01 Nov 2024 Company Update
The Benefits of Owning a Buy to Let Property…
With the Labour Party’s recent election victory, Sir Keir Starmer steps up as the new Prime Minister, and as the new government takes shape, landlords will be keen to understand the implications for the rental market.
Post-election, landlords will be closely monitoring Labour’s approach to several pressing issues in the rental market. These include:
Rising Costs: Increased mortgage rates and significant tax changes have reduced returns for many landlords.
Rental Reforms: Although plans to scrap Section 21 evictions were initially dropped, Labour intends to revive them.
Rental Housing Supply: A mismatch between rental supply and demand has led to steep rent increases in some areas.
Energy Efficiency: Previous plans to raise minimum energy efficiency standards were scrapped, but Labour aims to introduce new measures by 2030.
What is Labour’s vision for the Rental Market? Sir Keir Starmer emphasised change during his election campaign and with a strong majority, Labour is now poised to implement its manifesto pledges, particularly those affecting the private rental sector and landlord taxation.
Labour’s Key Promises:
Abolish Section 21 Evictions: Labour plans to ban Section 21 (no-fault) evictions immediately.
Tenant Protections: Empower tenants to challenge unreasonable rent increases and ban rental bidding wars (details on this are still pending).
Rent Caps: Cap the amount of rent that can be paid upfront.
Awaab’s Law: Extend this law, which mandates rectifying hazards like mould in social housing to also include private rentals. This will require landlords to fix any health hazards within a specified timeframe.
Energy Efficiency Standards: Introduce new standards by 2030, though the specific EPC rating required is yet to be determined, it is likely to be a C rating.
Gas Boilers: Remove the mandate to replace gas boilers by 2030. No-one will be forced to remove gas boilers as part of the energy efficiency standards.
Taxation under Labour – Labour has pledged not to raise the basic, higher, or additional income tax rates. Corporation tax will stay at 25%, and VAT and National Insurance rates will remain unchanged.
However, landlords should look out for potential increases in capital gains tax rates as Labour seeks alternative funding sources.
What’s next for Rental Reforms? The Conservative government had proposed the Renters’ Reform Bill, which aimed to abolish Section 21 evictions and end fixed-term tenancies. Although the bill was dropped before the election, Labour is committed to scrapping Section 21 evictions immediately, and more details are expected soon.
Key dates for Landlords – After moving into 10 Downing Street, Sir Keir Starmer will form his cabinet. Critical positions for landlords include the Chancellor of the Exchequer, the Secretary of State for Levelling Up, Housing and Communities, and the Secretary of State for Business and Trade.
Parliament Resumes: July 9, 2024
King’s Speech: July 17, 2024, outlining the government’s policies and new legislation.
Labour Party Conference: September 22-25, 2024, which will indicate the government’s priorities and Starmer’s early performance.
Potential Autumn Budget: October or November 2024, as Labour plans to hold one budget annually instead of alternating spring and autumn budgets.
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