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

General Election:

Part of Labour’s bid to be elected on 12th 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.

The Labour Party Manifesto

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