Queen’s Speech 2015: four bills that landlords should be aware of
With the Conservatives bolstered by an unexpected, albeit slim, majority in the 2015 General Election, the Queen’s Speech to Parliament on 27 May cemented a large number of Conservative manifesto pledges.
Though the controversial decision to replace the Human Rights Act with a British Bill of Rights has been delayed pending consultation, a number of other commitments – including a referendum on Britain’s EU membership by the end of 2017 – have been set in motion.
Among the many bills announced as part of the State Opening, here are four that are likely to have an appreciable effect on landlords and property investors in the UK.
Full Employment and Welfare Benefits Bill
A key aspect of the Conservative manifesto was to reduce the welfare bill. Two measures to this end, both outlined in the Full Employment and Welfare Benefits Bill, are to reduce the household benefits cap to £23,000 and to freeze child benefits, working-age benefits and tax credits for two years.
The Conservatives’ ideological aversion to the welfare state is no secret, and these policies are certain to squeeze affordability for those households who rely on benefits to supplement their income. This, in turn, will affect landlords who have tenants who claim benefits.
Some benefits will be exempted from the two-year freeze, including the state pension. Statutory payments are also exempt, as are benefits relating to disability costs, which are also exempt from the lowered annual cap.
National Insurance Contributions and Finance Bill
Conversely, this bill will freeze income tax rates, national insurance and VAT for five years, and increase the personal income tax threshold to £12,500. This means that the income tax and VAT paid by employees, employers and individuals will not increase above its current level for the duration of this parliament.
As well as obviously affecting everyone who pays income tax in the UK, this also has a bearing on self-employed landlords who pay class 2 national insurance and those who employ others in the course of their property business.
This will also be of benefits to all tenants who pay income tax, and go some way to alleviate the pressure on tenant finances that has constrained private rent increases in many regions.
In many ways a flagship Conservative bill, the Housing Bill will extend Right to Buy to 1.3 million housing association tenants, oblige councils to sell their most expensive council homes in order to fund the construction of affordable homes, prepare brownfield sites for development and build 200,000 discounted homes for first-time buyers under the age of 40.
The massive imbalance between the supply of and the demand for housing has caused house prices to skyrocket in the last two decades, constraining rental yields and limiting affordability for all new market entrants, investors and occupiers alike.
Critics say the measures don’t go far enough to tackle supply issues, however – especially given separate pledges to suppress mortgage interest rates and expanding the government’s multifaceted Help to Buy scheme . Though the discounted starter homes initiative might go some way to reducing competition for the older one- and two-bed flats and houses that make for typical first-time property investments, as well as first-time houses, the government may still be unable to avert a further housing boom.
Prior to the Queen’s Speech, the Residential Landlords Association recommended allowing councils to include landlords’ details on council tax registration forms for rented properties. These measures, which the RLA suggested in the Housing Bill, would help councils tackle criminal landlords . Earliest indications are that this legislation will not be introduced.
The Immigration Act 2014 ‘right to rent check’ pilot scheme, which began last year in the West Midlands, will be rolled out across the UK under the new Immigration Bill. This will compel landlords and/or their agents to check the immigration status of their tenants in order to avoid fines of up to £3,000.
For more information on the Queen’s Speech 2015, visit the GOV.UK website.
- O’Loughlin, D. “Concerns raised on Tories tackling property supply”. FT Adviser. 11 May 2015.
- “Queen’s Speech – it’s time to find the criminal landlords”. Residential Landlords Association. 26 May 2015.