Conservative Manifesto – Ban S21 and strengthen rights of possession

by Property 118

9:54 AM, 25th November 2019
About 2 weeks ago

Conservative Manifesto – Ban S21 and strengthen rights of possession

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Conservative Manifesto – Ban S21 and strengthen rights of possession

The Conservative Party have released their 2019 general election manifesto. This has been very briefly summarised with the key points of interest for Landlords and the PRS industry. Download the full manifesto here

For the Private Rental Sector:

The Conservatives say they will bring a ‘Better Deal for Renters’ by abolishing ‘no fault’ evictions – Section 21

Tenants will be protected from revenge evictions and good landlords will have their rights of possession strengthened.

Renters will be able to have Lifetime Rental Deposits which can be transferred from one rental property to another, making the process of moving home easier and cheaper.

Housing Market:

A Stamp Duty Land Tax surcharge levied at 3% will be introduced for non UK tax residents applying to companies as well as individuals. The measure will raise up to £120 million a year, and this money will be directed at programmes to help tackle rough sleeping.

The surcharge will be levied on top of all other stamp duty payable, including the higher levels of stamp duty introduced in April 2016, on second home and buy-to-let purchases. This starts at a combined:

  • 3% for homes valued below £125,000
  • 5% on the next portion between £125,001 and £250,000
  • 8% on the portion between £250,001 and £925,000
  • 13% on the portion between £925,001 and £1.5 million
  • 15% above that

“At present, foreign individuals and companies who are not tax resident in the UK are able to buy homes as easily as those who live here. They are often bought by wealthy individuals or companies and kept as investments or rented out at inflated prices: a recent study showed that 13% of new London homes were bought by non-residents in 2014 to 2016. This adds significant amounts of demand to limited supply, inflating house prices and making it harder for people in Britain looking to get a foot on the property ladder.”

The Conservatives plan to increase home ownership levels by:

  • Delivering at least another million homes in the next five years, making further progress towards the target of 300,000 new houses a year by the mid-2020s.
  • Helping renters to buy. There are currently 2 million renters who could afford mortgage payments but struggle to save for a deposit. A new market in long-term fixed rate mortgages, requiring only 5% deposits, will make it easier for them to buy.
  • Providing discounts for local first-time buyers. Under a new First Home scheme, homes will be sold at a 30 per cent discount to local first-time buyers.

Reforms to leasehold will continue including implementing the ban on the sale of new leasehold homes, restricting ground rents to a peppercorn, and providing necessary mechanisms of redress for tenants.

Taxation:

“We promise not to raise the rates of income tax, National Insurance or VAT. This is a tax guarantee that will protect the incomes of hard-working families across the next Parliament.”

“We not only want to freeze taxes, but to cut them too. We will raise the National Insurance threshold to £9,500 next year – representing a tax cut for 31 million workers. Our ultimate ambition is to ensure that the first £12,500 you earn is completely free of tax – which would put almost £500 per year in people’s pockets.”



Comments

Neil Patterson

9:56 AM, 25th November 2019
About 2 weeks ago

RLA Press Release:

LANDLORDS GIVE CAUTIOUS WELCOME TO TORY PLANS

Landlords have welcomed the proposals in the Conservative manifesto to strengthen the possession rights of good landlords whilst accepting there is a need to protect tenants from unfair evictions.

David Smith, Policy Director for the Residential Landlords Association (RLA), said:

“We agree that the system for repossessing properties is in need of reform and support the Conservatives’ proposals to strength the possession rights of good landlords.

“It is vital that the reforms are got right. At present it can take over five months for a landlord to repossess a property through the courts in legitimate circumstances. We will be keen to work with Ministers to establish a new system of repossession rights and the establishment of a dedicated housing court to ensure good landlords and tenants can secure justice swiftly in the minority of cases where something goes wrong.

“It is disappointing that there is no mention of reversing some of the tax changes hitting landlords which have resulted in a drop in investment in the market making it more difficult for tenants to find the housing they want. Longer tenancies for tenants will be meaningless without landlords entering and staying in the market long term.”

JJ

11:36 AM, 25th November 2019
About 2 weeks ago

The devil will be in the detail. Presumably it is intentioned that S21 won't be abolished until they HAVE got all the rest right and there won't be any of the shenanigans that have happened over Universal Credit.

Simon Williams

11:37 AM, 25th November 2019
About 2 weeks ago

Unthinkable a few years ago that it would be the Tories who abolished section 21. A reminder that we can't expect any favours from them.

As they have committed not to raise income tax, VAT or NI, don't be surprised if they try to extract more in Capital Gains Tax from landlords. Don't even be surprised if they remove the 20% tax credit for mortgage interest. Their spending promises mean they will be looking for easy targets a year or more ahead.

Also, a word in favour of those nasty foreigners who used to buy lots of flats in places like London. Research by the LSE in 2017 concluded that only around 1% of foreign homes are left empty. Most are rented out or used for accommodation for sons or daughters attending UK universities. The LSE research was actually commissioned by Sadiq Khan, but obviously buried because it didn't give him the right answer.

As usual, the Tories peddle the line that landlords (in this case foreigners but they really mean the rest of us too) add to demand and therefore it it supposed, crowd out the plucky first time buyer. But my experience is that, before help to buy, it was buy to let money, whether domestic or foreign, which gave developers the crucial confidence to build as it usually comes through at the off-plan stage. Thus landlords create demand, but they also encourage supply. And unlike help to buy, no government subsidy was required to keep developers building.

Depressing conclusion: Boris = bad, Corbyn = catastrophic.

moneymanager

12:10 PM, 25th November 2019
About 2 weeks ago

I am more than mystified about the transferrable deposits. I recently had a pre June 18 tenant leave and the first pice of post I received was an electricity bill for the whole tenancy period in our name. Our AST stipulates that no part of any deposit will be returned until evidence of the settlement of property related services has been supplied or, subject to tenant permission, the deposit is used to settle such an account subject to there being sufficient to do so AFTER all other agreed deductions are covered. Given the now five week cap on deposits that coverage alone is impaired, if the deposit is somehow magically available to two landlords I can't imagine that Councils and utility providers will get much in future.

moneymanager

12:21 PM, 25th November 2019
About 2 weeks ago

"Struggling to save for a deposit" is a somewhat disingenuous statement following a period of near zero returns on deposit savings and the consequential "theft by transfer" to the banks balance sheets.

Kathy Evans

18:18 PM, 25th November 2019
About 2 weeks ago

Reply to the comment left by moneymanager at 25/11/2019 - 12:21
As well as low returns on savings, of course, there is the absolute necessity of having new clothes regularly and a foreign holiday every year, plus the latest tech gadgets.

Darlington Landlord

19:36 PM, 25th November 2019
About 2 weeks ago

Reply to the comment left by moneymanager at 25/11/2019 - 12:10
As part of my new tenancy process I always inform council, water and utilities of the movein date, any readings and new tenants name. This means bills should be put in the tenants name. If you have been billed for the entire tenancy contacating the utility company and emailing a copy of the tenancy agreement which states that the tenants are responsible for utility bills should get you off the hook. (I hope you took meter readings)

SM

9:49 AM, 30th November 2019
About A week ago

Reply to the comment left by Simon Williams at 25/11/2019 - 11:37
Landlords also create price stability by buying as prices start to fall and yield improves. Owner occupiers tend to stay out of the market when its falling prefering to dive in whilst its rising forcing prices up even more. The exception being foreign investors who are also interested in exchange rate fluctuation. Just look how many overseas buyers we see when the £ is weak and it certainly has been recently. I'm waiting to see what happens when the £ strengthens. Will overseas investors sell because they don't see the capital growth, don't see a good rental yield, see a government which doesn't value the private landlord.


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