A few days ago, I was fortunate enough to attend the Landlord Investment Show at Olympia, which is going from strength to strength, and take part in a panel discussion. The day was November 5th, and much of the discussion revolved around Brexit and the upcoming general election, as well as the state of the main political parties.
There was, however, an undercurrent of discontent in the audience. Though most people were hoping for an election outcome that puts an end to the Brexit uncertainty and deadlock – without wanting to spoil things, I pointed out that it is 32 years since the Conservatives won a large majority – few had high hopes for an improved post-election environment for landlords.
Iain Duncan Smith, the former Tory leader and a fellow panellist, came in for some flak for the George Osborne reforms, notably the Section 24 changes, but also the Stamp Duty premium. He pointed out that he had personally opposed these changes but that cut little ice. Mr Duncan Smith was no Osborne ally but even backbenchers have to carry the can for things done in their name.
A change of course?
I have noted here before, as I did at the event, that the effects of these reforms are coming home to roost, with many landlords selling up in what they now regard as a hostile environment, and the reduced availability of supply hurting the very people – the private renters – that the reforms were intended to help.
Reduced availability means less choice and a heightened shortage of properties in an already tight market. The effect of this, of course, is to push up rents. And the more you take from landlords in tax, the less the incentive they have for improving their properties.
Could we take any comfort from the fact that since Boris Johnson became Prime Minister, he has reversed many of the things that Mr Osborne did as Chancellor, including austerity? Could we see changes to Section 24 and other Osborne reforms being similarly reversed?
Mr Duncan Smith offered the hope of some landlord-friendly changes, but not a complete reversal of the Osborne reforms. It is unlikely to be a priority in the Tory manifesto, even though the party should be proud of its revival from the private rented sector’s (PRS) low point in the 1990s.
If there is little comfort in prospect from the Tories, very little is in store from Labour. The opposition’s focus is on the provision of more social housing, a lot more of it in fact. It remains to be seen whether the plan floated by John McDonnell, the Shadow Chancellor, to require private landlords to sell to tenants at a discount, actually makes it into the manifesto, or is being held back for Labour.
Failing to hit the spot
One member of the audience, to be fair, said he would not mind selling to a good tenant at a five per cent discount, though it was not my impression that this was the general view of landlords. Those with long memories will recall that, under the original right-to-buy scheme for council house tenants, the discounts were very much larger than five per cent.
In this election, the Tories will emphasise their commitment to increasing owner-occupation, which has been on the wane in recent years, while Labour is committed to what has been described as “the biggest council house building programme in a generation.”
Neither approach from either of the main political parties appears to be hitting the spot among “Generation Rent”, which rightly points out that government targets for private housebuilding are a triumph of hope over experience and social housing, while much-needed, suffers from similar capacity problems.
Neither of the two main political parties has what might be described as a joined-up policy for the PRS. Those who are waiting for one might have a very long time to wait.