Nov

Labour plans would challenge buy-to-let investors and second-home owners…

admin

General Election:

Part of Labour’s
bid to be elected on 12^th December is a raft of tax
raising measures aimed at buy-to-let landlords and second home
owners.

Jeremy Corbyn’s
Labour party manifesto launch last week outlined a number of issues
which will be of concern to landlords.

What is Labour
proposing:

Rent controls
would be introduced, providing a cap on rent increases during the
course of tenancies, most likely to the level of inflation. This in
itself may not be such a bad thing for landlords as most landlords
rarely have their rents keep pace with inflation, giving them a
legitimate reason to increase regularly. However, cities where
demand for rentals is highest would be given additional powers to
bring in even tougher rent controls.
With more
landlords considering switching to short-term holiday rentals
following the removal of the mortgage interest allowance on
long-term letting, this avenue could be closed to most landlords,
with an extra tax on holiday homes of an average of £3,200 a year
each. Labour’s levy on holiday homes and second homes, it is
estimated, will raise £560m a year, based on a 200pc hike on top of
council tax, hitting around 425,000 properties. The Liberal
Democrats have said they would adopt a similar policy.
Open ended, as
opposed to fixed term tenancies, would become the norm. Along with
the abolition of the assured shorthold tenancy (AST) and removal of
the no-fault section 21 eviction process, this would considerably
strengthen tenants’ security of tenure, making it difficult, if
not impossible in some cases, for landlords to end residential
tenancies.
The
Conservatives have also confirmed that the section 21 possession
process is to be brought to an end, replaced by a beefed-up
alternative, the section 8 court based possession process.
Labour plan to
bring in a universal licensing scheme for landlords, with what it
calls “tougher sanctions” for any property professional breaking
the rules on minimum safety standards.
Renters unions
would become the norm if Labour were elected, funded by government
to protect tenants legal rights, which it says would allow tenants
to “organise and defend their rights”.
Labour has
previously recommended the scrapping of council tax for tenants.
This would be replaced by a “progressive property tax”, based
the value of the home and paid for by the landlord owner.
The party has
also announced plans to allow tenants to buy their homes from
landlords at below market rates, though this suggested appears to
have been shelved for now – it’s not mentioned in the
manifesto.
On a more
positive note for landlords with benefit tenants, Labour would end
the freeze on Local Housing Allowance (LHA) and would realign LHA to
the 30th percentile of local rents. They would also pay the housing
element of Universal Credit directly to landlords, which landlords
would welcome, though it has said Universal Credit system could be
scrapped.
Landlords would
be prevented from excluding any tenant applicant who is receipt of
housing benefits.
Right to Rent
checks would be scrapped if Labour are elected.
Labour have
pledged to equalise capital gains with income tax income, which
would mean a considerable hike in capital gains tax for most people.
Income tax
would increase for anyone declaring an income above £80,000 per
year.
Labour plan to
end the Right to Buy council houses for residents, and to build
150,000 council and social homes annually, with 100,000 of these
built by councils for social rent.
Following on
from the Grenfell inquiry, a £1 billion Fire Safety Fund will be
launched to fit sprinklers and other fire safety measures in all
high-rise council and housing association tower blocks.
All high rise
residential tower blocks will have the dangerous Grenfell-style
cladding removed and replaced with safe materials.
Mandatory
building standards and guidance are to be introduced, inspected and
enforced by fully trained Fire and Rescue Service fire safety
officers.
Local
authorities will be given new powers to control Airbnb style
short-term lets.
Leasehold
reforms will be introduced, ending the sale of new leasehold
properties, abolishing unfair fees and conditions in existing
leaseholds, and leaseholders will be given the right to buy their
freehold “at a price they can afford.”
Most homes in
the UK would be upgraded to the highest energy efficiency standards,
though no indication as yet by Labour as to how that will be done.
All new homes
will need to reach zero-carbon emissions standards, achieved by
using new new technology such as heat pumps, solar hot water and
hydrogen gas, with new investments to be made in district heat
networks using waste heat.