The manifestos are out, well the traditional big three at least, and we have a (slightly) clearer view of what the election will mean for letting agents.
- There is no indication that a renewed Conservative Government will relent on the “Tenant Tax”/Section 24 restrictions to mortgage interest relief.
- Corporation tax will be reduced to 17% by 2020 as planned.
- The threshold for higher rate income tax will be pushed up to £50,000 by 2020 as planned.
Private Rented Sector
- Will look at how security for good tenants is increased and how landlords can be encouraged to offer longer tenancies as standard.
- Renewed commitment to banning letting fees for tenants.
- Equalities law will be strengthened so that private landlords who deny people a service on the basis of ethnicity, religion or gender are properly investigated and prosecuted.
- Commitment to upgrading all fuel poor homes to EPC band C by 2030.
- A fair debt policy – creating a “Breathing Space” for those in serious problem debt, allowing them to apply for legal protection from further interest, charges and enforcement action for a period of up to six weeks.
- Unsurprisingly, Labour have not mentioned reviewing or reversing the “Tenant Tax”/Section 24 restriction on mortgage interest relief.
- Conservative plans to reduce corporation tax to 17% by 2020 will be scrapped, and instead will be raised as follows:
- To 21% from 2018-19,
- To 24% from 2019-20, and
- To 26% from 2020-2021
- The lower small-business rate of corporation tax (below £300,000) will be reintroduced and raised as follows:
- To 20% from 2018-19, and
- To 21% from 2020-21.
- Labour will also exclude small businesses (turnover under £85,000) from the Government’s Making Tax Digital scheme, which will mandate digital quarterly reporting.
- Labour will reintroduce the Landlords Energy Saving Allowance (LESA), which has been a key ask of the NLA, in order to incentivise landlords to make energy efficiency improvements in their properties by offsetting the cost against income tax (up to a certain, as yet undefined amount).
Private Rented Sector
- “Improve” upon existing energy efficiency regulations which will already prohibit landlords granting a new or renewed tenancy for properties below an EPC rating of E from April 2018.
- Labour will seek to make three-year tenancies “the norm”, with an inflation cap on rent rises.
- The Mayor of London will be granted extra powers to give London renters additional security.
- Labour will legislate to ban letting agency fees for tenants.
- Labour will “empower tenants” by giving renters new consumer rights:
- Minimum standards – A new legal minimum standard to ensure properties are ‘fit for human habitation.
- Empower tenants to take action if their rented homes are sub-standard.
- Unsurprisingly, the manifesto makes no mention of reversing or reviewing the “Tenant Tax”/Section 24 restriction on mortgage interest relief.
- Reverse a number of the Conservatives’ tax cuts, including:
- – The cutting of Corporation Tax from 20% to 17%.
- – Capital Gains Tax cuts.
- – Capital Gains Tax extended relief.
- “Reform” dividend tax relief (although does not go into detail on how it will be reformed).
- “Reform” Corporation Tax, shifting it away from a profits-based tax to one that takes account of a wider range of economic activity indicators, such as sales and turnover.
- Consider the implementation of Land Value Taxation.
Private Rented Sector
- Introduce a new Rent to Own model where rent payments give tenants an increasing stake in the property, owning it outright after 30 years.
- Ban lettings fees for tenants, capping upfront deposits and increasing minimum standards in rented homes.
- Establish a new Help to Rent scheme to provide government-backed tenancy deposit loans for all first-time renters under 30.
- Give tenants first refusal to buy the home they are renting from a landlord who decides to sell during the tenancy at the market rate according to an independent valuation.
- Promote longer tenancies of three years or more with an inflation-linked annual rent increase built in, to give tenants security and limit rent hikes.
- Improve protections against rogue landlords through mandatory licensing and allow access for tenants to the database of rogue landlords and property agents.
- Pass a new Green Buildings Act to set new energy-efficiency targets, including a long-term ambition for every home in England to reach at least an energy rating of Band C by 2035.
- Ensure that at least four million homes are made highly energy efficient (Band C) by 2022, with priority given to fuel-poor households.