I am really struck by how back-of-an-envelope the three main parties’ manifestos are for the forthcoming election. In many ways it is a relief that there are not too many shoot-from–the-hip, vote winning, yet impractical proposals. The fact that they are so thin on the private rental sector (PRS) either suggests that politicians lack vision on housing or they are looking for a blank cheque to do whatever they want once they gain power.
All three main parties want to ban letting agent fees and want to promote three year tenancies. Labour and the Lib Dems are also in favour of inflation linked annual rental increases and Labour say they will make such tenancies ‘the norm.’
As in 2015, the Conservative manifesto has scant detail on the PRS, its other main points are strengthening equalities legislation for private landlords – already covered in the 2010 Equalities Act – and upgrading fuel poor homes to Energy Performance Certificate (EPC) grade C by 2030.
The Labour Party manifesto also wants to improve energy efficiency regulations already in place which prevent letting properties of EPC grade F or G from April 2018 and will re-introduce the Landlord Energy Saving Allowance to incentivise energy efficiency improvements. Labour wants to create a new legal minimum standard for rented properties – though this is currently addressed through the Housing Health & Safety ratings system. It also wants to empower tenants to take action against sub standard properties – currently tenants would complain to environmental heath so it’s difficult to know how this might be changed. Of course funding local authorities properly so that they can run effective private rented sector teams would help. Labour are also keen to give the Mayor of London extra powers to give tenants more security. This almost certainly means restrictions on rent increases, minimum tenancy lengths and possible rent caps. Plans to increase corporation tax to 26% (21% for turnover under £300,000) would likely impact landlords who trade through limited companies, though the Making Tax Digital scheme under Labour will only apply to businesses with a turnover of £85,000 or more.
The Liberal Democrat manifesto is probably the most radical. They want to bring in a package to support renters which includes a Help To Rent government backed deposit scheme for first time renters under 30, a cap on deposits, increasing minimum standards for rented homes and a Rent To Own scheme where tenants would own properties after renting them for 30 years. Tenants would also have first refusal to buy their rented property if their landlord decided to sell, albeit at an independent market valuation. The Lib Dems also want to promote mandatory licensing and allow tenants access to the database of rogue landlords and letting agents being created under the 2016 Housing & Planning Act. On tax they wish to reform corporation and dividend taxation, reverse cuts to capital gains and corporation tax and consider the implementation of a land value tax.
The Lib Dem proposals would be a real game changer and in many ways they have positioned themselves to the left of Labour with these policies. However a poll for the Sunday Times today puts them on just 9%, well behind the Conservatives on 44% and Labour on 35%. That outcome would see the Conservative party with a majority of 46 seats in the new parliament and free to tinker with the PRS in whatever way they wish for the next five years.
I feel very critical of politicians’ lack of vision on the PRS, so here are the ideas I would include in my manifesto if I were standing for election. Starting with something I agree with – I would ban letting agent fees subject to consultation – so that will probably result in the retention of some fees like referencing fees. I would introduce full regulation of letting agents, with compulsory membership of a professional body, which would hopefully result in a culling of the worst operators.
I would retain the existing tenancy model of six months minimum as it stands – the average tenancy lasts just under 4 years and legislation for compulsory 3 year tenancies is not needed. I would introduce a light touch national register in England and abolish local authority licensing. The register would be centrally administered and apply low charges similar to those in Scotland. Local authorities would be given increased funding to take enforcement action against poor practice and landlords would receive warnings and ultimately lose their registration for serious misdemeanours. I would retain mandatory HMO licensing for properties that are let by the room and/or with more than one tenancy agreement. I would amend the definition of an HMO so up to 4 sharers on one AST would not count as an HMO and abolish C4 planning use class to stop councils banning shared housing with Article 4 directions.
I agree a high target should be set for building new homes and would allow Housing Associations and local authorities to take out low cost loans to build new council and social housing. I would like to see more work done on bringing empty homes back into use, under occupation of existing dwellings and building on brown field sites. I would restructure stamp duty to a flat rate of 3%, abolish the 3% surcharge and make first time buyers exempt for purchases up to £600,000. I would consider a higher stamp duty rate for overseas buyers, unless they plan to move to the UK.
On lending, I would conduct an overhaul of residential and buy to let borrowing as they have both become too restrictive. I would also make it compulsory for rental payments to be reported to credit reference agencies. This will help renters build up a good credit file for when they want to get a mortgage and help landlords get accurate information on rent payment history. I would also continue help to buy schemes for first time buyers
On taxation, I would abolish unfair section 24 tax increases on letting and conduct a full review of the taxation of property with a view to taxing people who let property as businesses and not as a land and property adjunct to the self assessment process. I would favour preferential tax treatment for accredited landlords – for example capital gains rollover relief – or harsher treatment for unaccredited landlords. I would work with landlord bodies to develop a National Accreditation Scheme in England offering accreditation courses for around £125, require ongoing CPD and look to make trade body membership compulsory provided trade bodies offer landlord advice lines. I would postpone digital taxation requiring quarterly returns until 2022 – I think people are not just not prepared.
On welfare policy, I would end the freeze on Local Housing Allowance and restore its connection to market rents, plus give tenants the right to choose whether their housing benefit to be paid direct to their landlord or them. I would also like to see tax incentives for landlords who let to council and housing association nominated tenants on 3 or 5 year leasing schemes. These measures would help local authorities who are desperate for private landlords to provide them with accommodation. I would like to see more funding for agencies to provide support and helplines for tenants when dealing with criminal landlords and encourage training for tenants, particularly to aid tenancy sustainment.