Labour’s Renters’ Rights Act and tax warning will crush landlords

Sadly, I didn’t make it to the end of Rachel Reeves’ televised sermon on Tuesday because I was on the verge of scratching my eyes out.

Somewhere between the ‘growth and fairness’ platitudes and the Pudsey Dalek’s weary insistence that ‘the world has thrown even more challenges our way’.

This speech was billed as being ‘rare’, but the Chancellor is warming up the nation’s wage earners for tax hikes.

She wouldn’t rule them out, of course.

Just like she won’t promise to slash the public sector in half or send home people with no right to be here but still live comfortably.

Instead, she promised to make the ‘necessary choices’, which is Labour code for squeezing the pips of those who always pay for its disastrous time in office.

Rabble rousing clowns

Surely the biggest challenge Britain is facing isn’t just a poorly performing economy – which is about to get worse, naturally – but that a small proportion of the country decided to hand power to these talentless, envious sixth-form rabble rousing clowns.

Hopefully, everyone has now been reminded why Labour was unelectable for 14 years.

If our Rach decides to push up income tax in her November Budget, then it’s the end for Labour.

There’s no way we can continue with this level of tax without huge reductions in public spending. None.

But by the time the proposal becomes law, the damage to the private rented sector could already be irreversible.

This week, Property118 reported that more than a third of landlords are preparing to quit within 12 months.

Simply Business puts the figure at 39%, pointing to the Renters’ Rights Act and a blizzard of new rules that have turned letting homes into a bureaucratic endurance test.

Growing cost of possessions

It also found that more than half of landlords believe eviction cases will drag on, cost thousands and swallow months of lost rent.

Labour calls the Act fair. Landlords rightly call it a disaster.

I’ve said before that Labour’s greatest gift to the housing market is the law of unintended consequences.

The Renters’ Rights Act is shaping up to be a Trojan horse, sold as being sound protection for tenants, but designed so badly that both sides will lose.

Rents will rise. That’s inevitable.

It wouldn’t be half as painful if non-incorporated landlords could once again offset mortgage interest against rental income, or if the government introduced capital allowances to help fund EPC upgrades.

But this shower of politicians has no grasp of incentives or business reality.

For some properties, upgrading simply won’t be worth the cost, and that means more homes disappearing from the rental market.

The outcome is easy to predict with fewer available properties and higher rents. A PRS collapse dressed up as social justice.

The PRS is damaged

Labour is setting out to strangle the private rented sector with regulation, not reform. They can’t help themselves.

Every instinct tells them to control and restrict, to legislate and license until the market chokes.

And as landlords face even more scrutiny from councils wielding expanded investigatory powers, the next three-and-a-half years are going to crawl by.

This government also won’t be honest about the fallout from its policies.

When things go wrong, they will point fingers – at Reform, at Brexit, at Ukraine. It’s always someone else’s fault.

Now Ms Reeves is softening up the public for tax hikes under the banner of ‘sharing the burden’.

We all know how that plays out.

Middle earners will pay more, the wealthy will quietly leave, and landlords will once again be branded villains while our pockets are being picked.

The final version of the Renters’ Rights Act has been written by people who’ve never run a business.

They might have encountered a landlord who wanted rent paid on time, but the result is predictably shambolic.

The people who’ll suffer aren’t just landlords, but tenants too.

Lease to asylum seekers

The irony is that it may soon be safer for some landlords to lease to companies housing asylum seekers than to rent to local families on low incomes.

That will spark social tension, resentment and division.

That would be the inevitable legacy of a government that confuses fairness with punishment.

Introducing the Renters’ Rights Act in its current form is an act of extraordinary recklessness.

Coupled with higher taxes and the prospect of landlords paying National Insurance on rental income, the PRS for small landlords is surely doomed.

Don’t worry, though.

The extra tax you’ll be paying will be ‘put to good use’ and you’ll probably hear about it in a speech about growth and fairness.

Until next time,

The Landlord Crusader