Surcharge on foreign-based property buyers proposed by Theresa May, while opposition backs renters’ unions and a second home levy
Party conference season sees MPs up sticks to – in the cases of the Labour and Conservative parties – Liverpool and Bournemouth for a few days. Because a handful of announcements that could well become government policy before long can sometimes be found amid the usual sloganeering, Mortgage Strategy tuned in to some of the main events to see what the two parties had planned for housing.
In a fiery speech that promised “radical change” for the housing market, shadow secretary of state for housing John Healey spoke of a Labour government introducing controlled rents, an end to no-fault evictions, and “a stop to the tyranny of rogue landlords”.
He also expressed a hope of forming government-funded renters’ unions that would allow renters “who feel helpless in the face of a housing crisis [to] organise and defend their rights”.
A levy on second homes used as holiday homes “to give homeless families the chance of their first home” was also mooted, but perhaps more intriguingly, halfway through his speech, Healey mentioned “living rent homes”, where rents would be set at a third of average local incomes, and “new low-cost homes to buy”, this time with mortgage costs set at a third of average local incomes. However, no further details on these ideas were given.
While the National Landlords Association says that it “welcomes plans for the introduction of renters’ unions”, chief executive Richard Lambert was more critical of other points. “Government intervention through rent controls would be counter-productive to encouraging supply at a time when it is so badly needed,” he says.
“The proposals don’t address the real reason that the section 21 no-fault possession process is used so much, which is that the courts are so overloaded that the preferred section 8 procedure, citing grounds for ending the tenancy, has become uncertain, time consuming and expensive,” he concludes.
North London estate agent Jeremy Leaf says: “We all want to see rents kept in check but they are much more likely to be so if supply is increased, and particularly if small landlords are encouraged not just to buy more properties to let out but retain the ones they have already got.
“In theory, landlords shouldn’t be able to evict tenants without reason, but on the other hand, obtaining possession when perhaps tenants are in considerable arrears with their rent or abusing the property, or guilty of antisocial behaviour, takes far too long so some sort of help on that side at the same time would be welcome.”
A week later, it was the Tories’ turn. Prime Minister Theresa May started things off by announcing on the Andrew Marr Show that her government would be adding a surcharge of between 1 and 3 per cent on foreign property buyers and, in her big speech a few days later, revealed plans to scrap the cap on how much councils can borrow against their housing revenue account assets. This will allow councils to borrow billions of pounds.
On the surcharge, Leaf is unsure on the timing. He comments: “Sales are substantially lower since the Brexit vote, which is bad for the housing market but even worse for the economy, bearing in mind the number of associated companies and trades affected.”
On the same day that May was on the Andrew Marr Show, housing and communities secretary James Brokenshire detailed plans to harness land and vacant buildings, and to reform the planning system to allow for higher-density buildings – all with an eye on reaching the government target of building 300,000 new homes a year. He also announced the introduction of a new homes ombudsman.
Praise for the plan to remove the borrowing cap came quickly. Building Societies Association chief executive Robin Fieth says: “We have heard lots of warm words from government about tackling the need for truly affordable homes. It is great that they are now taking action that will make a tangible difference in boosting the supply of much-needed local authority housing.”
Leaf says he “would like to see this proposal introduced more swiftly and with a register of publicly owned land where affordable homes will be offered at sub-market prices for sale and to rent in perpetuity”, citing past local authority housing as being expensive and poor quality as a worry.
Coreco director Andrew Montlake adds: “With the housing market in the state that it’s in, all ideas are on the table, and it would be nice to see some cross-party support for a long-term plan.”