What would a Labour government mean for property in north London?
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Many of Labour’s proposed social policies are morally responsible and are likely to have a positive impact on society in the UK. However concerns still remain surrounding their economic prudence. Labour are proposing the largest raft of changes relating to property.
Labour too are aware the main crux of the debate revolves around housing supply, and are proposing to build 200,000 new homes a year by 2020. They will help to reach this target by building a number of ‘garden cities or garden suburbs’. They pledge to ensure local authorities have the skills and resources needed for a more positive and proactive planning role. This will include encouragement to develop brown field sites and land holdings, and local authorities will be given powers to ensure that local first time buyers are given priority to take advantage of new homes built in their area. Money invested in “Help to buy” ISAs will be given to measures to increase the housing supply.
There is also a proposal to discourage people from leaving properties vacant, by doubling the council tax on properties empty for more than one year, and a “use it or lose it” policy on land with planning permission. The “Help to Build” scheme will give small builders access to cheaper loans from banks which will be backed by government guarantees, and the planning process for developments of up to 10 homes will be prioritised.
Any policies designed to help increase the number of homes being built, especially at an affordable level has to be applauded, however – as with all headline grabbing policy announcements – the devil will be in the detail. To date no money has been invested in the “Help to Buy” ISAs, announced in the last Conservative Budget, and the change in planning policies will require a total change of mindset for local authority planners.
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Private Rented Sector
Of the three main parties Labour are proposing the most radical changes to the Private Rental Sector (PRS), an area that has grown exponentially in the past five to ten years, with many acquiring buy-to-let property as a secure inflation-proof investment.
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The main plank of the raft of changes is to introduce a mandatory fixed three-year tenancy. These tenancies will include a ceiling on any rent increases during the term. There is a strong feeling that this is effectively bringing in a form of rent capping, which has proved in the past to have a huge negative impact on the rental market.
The ability to agree long-term tenancies already exists, if both sides wish, and it is not uncommon for a landlord to renew an agreement, at the same rent to a good tenant. This policy will introduce an agreed fixed annual rent increase.
The policy has the potential to reduce flexibility/mobility for tenants and is likely to deter many potential landlords coming into the market. Those already with buy-to-let mortgages may also find themselves breaching their mortgage conditions as many lenders do not allow fixed term tenancies of over 12 months. Ultimately this is likely to have the effect of reducing the availability and choice of rental property and drive up rents.
More positively a national register of landlords will be introduced, and Labour have announced that all unfair letting agent fees to tenants will be banned. However some fees to tenants (the cost of independent referencing for example) may be justified, and a blanket ban is likely to force rents up.
Labour’s much heralded mansion tax (although originally a Lib Dem proposal) will have the biggest impact on our local market.
The majority of people feel this tax will not affect them, as owning a property worth more than £2 million for most is a dream, however the mansion tax has the potential to have a major knock on effect on the whole market.
There will need to be a revaluation of property to find those that will fall into the new tax rate. I can also envisage a busy time for valuers and lawyers employed by both sides to argue the value of properties valued at just above £2 million.