If Labour gets into Government next week, what does their manifesto promise for landlords and the wider private rental sector?
With the polls predicting a significant Labour majority at next week’s election, we’re looking at the main manifesto pledges that landlords, homebuyers and property developers need to be aware of. As an overview, we’ll be covering the plans for:
- Labour’s Renters’ Charter and Private Rental Sector Reform
- Tax Changes
- House Building Targets and Social Housing
- Leasehold Reform
Labour’s Renters’ Charter and Private Rental Sector Reform
Section 21 Evictions
Labour has consistently pledged to immediately abolish Section 21 ‘no-fault’ evictions as part of their manifesto. Their full Renters’ Charter aims to “prevent private renters being exploited and discriminated against, empower them to challenge unreasonable rent increases, and take steps to decisively raise standards.”
The Conservative Government got within touching distance of passing their Renters’ Reform Bill and had promised to delay abolishing Section 21 until a full review of the courts’ system had been undertaken. Unfortunately, Labour has promised no such thing. Either way, removing Section 21 puts renters more at risk, as landlords will be stricter when choosing their tenants, making those most vulnerable less likely to find safe and secure housing.
Labour has also pledged to cap the amount of rent tenants can pay upfront when securing a property and vowed to end ‘bidding wars’ as a crackdown on landlords. Research from the New Economics Foundation thinktank revealed tenants paid an extra £100 a month above the initial asking price last year. Yet again, these pledges could be more damaging and cause landlords to raise rents more frequently to combat increased mortgage and maintenance costs.
Short-term lets
There is no mention in Labour’s manifesto of plans to change the tightening of legislation around second homes and holiday lets. It has been speculated that they may tighten the definition of a holiday let to limit the number of second homeowners exempt from council tax and pay holiday let business rates instead.
To read more on the upcoming changes for holiday let landlords, read here.
Energy-Efficiency
Labour’s ‘Warm Homes plan’ stresses the urgent need to improve energy efficiency in residential properties. They pledge to invest an extra £6.6 billion in upgrading five million homes to reduce energy bills. The plan will offer grants and loans to invest in insulation, solar panels, low-carbon heating, and more.
The manifesto also pledges to ensure all privately rented properties meet energy-efficiency standards by 2030. However, it fails to mention what this standard will be or whether the previous EPC system will continue to be used. The Government had announced a new Home Energy Model prior to the election announcement, but it’s unclear whether a Labour Government would adopt this model.
Tax Changes
Labour’s tax plans have been a point of contention throughout this election period. Despite their claims that they will not increase tax for 'working people', the full extent of their tax plans remains unclear.
Stamp Duty Land Tax (SDLT)
Despite many voters' hopes of seeing the SDLT thresholds increased, Labour's manifesto does not include such announcements. Instead, the Party has pledged to increase the surcharge for overseas buyers by 1%, leaving foreign-based buyers paying an extra 3% in stamp duty when buying a main residence in the UK or an additional 6% on a second home.
Labour aims to raise £40m with this pledge to fund new planning officers.
Capital Gains Tax (CGT)
The Labour Party have refused to rule out changes to the current rates of CGT. As it stands, there are no planned increases, which has raised many assumptions that future increases to CGT could be likely.
House Building Targets and Social Housing
Housing Targets
The Labour Party has set an ambitious target of building 1.5 million new homes over the next parliament, suggesting that housing is likely to be high on the Party’s priority list.
Furthermore, they plan to update the National Policy Planning Framework to restore housing targets, ensuring local authorities have updated plans for their area.
Labour also pledge to introduce a housing recovery plan to overhaul planning reform to increase building. This will involve hiring 300 new planning officers and reforming compulsory purchase compensation rules.
Affordable Housing and First-Time Buyers
The Labour Party promises to introduce ‘new towns’ with new communities encompassing well-designed homes, green spaces, transport links, and high streets. This is in addition to their promise to bring in the biggest increase in social and affordable housing in a generation.
To help aspiring first-time buyers, Labour plans to give younger people the first chance to purchase homes in new housing developments. They have also pledged a Freedom to Buy mortgage guarantee scheme, which should support 80,000 young people in getting onto the housing ladder over the next five years. This allows the Government to act as a mortgage guarantor.
Leasehold Reform
The Leasehold Reform Bill reached Royal Assent before the election announcement, so the next Government can enact the Conservative leasehold reforms, regardless of which party is in charge. Labour plans to extend this current Bill to include all the Law Commission’s proposals, namely to cap ground rents.
Labour aims to phase out leaseholds entirely and will require all new flats to be sold as commonholds as the default tenure.
To read the full Labour Party manifesto, click here.
This is, of course, a high-level overview of Labour’s plans for housing and property investors.
