous Grenfell-style cladding on all high-rise buildings
- Introducing mandatory building standards which will be enforced by Fire and Rescue Service officers
- A pledge to end rough sleeping within five years through upgrading hostels and making 8,000 additional homes available
- Introducing a tough new “zero carbon standard” for all new homes, and upgrading almost all of the UK's 27 million homes to the highest energy-efficiency standards
Conservative Manifesto: ‘Get Brexit Done, Unleash Britain’s Potential’
The Conservative manifesto, which is half the length of Labour’s and a fraction of the cost, vows to "get Brexit done." But what are Johnson’s housing policies? And how will they affect the property market?
Scrapping section 21 for Landlords
There were no surprises that the Conservative manifesto confirmed that the party will follow through with plans to change the law and abolish ‘no fault’ evictions (scrap Section 21). The party also said there will be reform ensuring that landlords are able to regain possession when they need to, though there is no detail on how this will be funded.
How will this affect landlords?
The Government states that removing section 21 will give an opportunity for open-ended tenancies, but interestingly, government data cited on Landlord Today shows that 90% of tenancies are not ended by the landlord but by the tenant.
Robert Nichols, CEO of Portico, states, ‘For responsible landlords, who make up the majority of landlords within the private rental sector, very little will change. To end an assured tenancy, landlords will have to use section 8, meaning that they will have to provide a sound reason for the eviction. This could be rent arrears, destruction of the property, selling the property, or wanting to move back into the property.
Should any of these issues arise, the government plans to expedite Court processes, meaning that landlords are able to regain the use of their property quickly. At the moment, it takes over five months for a private landlord to regain their property should the tenant choose to fight the decision in court.”
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Key reforms to help renters and first-time buyers
The Conservatives are committed to helping people buy and rent, pledging to build “at least” one million new homes by 2024. The party has also said they will also introduce a First Home scheme, where first-time buyers will be offered a 30% discount on new homes in their local area.
Notably, the party also stated that will bring in a Better Deal for Renters, requiring one ‘lifetime’ deposit which moves with the tenant through properties.
“Lifetime” fixed-rate mortgages requiring a deposit of just 5%
One of the most interesting pledges from the Conservatives was “lifetime” fixed-rate mortgages. These mortgages will require 5% deposits to help renters “realise their dream of owning a home.” Currently, fixed-rate mortgage deals can last for as little as one year before homeowners are moved on to the higher variable rate, so this would be a radical reform. The party says they would enlist funding from institutional investors like pension funds.
Paul Tait, Head of Portico Finance, commented on this:
“First time buyers usually like the idea of a fixed rate mortgage as it gives them the security of knowing the exact amount they have to pay each month. But what’s not clear in the Conservative manifesto is what exit fees would apply, and what rate lenders would price this mortgage at compared to other long-term options currently available.
It’s worth noting that 10-year fixed rates have really dropped over the past year, and this is still a very long time to be fixed into a deal which may have penalties to exit. Anyone considering their mortgage options should fully discuss this with their mortgage broker who can talk through the full options and implications.”
Further Conservative pledges on housing include:
- A commitment to introduce Lifetime Rental Deposits to help renters reduce the costs when moving
- Maintaining Right to Buy for all council tenants and the voluntary Right to Buy scheme agreed with housing associations
- Extending the Help to Buy scheme from 2021 to 2023 and reviewing new home ownership initiatives upon its completion
- Renewing the Affordable Homes Programme in order to support the delivery of hundreds of thousands of affordable homes
- “Ending the blight of rough sleeping” by the end of the next Parliament by expanding on programmes like the Rough Sleeping Initiative and Housing First. The party stated that they will help pay for this by “Bringing in a stamp duty surcharge on non-UK resident buyers”
What about taxes?
The Conservative’s manifesto contains very few tax increases to raise money for spending. In fact, Inews report that “In total, changes to taxation would make just £3.3bn, which is far lower than the £82.9bn stated in Labour's manifesto.”
Here are some of the party’s tax proposals:
- Triple tax lock: No increase to income tax, national insurance or VAT
- Corporation tax, which currently stands at 19%, will no longer be decreasing to 17% next year. Instead, the rate will remain at 19%
- VAT will be frozen – except on ‘Tampon Tax’ which will be scrapped
- Increasing the health immigration surcharge
- Introducing a plastic packaging tax
- The largest tax cut involves raising the salary threshold for paying National Insurance to £9,500 in April 2020
Liberal Democrats Manifesto: ‘Stop Brexit, Build a Brighter Future’
The Liberal Democrat’s party promises are centred around cancelling Brexit and remaining inside the EU, but they also document a range of policies that will directly affect the property market and landlords. Here are their key pledges summarised.
‘Mandatory licensing in the private rented sector’
At-a-glance, the party manifesto seems to fight for the renter and in doing so take a tough line on landlords. They made an election promise to introduce longer-term tenancies of three years or more, and like Labour, pledged to enforce annual rent increases during a tenancy, “with an inflation-linked annual rent increase built in.” The manifesto also vowed to “Improve protections against rogue landlords through mandatory licensing”, though whether this is for individual landlords or properties isn’t clear.
Despite voting to support the scrapping of Section 21 at their autumn conference, the party didn’t mention this in their manifesto. They did however reveal some other policies and reforms related to landlords:
- Increase Local Housing Allowance in line with average rents in an area ?
- Scrap the Conservative ‘hostile environment’ policy on immigration – and therefore likely end Right to Rent checks?
- Devolve full control of Right to Buy to local councils?
- Increase minimum energy efficiency standards for privately rented properties and remove the cost cap on improvements?
- Reform Universal Credit to be more supportive of the self-employed?
The party also said that, if elected, they would allow local authorities to increase council tax by up to 500% on second homes, with a stamp duty surcharge on overseas residents purchasing such properties.
Offering “access to affordable housing”
Stating “house prices are too high” and the possibility of owning a house is “remote”, the party’s manifesto pledged to oversee a “substantial building programme” to give people access to affordable housing.
They pledged to build at least 100,000 homes for social rent each year, ensuring that total housebuilding increases to 300,000 each year. This commitment will be funded with a £130bn capital infrastructure budget.
The party also revealed that they’d like to introduce a new Rent to Own model for social housing. This model would allow tenants to gain an increasing stake in their rental property, and even own it outright after 30 years.
Introducing a Help to Rent with government-backed tenancy deposit loans
In addition to building more homes, the Lib Dems stated that they want to introduce a Help to Rent scheme, consisting of government-backed tenancy deposit loans for all first-time renters under the age of 30.
David Smith, policy director for the Residential Landlords Association, added: “We welcome the Liberal Democrats’ plans to support younger tenants in accessing rented housing with a deposit loan scheme.
Though he continued: “This is tempered by the party’s proposals for three year tenancies with rent increases linked to inflation.
“It is bizarre to be proposing this when the average length tenants have been in their properties is over four years and when private rents are increasing by less than inflation according to the Office for National Statistics.
“Proposals to end the Local Housing Allowance Cap as well as ending the hostile environment for immigration are welcome steps and reflect proposals put forward by the RLA in its own manifesto for the private rented sector.
“However, the party’s plans for a blanket licensing scheme for landlords needs further thought.
“The crooks will simply not come forward, leaving the good landlords to pick up the tab for what would be a costly waste of time.”
Delivering “energy efficiency improvements street by street”
Committed to bringing in tougher environmental standards, the Lib Dem manifesto revealed plans to support councils to develop community energy-saving projects, “including delivering housing energy efficiency improvements street by street”.
Meanwhile, the party also pledged to cut energy bills, end fuel poverty by 2025 and reduce emissions from buildings. They said they would pilot a new subsidised Energy-Saving Homes scheme, graduating Stamp Duty Land Tax by the energy rating of the property and reducing VAT on home insulation.
The manifesto also stated that the party, if elected, will require all new homes to be built to a zero-carbon standard by 2021.
What about taxes?
- Raise corporation tax to 20%, with a view to keep the rate “stable with a predictable future path”
- Add 1p to income tax in England, with the proceeds going toward the NHS and social care
- Allow councils to increase council tax by up to 500% if properties are bought as second homes, and increase a stamp duty surcharge on overseas residents buying homes
- Abolish the bedroom tax and introduce positive incentives for people to downsize
- Reform the tax system by abolishing the Capital Gains Tax-free allowance and taxing capital gains and income through a single allowance ?
- Simplify business taxation to lower administration costs and reduce opportunities for tax avoidance
- Scrap the Marriage Tax Allowance
When will the vote take place?
So, there you have it: the key housing policies listed in the Labour, Conservative and Liberal Democrat manifestos.
Remember, the date of the general election is set for 12 December 2019.
What are your thoughts on the party policies? Let us know in the comments below.
If you're interested in getting an up to date valuation of your property ahead of the election, try our instant valuation tool or give us a call on 0207 099 4000!!!!!!Note: Housing is devolved, so the party is talking about England only.