On Friday the 8th of May, the Conservative Party claimed victory in the UK General Election with a 12-seat majority. The results now mean we have further clarity regarding what the future is likely to look like for the Private Rented Sector, based on the Conservative Party housing pledges detailed in their manifesto.
Firstly though, we’ll briefly recap on what some of the other political parties had promised, as part of their election campaigns, and take a look at what tenants and landlords alike could’ve seen happen to the markets.
What the main parties were promising voters
The Green Party’s manifesto suggests there would’ve been significant changes to the housing and rental sectors; their main pledges included:
- Scrapping ‘the government’s Help to Buy scheme’
- Making ‘buy to let’ less appealing by ‘removing tax incentives, including the deduction of mortgage interest as an expense, and reforming the ‘wear and tear’ allowance’
- Reforming the PRS by ‘introducing a ‘living rent’ tenancy (including five-year fixed tenancy agreements), smart rent control that caps annual rent increases linked to the Consumer Price Index’
- Providing ‘500,000 social rented homes’ by the next election in 2020
According to the Labour Party’s manifesto, they promised to ‘build more homes and get a fairer deal for renters’ through pledges, which included:
- Building ‘200,000 homes a year by 2020’
- Building more ‘affordable homes by prioritising capital investment for housing and reforming the council house financing system’
- Introducing ‘a ceiling on excessive rent rises and make stable three-year tenancies the rule, not the exception’
- Creating a ‘National register of private landlords to drive up standards of rental properties and drive out rogue landlords’
In their manifesto, the Liberal Democrats claimed the UK needed to ‘speed up house building and stop prices from getting any further out of reach of families’ as well as doing more ‘to help people making a home in rented property’. Key pledges included:
- Boosting ‘house building towards our 300,000 (a year) target’
- Introducing a ‘new Rent to Own model where monthly payments steadily accrue the tenant a percentage stake in the property, owning it outright after 30 years’
- Improving ‘protections against rogue landlords and encourage a new multi-year tenancy’
- Passing ‘a new Green Buildings Act to set new energy efficiency targets, including a long-term ambition for every home to reach at least an energy rating of Band C by 2035’
While the Scottish National Party didn’t claim an overall victory, they made big gains in Scotland’s constituencies, winning 56 out of 59 seats. According to their manifesto, their policies involved:
- Backing ‘investment in an annual house building target across the UK of 100,000 affordable homes a year’
- Continued ‘support for Help to Buy and shared equity’
- Ending ‘policies like the Bedroom Tax’
- Addressing the ‘shortfall of affordable houses for rent across the UK’
In UKIP’s manifesto they claimed to recognise that the ‘housing shortage is leading to higher rents, less stable tenancies, and rising homelessness.’ They addressed this with a number of policies including:
- Making properties ‘built on registered brownfield sites exempt from stamp duty on first sale, up to the £250,000 threshold’
- Building ‘one million homes on brownfield sites by 2025 to address the current housing shortage’
- Enforcing the rule that ‘all local authorities, social landlords and housing associations will be required to register the nationality of their tenants’
- Putting ‘100 per cent of all revenue from Right to Buy sales, after essential costs have been paid back, into new community housing’
Conservative Party policies
The above is simply a snapshot of what each Party was offering in the run up to the election. The interesting similarity between them is they all promised to increase the number of houses in the UK, albeit varying in number.
Ultimately however, it’s the Conservative’s Housing pledges that will be unrolled and put in place over the next five years. Their manifesto states the following:
- Help to keep mortgage rates lower by continuing to work through our long-term economic plan
- Build more homes that people can afford, including 200,000 new Starter Homes exclusively for first-time buyers under 40
- Extend the Help to Buy Equity Loan scheme to 2020 to help more people onto and up the housing ladder, and introduce a new Help to Buy ISA to support people saving for a deposit
- Give more people the chance to own their home by extending the Right to Buy to tenants of Housing Associations and create a Brownfield Fund to unlock homes on brownfield land
- Ensure local people have more control over planning and protect the Green Belt’
Again, there are some overlaps with the Conservative’s pledges and those of the other main parties. The building of more new homes and support for first time buyers has been a common promise across the respective Housing policies. What’s noticeable about this though is there aren’t any policies directly referring to private landlords and tenants.
What these policies could mean for the Private Rented Sector
While there are no guarantees what the next five years will be like for the rental markets, the main focus behind the Conservative’s policies seems to be increasing the amount of home owners in the UK. This can be gleamed from notable pledges like the extension of Help to Buy, the introduction of the Help to Buy ISA and the Right to Buy for Housing Association public sector tenants.
Further details in the Conservative manifesto about Help to Buy reveal how the scheme will extend to ‘cover another 120,000 homes’. Furthermore, the aim of the new ISA is to support those saving for a deposit on a home. The example given states: ‘A 10% deposit on the average first home costs £15,000, so if you put in up to £12,000, government will put in up to £3,000 more.’
Similarly, Right to Buy for tenants in Housing Associations aims to provide discounts for tenants in these properties, ranging in amount depending on the type of property and how long they’ve lived there.
Public opinion on what this means for the private rental markets though seems polarised on whether this will have positive or negative effects. In an article for the Huffington Post, Adam Day champions the lack of policies regarding the private rented sector and criticises Labour’s proposed rent rise caps suggesting how they ‘would have interfered with the market forces, something that should never be controlled.’
In this article for The Guardian however, Ruth Davison of the National Housing Federation is critical of the Right to Buy scheme, claiming it will only inflate the cost of renting and price more out of buying and renting a property: ‘It won’t help the millions of people in private rented homes…nor the 3 million adult children living with their parents because they can’t afford to rent or buy.’
Wait and see
It would appear then that only time will tell on whether or not the Conservative’s Housing pledges will significantly affect the private rented sector. Changes in both the private and public housing and rental sectors are almost a certainty, but the nature and extent of these remains to be seen. We’ll continue to report on such changes as the newly elected Government begins to put its pledges into practice.
Image courtesy of Shutterstock
All information correct as of 13/05/2015