Labour’s landlord letting reforms could shorten supply and push up rents, that’s the view of leading property agent, Chestertons.
If Labour forms a Government after May’s General Election, proposals for wholesale changes to landlord legislation including national registration schemes, extended minimum tenancy terms and even direct rent controls could backfire, shortening the supply of quality rented homes and forcing up rents, according to leading London estate agent Chestertons.
With the 7 May poll predicted to be one of the tightest in decades, it’s very unlikely any single party will have a strong mandate to govern alone. Chestertons analysed the main parties’ manifestos and announcements during the last Parliament to identify common ground and insurmountable policy differences, so homeowners, tenants and the wider property industry can get a feel for the likely intentions of the any future Government, whatever its political make-up. The results indicate:
- All parties bar the Conservatives favour reform of the private rented sector, so if a Labour-led Government takes control landlords can expect a raft of new rules to be introduced;
- Some form of Mansion Tax seems inevitable if Labour forms the next administration, as the Liberal Democrats and Green Party also back levies on £2 million-plus properties;
- Cross-party consensus that more new homes are needed to tackle the housing shortage, but little detail on how the hundreds of thousands of new housing starts will be delivered;
- Parties agree on higher Council Tax charges on empty properties or second homes but major reform of Council Tax or Business Rates unlikely owing to the cost of wide-scale revaluations.
Robert Bartlett, Group CEO of Chestertons, says:
“This will be one of the closest elections in decades and property has never been higher up the political agenda, with pretty much all parties pledging to build more new homes and backing changes to property and wealth taxes. We can’t predict the outcome of the vote or the discussions between the parties that may follow, but we can draw conclusions as to the types of policies we might see introduced under various political permutations.
“Labour, the Lib-Dems and the Greens all propose major reform to the private rental market, including national landlord registration schemes, minimum terms for tenancies and rent reviews and, in some cases, direct rent controls. While we welcome the aim of a fairer, more transparent and accessible rented sector, the main factor behind rising rents is that the available supply of good-quality homes is being outstripped by rising demand. If a lot of new legislation is imposed on landlords quickly and without proper consultation, there is a real danger that properties may actually be withdrawn from the market, which will only serve to exacerbate the very problems the new laws seek to address.”
“If Labour gets in we can also expect some form of Mansion Tax. There isn’t much detail on how this would work in practice, or how much money it would raise, but it’s likely properties worth over £2m would be subject to the levy, and we also know the vast majority of these homes would be in London. Many older people who bought property a long time ago and have seen values rise over time could be forced to sell up and downsize to avoid a tax they can’t afford to pay.”
“Ultimately we need to see many more housing starts in all areas of the UK and, with the exception of the Greens, who favour refurbishment and energy efficiency improvements over building new houses, all of the parties are in agreement that hundreds of thousands of new homes of all sizes are needed to meet the growing housing shortage.
“They all favour development on brownfield sites over encroachment into the Green-belt, but unfortunately there isn’t much detail on how these homes can actually be delivered. The property sector as a whole continues to hold its breath and await the outcome of the vote and the inter-party talks that will surely follow. We just hope that any proposals put forward will allow full consultation across our industry, to ensure new laws don’t end up having the opposite of their intended effects.”
To read the Chestertons research into the main parties’ property promises and to download the at-a-glance guide here
With 32 offices across London and a further 20 international branches spanning 11 countries and five continents, Chestertons is the residential property expert which combines expert local knowledge with a global reach.
Named UK Sales Agency of the Year 2014 and Best Large Lettings Agency 2013, Chestertons offers clients access to a full range of services including residential sales and lettings, property and block management, professional valuations, investment, leasehold services, residential development consultancy and property refurbishment and sourcing.