Ahead of the upcoming general election on July 4, both the two major parties, Conservative and Labour, have outlined their plans concerning the property sector in their manifestos.
As always, we want to ensure our landlords at Rocket are well-informed and well-equipped to navigate the future of the London property market.
As such, we have reviewed the Conservative and Labour manifestos and shared our thoughts on both below:
Labour Manifesto:
It is difficult to make too many conclusions from the Labour manifesto, as there isn’t a huge amount of detail, but they have made a handful of promises.
They have said they want to immediately abolish Section 21 no fault eviction notices to prevent private renters from being exploited and discriminated against.
In reality, it is extremely unlikely they will be able to immediately abolish Section 21 notices legally without providing an alternative method for landlords to gain possession of their assets. Section 8 provisions are already in place, where landlords have to give a reason to take possession of their properties, but these are quite limited.
Labour will have to bring forward legislation to deal with Assured Shorthold Tenancies, because there are too many tenancy contracts already in place that contain Section 21 clauses.
With Section 21 notices having existed since 1988, it will take time to go about abolishing them properly, at least 6-12 months, but more likely over a year, so it should be business as usual for landlords in this respect for at least the next year or two.
Labour have also said they want to empower tenants to be able to challenge unreasonable rent increases.
Tenants can already do this, as when a landlord serves a Section 13 rent review notice, the tenant has the right to take it to a tribunal if they feel it is unreasonable.
This process would have become much easier under the Renters Reform Bill that had been put forward by the Conservative government and so it is likely Labour will introduce something similar.
There were previously concerns about tribunals becoming inundated with tenants referring rent increases no matter how much, but we will have to wait to see the details of Labour’s plan to find out how they will deal with this issue.
Another promise Labour have made is to decisively raise standards, including extending Awaab’s law to the private sector.
The Awaab’s law was introduced after the tragic death of two-year-old Awaab Ishak due to exposure to mould in his family’s home in Rochdale, which would have been preventable had the landlord taken action.
As such, social housing landlords are required to adhere to strict time limits to address hazards in the home, such as damp and mould and Labour are proposing that private landlords should have to do the same, which is an excellent idea.
Raising standards also means taking decisive action to improve building safety.
Since the Grenfell Tower disaster, which happened because of the flammable cladding on the outside of the building, the government have been gradually replacing similar cladding on other buildings. However, this has progressed slowly, and often at the expense of leaseholders, with only a fraction of buildings in London addressed so far.
In some instances, to ensure resident safety, buildings have required 24-hour surveillance to monitor for potential fires.
Labour have said they will come at this with a renewed focus to protect leaseholders from the costs of changing the cladding and they will take steps to accelerate remediation across the country, although they have not indicated how they will do this.
Outside of these main pledges, Labour have said they will bring an end to the feudal leasehold system and instead introduce commonhold for new buildings, which means every leaseholder will have a share of the freehold.
The incoming government will also need to finalise legislation that has already been enacted, which extends lease terms to 990 years from 99 years and caps ground rents at £250.
Although this law has been passed, it remains for the new government to implement specific regulations concerning the costs associated with lease extensions.
Finally, Labour have promised to deliver the biggest boost to affordable housing in a generation. Again, there is little to no detail on what this means, but building more will take pressure off the rest of the housing market so it can only be a good thing if enacted.
Conservative Manifesto:
The Conservatives have essentially pledged to pick up where they left off and pass a Renters Reform Bill that will deliver fairness in the rental market for landlords and renters alike.
We have quite a lot of detail in this respect, as we know exactly what the Conservatives were proposing before the general election was called.
In terms of what this Renters Reform Bill entails, the Conservatives have said they will deliver court reforms necessary to fully abolish Section 21 and strengthen other grounds for landlords to evict private tenants guilty of antisocial behaviour.
Other interesting points from the Conservative manifesto include a promise to deliver 1.6 million homes in England and that they’re going to do it by building on brownfield land, which is any land that has already been built on.
They’re going to be stronger on protecting the greenbelt, but they will encourage planning permission for new houses on brownfield land, so any unused industrial complexes and they have already mentioned Euston, Old Oak Common and Thamesmead as potential areas for this building.
They also hope to raise density levels in inner London to that of European cities such as Paris and Barcelona. There’s not much detail on this point, but it seems to be a good idea.
The Conservatives also want to make a permanent increase to the threshold that first time buyers pay stamp duty, keeping it at £425,000 and they want to support homeowners with a two-year temporary capital gains tax relief for landlords who sell to existing tenants.
Ultimately, no matter who gets into government, from a property sector perspective there will not be a huge difference.
Both sides will look to implement a Renters Reform Bill of some sort, with Labour’s being more tenant focused and the Conservatives being more landlord focused.
So, at Rocket, our advice to our clients would be that there is nothing you need to be worried about in the short term, as we continue to work hard to put all our landlords in a strong position by getting market rents and good tenants.
As for the future, trust in our expertise here at Rocket and we will guide you through any speed bumps along the way to ensure your property portfolios remain profitable.
