Election special: Politics and property
By Will Leyland, 23 May 2017
As we hurtle towards the General Election on the 8th June 2017, all three of the main parties have published their manifestos in the hope of persuading voters that they are most worthy of their vote. The Conservatives, under Theresa May, are widely expected to record a victory in the election and form the next government, though Jeremy Corbyn’s Labour, sitting on its most left wing platform for decades, is giving May’s ruling party a run for their money. Without a snowball in a volcano’s chance of winning a majority is the Liberal Democrat Party under Tim Farron, which is hoping to register a much stronger vote share than their 2015 collapse.
All three parties have released interesting and varied manifestos tackling issues such as social care, crime and justice and, of course, Brexit - but for the purposes of this article we’ll be concentrating on each party’s plans for housing and property.
One of the biggest surprises from the Conservative was with regards to social care and how the government plans to make people pay for it. With a perceived crisis across the country in elderly care it’s not surprising that something has been planned to tackle it, but what was surprising was the method. These include, according to the BBC:
· Scrap a planned £72,000 cap on care costs, which had been due in 2020
· People with assets of more than £100,000 would have to pay for their care - but could defer payment until after their death
· However, the value of an elderly person’s property will now be included in the means test for care in their own home, meaning more people will be liable to contribute to the cost of being looked after.
Because the value of your home now counts towards how much you have to contribute towards the cost of your own care, property values are now going to be firmly in the spotlight. This could, for example, mean that older homeowners may either downsize their properties, pass them on to the children now, or simply sell up and rent.
As described by Nick Triggle of the BBC, the Conservative manifesto argues the plans are more generous because they raise the threshold your assets have to deplete to before you get council help from £23,250 to £100,000.
That means no matter how much your care costs, you are guaranteed to be left with that amount.
However, if you look at it the other way round, the changes seem less helpful.
75% of people over the age of 65 are homeowners and the average value of a property in England is £233,000. You don’t need to be a maths genius to see that means plenty of people will become liable for more of their care costs.
Aside from this announcement though, other plans for housing include:
· Meet 2015 commitment to deliver a million homes by the end of 2020 and half a million more by the end of 2022
· Build better houses to match the quality of previous generations
· Support for high-quality, high-density housing like mansion blocks, mews houses and terraced streets
· 160,000 houses built on government land
Essentially then: build, build, build! More houses to be constructed to accommodate first time buyers who have so far had a pretty rough time of it. What does this mean for landlords? Areas such as city centres and suburban spreads shouldn’t see a significant impact and, whilst the Conservatives have made these promises, there is zero evidence that they’ll meet their own targets based on the last seven years performance.
Onto the opposition then, what are they offering on housing and property? Jeremy Corbyn has had a pretty rough ride dodging bullets from the media recently, fairly or unfairly depending on your political persuasion, but what is he offering?
· Reinstate housing benefit for under-21s
· Build over one million more homes, with at least half for social rent
· Homeowners to be offered interest free loans to improve their properties
· Guarantee Help to Buy funding until 2027 and give locals buying their first home “first dibs on new homes built in their area”
· Legislate to ban letting agency fees for tenants, and look at giving the Mayor of London power to give London renters “additional security”
Re-instating housing benefit to under 21s could be a big benefit to landlords who enjoy the security and reliability of tenants receiving housing payments. Those under the age of 21 are proportionally much more likely to rent homes and even a marginal amount of help from the government could see demand rise sharply for young people keen to strike out on their own.
As with the Conservatives, house building should largely leave landlords unaffected in the areas where most own their buy-to-let properties. Help for young people to buy their first homes is a positive move socially and shouldn’t mean any significant drop in demand for rental property as prices aren’t set to slow anytime soon and we aren’t likely to suddenly see a spike in young people able to put together a £25k deposit.
Letting agent fees is a mixed bag in truth, as all the major parties have pledged to take action on it. Already announced by the Chancellor, it’s not an original or radical policy and many agents and landlords already have plans in place to compensate for this.
Tim Farron’s Liberal Democrats are hoping for a resurgence in the polls aided by anger over the Brexit vote. They’re hoping that by being the only party pledging a second referendum over membership of the European Union they can persuade Remain voters to switch to their corner in hopes of rescuing our EU membership. Sadly for Farron, the polls suggest that there simply aren’t the numbers to affect this in a significant way. Here are their key policies:
· Second EU referendum on Brexit deal
· Build 300,000 homes a year by 2022, including half a million affordable and energy-efficient homes
· £5bn of initial capital for a new British Housing and Infrastructure Development Bank
· Ensure at least four million homes are made highly energy efficient (Band C) by 2022, with priority given to fuel-poor households
· Enable local authorities to levy up to 200% council tax on second homes and ‘buy to leave empty’ investments from overseas
· Enforce housebuilding on unwanted public sector land
· Penalise excessive land-banking when builders with planning permission have failed to build after three years.
The Lib Dem’s housing policy seems to be, on paper, the most radical with a real focus on new house building. So far things have been going relatively well for business and property so appetite from those sectors for a re-run of the referendum is likely to be low, but should the negotiations go badly then there may well be a pro-EU uprising - but it seems unlikely at this stage.
Plans to make homes energy efficient should be seen positively as government incentives should be put forward for landlords to make their properties energy efficient, making the initial outlay low and the long term benefits relatively high.
Housebuilding should be a good one depending how you see it. Because the majority of landlords work mainly on rental yields rather than property prices, it could be seen as positive that more property is built in an area that could theoretically increase house prices whilst increasing demand for a desirable area.
All in all, most of the parties seem to have offered very little for landlords and those involved in property, but when read in-between the lines there is plenty for them to be positive about.
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