What can property owners expect from the new government?

Following Labour’s victory in the general election, Sir Keir Starmer will be the new Prime Minister.

What does the new government mean for property owners and the rental market?

Read on to find out more about what to expect regarding important topics such as Section 21 evictions, energy efficiency and landlord tax.

New government – ​​what are the most important issues for property owners?

Once the dust settles after the general election, landlords will be watching closely to see how Labour plans to address a range of issues affecting the rental market. These include:

• rising costs – higher mortgage costs and significant tax changes have reduced the profits of many property owners
• rental reforms – Plans to abolish Section 21 evictions were abandoned before the election, but Labour has promised to bring them back
• supply of apartments for rent – the imbalance between supply and demand for rentals has led to unsustainable rent increases for tenants in some parts of the country
• energy efficiency – Plans to raise minimum energy efficiency standards for rented properties were rejected in 2023, but Labour wants to introduce new measures by 2030.

What are Labour’s plans for the rental market?

New Prime Minister Sir Keir Starmer has said the general election is all about “change”. With a strong majority, Labour will now look to deliver on its manifesto promises.

Labour has a number of plans for the private rental sector, as well as proposals for the tax system that could affect landlords.

Here’s what they promise:

• an immediate end to Section 21 evictions without any improvements to the justice system
• to give tenants the power to challenge unjustified rent increases
• ban “bidding wars” between potential tenants for rentals (details on how this will work have not yet been announced)
• introduce a limit on the amount of rent that tenants can pay in advance
• extending the Awaaba law, which requires social housing landlords to address hazardous hazards such as mould, to the private rental market
• introducing new energy efficiency standards for rental properties by 2030 (it is not clear what the new minimum EPC rating will be)
• abolish the requirement to replace gas boilers by 2030

Labour’s tax plan

On tax, Labour has said it does not intend to increase the basic, higher or additional rate of income tax.

Corporation tax will also be capped at its current rate of 25 percent, while VAT and social security rates will remain the same.

As Labour will need to raise funds in other ways, landlords have been warned of the possibility of a rise in capital gains tax rates.

What next for tenancy reform and the end of Section 21?

In May 2023, the Conservative Government published the Tenancies Reform Bill.

The bill, which has been described as the biggest change to tenancy law in a generation, included measures to abolish Section 21 evictions and end fixed-term tenancies.

The Bill was withdrawn before the general election because it had only passed its second reading in the House of Lords and was awaiting committee stage.

Labour has pledged to end Section 21 evictions immediately, so landlords should soon learn more about how the law will work.

What do property owners think about the future?

As part of our 2023 Landlord Report, we asked 1,500 landlords about their biggest concerns and plans for the future.

Two-thirds (66 percent) said that one of their biggest challenges was constantly changing and unclear legal regulations.

Property owners participating in the discussion also highlighted a number of challenges related to government, including:

• lower capital gains tax-free amount (38 percent)
• a reduction in tax relief on interest on mortgages for buy-to-let properties (36 percent)
• rising taxes such as income tax and corporate tax (35 percent)

In addition, 20 percent of respondents said that the Tenants’ Law Reform Act poses the greatest threat to the rental market.

These challenges appear to be having an impact, with 25 percent of property owners saying they plan to sell in 2023 or 2024. However, many planned to wait, and 50 percent said they believed buying to let remained a good investment.

New government elected: key dates property owners should look out for

Following his move to 10 Downing Street, Sir Keir Starmer will appoint his cabinet. On landowner issues, important positions to look out for include:

• Chancellor of the Exchequer
• Secretary of State for Equal Opportunities, Housing and Communities
• Secretary of State for Business and Trade

The House of Commons is due to resume business on 9 July 2024, with the Royal Speech taking place following the beginning of the new session of Parliament on 17 July 2024.

The Royal Speech will be written by the new government and delivered by King Charles III. It will set out key government policies and new legislation for the coming months.

The Labour Party conference is scheduled for 22-25 September and could provide some indication of the government’s key priorities, as well as how Sir Keir Starmer has fared in his first months as prime minister.

Another date to watch is a potential autumn budget in October or November. Labour has previously said it would have one budget a year, rather than alternating spring and autumn budgets and statements.

What are your hopes and concerns about the new government as a landlord for rental apartments? Let us know in the comments below.

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