Post-party conferences: are there any surprises in store for landlords?
Property has always been a political bargaining chip, but has recently become forefront of political campaigns to secure younger votes. All parties want to win millennial support and to do that they are trying to make renting easier and cheaper for tenants, but at a cost to private landlords. The Conservative Party, traditionally the home of property entrepreneurs, has haemorrhaged support from landlords. Will they try to win them back?
The latest from the Labour Party Conference is to compulsory purchase empty houses and link rents to local incomes. These proposals would give councils increased power to buy up empty homes and cap rents at a third of local incomes.
Other policies could provide a community Right to Buy and bring privately rented homes owned by big landlords, management companies and housing associations into local public ownership.
Based on its 2018 manifesto, we can expect the Labour Party to include a pledge to build more affordable housing. This may take the form of investment incentives for modular homes. The party claims modular homes meet high-quality standards, are eco-friendly and are faster and often cheaper to build than traditional housing. They are also suitable for smaller ‘infill sites’. But output is constrained by the lack of factories and high upfront investment and design costs. IKEA recently signed a contract with an English council to create modular housing to fill a housing gap in the coastal town (see the UK Landlord winter issue for more info).
Right to Buy discounts for tenants
Shadow Chancellor John McDonnell told the Financial Times this summer that the party could introduce a Right to Buy scheme for private tenants to buy their homes at a discounted rate from their landlords. McDonnell said he hoped the policy would be a solution to the “burgeoning buy-to-let” market. The policy would be loosely modelled on the Right to Buy scheme introduced by Margaret Thatcher in the 1980s, which gave social-housing tenants the right to buy their council homes at a discount.
Under the Labour proposal, the Government would set the criteria for determining a reasonable price for the property, which would then become Right to Buy. McDonnell said he didn’t “think it’s complicated”. No further details on the proposal have been forthcoming and it’s not an official policy yet.
The policy could result in a big property sell-off, pushing down already stagnant house prices and have a detrimental effect on landlords, tenants and the health of the rental market. It’s fair to say that the Labour Party is on the side of tenants. That said, Mayor of London Sadiq Khan’s new blueprint for a radical overhaul of housing in the capital was not met with fear by institutional investors investing in residential in the city.
Under Sadiq Khan’s plans to overhaul private renting, he wants to establish a new London Private Rent Commission, with renters on its board to cut London rents, which have been rising for years but are now beginning to stabilise.
Other proposals outlined by the mayor include incentives to encourage investment in new and existing rental housing supply, open-ended tenancies, scrapping break clauses and better dispute resolution for tenants. Dan Batterton, head of Build to Rent at LGIM Real Assets, said: “It is encouraging to see that the Mayor of London is similarly looking to improve standards by establishing a London Private Rent Commission. However, whilst moves to tackle issues within the market are welcome, current proposals do not appear to address the root of the problem – a lack of supply.”
Private renting in the UK is undergoing major structural change, transforming a sector traditionally managed by small-scale landlords into one increasingly dominated by institutional landlords similar to the PRS in the US and Germany.
The Conservative Party
At the Conservative Party Conference in Manchester, Secretary of State for Housing Robert Jenrick unveiled a new housebuilding design guide and promised to cut red tape allowing homeowners to extend without planning permission.
Homeowners will be able to add two floors to their home using the same legislation that monitors small-scale extensions as part of a growing Conservative Party push to "build up, not out".
Purpose-built blocks of flats will be able to benefit from the policy first when it is rolled out in January. Detached properties are due to be included in the future.
Jenrick, who took up the role in July, told the party conference: “There is no accepted national standard for the development of homes, only vague documents with little enforceable power. This new design guide will introduce a national standard for local authorities to adhere to.”
He said the party was replacing the existing ‘vague and outdated’ guidance with a new national design guide that local authorities can adhere to. But he also said that local authorities would be expected to design their own locally applicable guides in keeping with the national standard.
The National Planning Policy Framework will be updated to incorporate the guide’s proposals once a written ministerial statement is published.
The current focus of the Lib Dems’ new leader Jo Swinson is primarily on revoking Article 50 to remain in the European Union, in a bid to differentiate the party from other political contenders and position it as the most pro-EU party.
It’s difficult to find any advances on housing policies under the party's new leadership. Under former leader Vince Cable, the party proposed a state-backed agency to compulsory purchase land for building houses to ease the housing crisis. It had also called for measures to allow construction on some green-belt sites.
Last year, Cable also proposed a big expansion in rent-to-own, where tenants in new developments could pay a market rent in exchange for a gradual stake in the house they live in.
Existing party policy is to increase Local Housing Allowance in line with local rents, which is a big plus for landlords who rent to tenants in receipt of benefits. Polls suggest the Lib Dems are currently the closest contender to the Conservative Party to win a general election.