Promises Promises Promises - There is a General Election Coming!

A General Election by definition is about more than one issue and voters usually make up their minds on who to vote for based on a host of issues that affect them. Of course this election appears to be about one fundamental issue which has polarised the country. I will however not touch on that particular subject in this piece and like the arch villain in the Harry Potter stories I will (try) not to mention its name.

The usual plurality of policies and promises, may play a less significant part in this election than before, however what the political players commit to in their manifestos is hugely significant and will shape the future direction of the country come what may.

It is also quite right that people look at the policies that directly impact on themselves and the sector they are involved in.

I therefore want to give you a brief overview of what the political parties have put into their manifestos that directly relates to the property world and the messages they will be campaigning on until the 10pm on 12th December.

Whether they are in the position to deliver their proposals or even honour them when in power is a debate for another time so I will not delve too deeply into the whys and wherefores at this stage, but only outline the general direction of travel when it comes to the future of housing and in particular the potential impact on private rental sector and housing markets. Other wider policies will of course have consequences for the industry, such as the economy, taxation and investment, but I will leave you to absorb these yourself.

Fortunately, in this analysis, I do not have to begin from a standing start. The main political parties have already revealed a lot of their thinking over the last few months and through their conferences, press releases and spokespersons, we have had inklings of their thought processes and ambitions. I also am going to restrict my commentary to the English context, as with no disrespect, the devolved nations, have different political dynamic, especially with regards to housing.

I have also had opportunity to read some very incisive commentary from those in the industry such as the article by Eddie Hooker CEO of Hamilton Fraser written in the run up to the manifesto launches. What follows, therefore is a summary of the policies of the three political heavy weights who will be steering the direction of our sector if they gain power or influence in the next Government.

Conservatives:

The Tories are in a strange place in so far that they are the incumbent Government but due to their recent change of leader are presenting themselves as a new proposition with a fresh agenda.

This means that the proposals and policies of the past might not apply and the direction of their government may not be the same as before. It was therefore with anticipation that those in property looked to see what if anything would change in regards to the still recent promises of the Theresa May administration.

However if a change in direction was what people were expecting then this does not appear to have transpired. The Prime Minister – Boris Johnson was talking up the need for Stamp Duty reform, but has now put this on hold, instead his expressed priority was to deal with the cost of living for the ordinary person.

What is being offered to the house buyer is long term fixed mortgages, that the Tories hope will slash the cost of deposits and they have plans for house developers to be compelled through Section 106 contributions to discount a third of all new build to allow for local buyers who may be priced out of the market to get foothold on the ladder. A new Conservative Government will need to keep property developers on board to have a chance of fulfilling their house building programme so how much pressure on affordability will be exerted remains to be seen.

There also appears to be an imminent shake up of shared ownership and Help to Buy, which I think has been prompted by the relative failure of this type of scheme in the past. There is no mention of the previously proposed New Homes Ombudsman, but this does not mean this is not in the pipeline and the document refers to providing the necessary mechanisms for redress. Leasehold is also a key reform area for consideration and previous policies such as banning leases on new build homes and abolishing ground rent are confirmed.

The manifesto reaffirms the Conservative’s commitment to Right to Buy and whilst a previous promise to offer the right to all social housing tenants has gone, the current manifesto states that housing associations can volunteer to adopt the practice and a number of new pilot schemes will be set up.    

In terms of the private rented sector, the recent tax changes namely Section 24 and capital gains increases seem set to stay. The only upside of this decision for the sector on this decision is that it appears the other parties want to go further and harder on taxing rental income.

The industry was also watching to see if the pledge to scrap Section 21 would appear in the manifesto. Rumours had been circulated that the PM was not as wedded to the idea as his predecessor and a re-think may occur. If this was the hope then there will be disappointment, as the commitment to ban no-fault evictions is clearly in the programme. The caveat added to the pledge is the statement that if you are a good landlord, your rights to possession will be strengthened. I can only deduce that they refer to proposed reforms of Section 8 and the introduction of a Housing Court.     

A new commitment that has been flag-shipped in the manifesto is what is being called the “lifetime deposit” but we know as tenant deposit passports. This is where a deposit is paid by the tenant at the start of their rental journey and then follows the tenant from property to property. The concept has been looked at by a working group set up by the Government, which includes the TDP schemes (including my|deposits our sister company) and tenant groups. They were due to report this autumn but the Tories have jumped the gun and made this firm commitment. Of course there will be many questions to answer before this policy can become reality. 

One other thing I was curious not to see, is the Tories commitment or not to property agent regulation. The RoPA report was being considered by the then Government and the industry was welcoming of the expressions of support from the administration. It is therefore disappointing that this has not been acknowledge in their manifesto. It does not however mean it will not happen.  

Read Conservative manifesto here

Labour:

Jeremy Corbyn has stated that his party will deliver the most radical agenda for change in a lifetime and has targeted the housing sector as a key barometer for this change. I do not want to speculate on the feasibility of any parties’ commitment to build more housing, however Labour have been clear that a majority of their programme will come from publicly funded council houses. The plans include setting new rents for these homes based on their concept of local incomes and they promise to scrap Right to Buy completely for all social housing.

There is a lot of reference to Help to Buy and promoting this for people on ordinary incomes. There is little detail though and their idea of renter/owners buying increments of the property as low as 1% are not in black and white in the document. 

In the private rented sector the “radical” idea of giving tenants the Right to Buy their private rented property, has disappeared. A combination of the unworkability of such a scheme and the accusations that this was a Tory concept, has meant that this proposal did not make the cut.

What is in however is a commitment to rent controls, open ended tenancies and effectively the end of Section 21. They will also toughen up minimum property standards and empower tenants through renters unions. They want a property “MOT” and are now talking of fines up to ￡100,000 and rent repayment for landlords who rent out substandard property.

Despite the industry actively promoting this idea, the Labour concept is attracting some hostility from the sector. Part of this resistance, is that enforcement of the current regulations is poor and further burdens are not needed.   

It remains to be seen what the details of these ideas are, however it is the headline of rent controls that will dominate the thinking of the sector and will be resisted by landlords and their representatives. Be aware however, this policy will be very popular with tenants and landlords are outnumbered on the voting front.  

Another contentious policy is a call for wider licencing for landlords in the form of a national register. This they maintain would ensure standards are enforced. Some of the sector welcome the idea nationwide register but Labour is silent on whether this is in addition to or supersedes local licencing. Cost and red tape is the fear expressed by the landlord and agent associations and they argue that addition pressures on good landlords could drive supply down, whilst allowing the rogues to prosper. 

What might however be welcomed by the landlord fraternity and sorority is the plan to scrap Right to Rent and the abolition of Universal Credit. The implication is that they will reintroduce direct payment of Local Housing Allowance, which they are also committed to raise.

The manifesto also promises wide reform of the leasehold sector, with the proposal to ban new leasehold homes and make enfranchisement affordable. Again no detail, however this pledge will no doubt prove popular and hence there appears to be a lot of cross over with the aspirations of the other political parties who have also been pushing for serious change to leasehold.

Read Labour manifesto here

Liberal Democrats:

After a controversial, but on balance a successful period in coalition government, the Lib Dems suffered a post coalition hangover where their electoral strength was significantly diminished. What looked like being a slow recovery has somewhat changed with the recent political climate. They have received boost in popularity and may well be pivotal in influencing the way the next government goes. They are clearly vying for the centre ground, however they are also seeking eye catching policies that appeal to the voter.

On housing policy, the Lib Dems have also got the Lego set out and intend to promote the building of new homes for the social sector. They however steer clear of calling it council housing.

They want to reform Right to Buy by devolving it to a local level and would release the cap on using the proceeds of any sales to fund new build.

In terms of getting first time buyers on the housing ladder, they will promote and support, Rent to Own within the social sector to supplement Rent to Buy in the private market.

In the private rented sector, they too want longer tenancies and whilst they do not call for external rent controls, they would want binding clauses in these tenancies restricting rent increases to inflation. There is no indication that these tenancies will be mandatory, but landlords would need to have good reason why they are not offering this security.

In terms of deposits, the Lib Dems would offer a Help to Rent scheme, where deposit loans could be facilitated. The Government would back these but not necessarily stump up the cash.

The Lib Dems also want mandatory licencing and greater enforcement of current regulations. They have also called for the end of Section 21.

Read Liberal Democrat manifesto here

Greens and others:

As explained above, the situation in Scotland is different to that in England and therefore as the SNP will not be voting on English laws and the specific policies relating to each nation will differ. Wales too has significantly diverged in terms of housing policy, so the policies of the Welsh parties of the big three and Plaid Cymru are not part of my musings.

The Greens are worth a mention, not least because of their emphasise on building sustainable new houses and bring rental properties up to the highest energy efficiency standards. Some of their policies are echoed in the other manifestos but it is a welcome debate that our housing stock should be at the vanguard of tackling the environmental crisis. They also have pledged to scrap Section 21 and introduce rent controls.

Read Green manifesto here

Finally the Brexit Party (please note the only use of the word in this article), has produced a manifesto, which does not appear to mention the private rented sector at all. Whether or not that means that they would leave everything as it is, could be another matter, however their commitment to laisse-faire across the piste does appear to provide a hands off approach to the housing market that some will welcome.

Ultimately, despite the weighty tomes all these manifestos amount to, and good luck in reading them all, they are all surprisingly light on detail. Many of the policies appear to be shared across the spectrum and some policies by more than one party but not another. A mixed bag really, of aspirations and promises that could be open to interpretation. Whether any of these policies see the light of day will depend on the outcome of the election. The only real one that we all hope and pray will come to fruition is the scale of house building that all the parties have committed to deliver. Past history does not bode well that Governments have got anywhere near the targets they set and in some cases the failing was so catastrophic that it is embarrassing.

What is also clear is that whatever the colour or composition of the next Government, more changes to the sector are inevitable. The new decade will be a challenge in housing and the rental sector and again those who are part of it will need to adapt and modify what they do.

Like it or not, on December 12th you will be casting one of the most important vote of your life. So many critical things hinge on what the result is and we have politicians who are saying what we want to hear, rather than explaining how they will deliver what they say. At the end of the day, manifestos are wish lists and not binding contracts, so it does somewhat come down to blind trust and credibility.

A heady mix of hope and trepidation for us all!

However you should well note the following quote based on the old Aesop fable, which does kind of sum it all up.

“The forest was shrinking but the trees kept voting for the axe because its handle was made of wood and they thought it was one of them!”

Sean Hooker

Head of Redress at the Property Redress Scheme