Well, with the General Election just over the horizon and having been asked by a number of Tameside homeowners and Tameside buy to let landlords what the different main parties would do to the local property market, in this week’s article I’ll focus on Labour’s contentious Right to Buy proposal for private tenants. Launched in September, the plan was designed to force landlords to sell their buy to let investments to their tenants who wished to buy them; at a substantial discount.
- Right To Buy
- Universal Credit
- Fire Safety Fund
- Department for Housing and the English Sovereign Land Trust
- Council and Social Homes
- Homeownership and Renting
With political campaigning in full swing in the borough to re-shape the nation, I want to take an opportunity to break down the views of each political party and what their manifestos mean for the Tameside property market; as well as its homeowners, renters, landlords and the homeless.
As it currently stands, Tameside’s MPs are all representatives of the Labour party. Each MP has undoubtedly marched into Parliament with strong, vocal points during the current government tenure; some focusing on national matters whilst also focusing on matters particularly impacting the lives of us Tamesiders.
Labour had a comfortable victory across the borough in the last election, but it remains to be seen how the polls turn out in the coming weeks. Of course, this election is more than just Brexit and one has to look at the entire picture. So without further ado, here is my analysis of Labour’s housing portion in their manifesto and how this will impact us as Tamesiders:
Right To Buy
Shadow Chancellor John McDonnell told the FT in September that, under a new Labour government, tenants would be given the Right to Buy their tenanted home with a hefty discount – just like the Tory Right to Buy policy for Council house renters that came into force after the 1979 General Election.
Yet it was not certain who would have been expected to pay for discounts on buy to let homes sold to tenants. Four years ago, Jeremy Corbyn advocated using the £14bn of tax allowances that UK landlords had at the time to pay for these discounts, allowing tenants to buy their tenanted home at the same discount as they would a local authority home without leaving the landlord out of pocket.
However, these tax allowances have been substantially reduced with the changes in the way mortgage interest relief on landlords’ mortgages is calculated, meaning that this method of funding would no longer be feasible. In fact, bankrolling a project at a modest 20% discount for the whole of the UK would cost £177.84bn; a lot more than the £14billion quoted by Mr Corbyn.
This creates threats to the private rental sector and Tameside’s overall stock of private rented homes. John McDonnell seems to have altered his initial thought to permit all private tenants the right to buy from their landlords to apply only to those with more than a couple of buy to let properties. The shift appears to be aimed at pacifying middle England small time landlords who are probably swing voters with smaller property investments and instead, Labour’s focus is on the larger scale buy to let investors.
To target these larger scale landlords (who would unquestionably leave the property market in their hordes if their buy to let investments could be so easily destabilised) there would be mass sell offs before the legislation became law; thus making the tenants homeless. Then the question lingers as to who would house them? Even even if that didn’t happen, it would be very damaging and someone (probably landlords) would have to stump up the £48.54bn national bill.
Universal Credits has been plagued with issues since its introduction under the current government. Not only have costs ascended well above the originally predicted figure, it has also taken far longer than initially anticipated to implement.
Those who are on Universal Credits have aired their thoughts surrounding the schemes across all mediums, particularly when it comes to awaiting overdue payments. Tameside landlords have faced uncertainty when it comes to being paid the rent, whilst Tameside tenants face uncertainty regarding their tenancies in the event of Universal Credits not covering the rental payments.
Ultimately, Labour have pledged to scrap the Universal Credit scheme and immediately cease placing Tamesiders onto the scheme. They have however committed to designing a new system focusing on treating people with dignity and respect.
The aim is to ensure that the ‘digital only’ system is made fully accessible, particularly as it does not lend itself to the more vulnerable and less digital able people in our society. Furthermore, they have also pledged to end the five-week wait by introducing an interim payment based on half an estimated monthly entitlement.
Fire Safety Fund
Each party have actively promised to address issues with fire safety following the tragedy of Grenfell Tower. Labour’s method involves introducing a £1bn ‘Fire Safety Fund’ which will see sprinklers and other fire safety measures rolled out across all high rises, including those in Tameside. This would also include the removal of any flammable cladding, which as I mentioned in the previous article, is not a major concern in Tameside given the lack of high-rise construction.
A mandatory building guidance would also be introduced by Labour, inspected and enforced by fully trained safety officers (something that I already offer to my Tameside landlords, particularly those who own HMOs in the borough).
Department for Housing and the English Sovereign Land Trust.
Labour have pledged to introduce a brand new Department for Housing whilst ensuring Homes England are positioned as a more accountable housing agency. This would allow them to put Tameside Council in the driving seat when it comes to new homes in the borough, rather than high-ranking officials hundreds of miles away who will be unable to truly envision the impact on our borough when it comes to new developments.
When it comes to new developments, Labour have also promised to introduced the English Soverign Land Trust, with powers to buy land across the borough more cheaply for low-cost housing. This public land will be used to build the new housing as opposed to selling it off to the highest bidder. Developers will face new ‘use it or lose it’ taxes on stalled housing developments in the borough under a new Labour government, which will also make brownfield sites the priority for development and protect the green belt. This is crucial, given the current Labour MP’s stances on using our precious green belt space for new developments.
Council and Social Homes
The current surge in new build properties across the borough has focused on introducing three and four bedroom properties into the borough over the £250,000 mark; with very little consideration having been implemented for affordable homes.
Labour have promised at the end of their 5-year tenure in Parliament should they be elected, 150,000
council and social homes are to be built annually. 100,000 of these would built by councils for social rent, whilst a new duty on Tameside council would be introduced for them to plan and build these homes. The funding to do so would be backed from the national government.
As part of this pledge, Labour are seeking to instil Tameside council with the power and funds to buy back homes from private landlords in the borough. In addition to this, they have pledged to ensure tenants a stronger say in the management of their homes and stop social cleansing by making sure
regeneration only goes ahead when it has the consent of residents, and that all residents are offered a new property on the same site and terms.
Homeownership and Renting
There’s no doubting that a main priority for Tamesider’s is a roof over their heads; whether that be through owning their own home or renting one of the many offered by Tameside’s landlords and letting agents. As homeownership has continued to spiral further out of the affordability to many Tamesiders, the borough has seen a sturdy growth in its rental market.
Labour has pledged to ensure new, affordable homes are built to make the dream of homeownership affordable, whilst reforming Help to Buy to focus it on first-time buyers on ordinary incomes. In addition, a levy is set to be implemented on overseas companies buying housing; impacting investors from abroad.
When it comes to the growing rental market, Labour is seemingly set on making it increasingly difficult for landlords and property investors who ultimately provide the Tameside rental market its strength through their supply for the demand. Capping rental figures with inflation, whilst implementing open-ended tenancies are promises by Labour alongside the introduction of a nationwide licensing scheme. This scheme would be welcomed in imposing stricter rules on landlords who flout the rules, but would also make it more difficult for compliant and well-meaning landlords to stand on sturdy ground in the sector.
A new renters union would be funded and developed under a Labour government, giving tenants the rights to organise and defend their rights against landlords. Furthermore, a Labour government have vowed to crack down on the important checks that landlords carry out prior to tenancies, removing a component of security and opening the doors wider to arrears-amassing tenants.
Whilst there are no doubts that Brexit has a dominating factor over this election, I would like to take this opportunity to encourage all Tamesiders (and those of you outside the borough who remain interested in our property market) to think as openly as possible when it comes to putting that X on paper next month. There are so many more considerations to take outside of our EU position, with housing being a huge element of that. As our population continues to soar on a borough basis year-on-year, both concerns with homeownership and also the private rental sector need to be met by whoever finds themselves in Downing Street on Friday 13th December.
As always I’d love to know your thoughts, and if you have any concerns with regards to investing in Tameside based on the current political climate, give me a call on 07709 505442 and allow me to demonstrate the effective returns Tameside’s property market can have for you.