How might you as a Landlord be affected by the General Election?

23 May

How might you as a Landlord be affected by the General Election?

Posted by
markpollard@vantagelaw.co.uk
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On 8 June 2017 the electorate will be hauled back to the polling stations to vote on who they want to run the country for the next 5 years (or until someone else calls an emergency election!).

 

Brexit may be the main focus and cause for this latest democratic process but each of the political parties have produced manifestos which extend far beyond this single issue and we thought it might be helpful to highlight the more relevant sections that apply to our Landlord clients to help you make a more enlightened decision come 8 June:


 

  • Promised to look at how security for good tenants is increased and how landlords can be encouraged to offer longer tenancies as standard.
  • Renewed commitment to banning letting fees for tenants.
  • Equalities law will be strengthened so that private landlords who deny people a service on the basis of ethnicity, religion or gender are properly investigated and prosecuted.
  • Commitment to upgrading all fuel poor homes to EPC band C by 2030.
  • A fair debt policy – creating a “Breathing Space” for those in serious problem debt, allowing them to apply for legal protection from further interest, charges and enforcement action for a period of up to six weeks.

 

Estate Planning

  • There is no indication that a renewed Conservative Government will relent on the recent tax changes to landlords brought in this April;
  • Corporation tax will be reduced to 17% by 2020 as planned.
  • The threshold for higher rate income tax will be pushed up to £50,000 by 2020 as planned.

 

  • “Improve” upon existing energy efficiency regulations which will already prohibit landlords granting a new or renewed tenancy for properties below an EPC rating of E from April 2018.
  • Seek to make three-year tenancies “the norm”, with an inflation cap on rent rises.
  • The Mayor of London will be granted extra powers to give London renters additional security.
  • Will legislate to ban letting agency fees for tenants.
  • Will “empower tenants” by giving renters new consumer rights:
    • Minimum standards – A new legal minimum standard to ensure properties are ‘fit for human habitation.
    • Empower tenants to take action if their rented homes are sub-standard.

Estate Planning

  • There is no indication that they will alter the recent tax changes to landlords brought in this April;
  • Conservative plans to reduce corporation tax to 17% by 2020 will be scrapped, and instead will be raised as follows:
    • To 21% from 2018-19,
    • To 24% from 2019-20, and
    • To 26% from 2020-2021
  • The lower small-business rate of corporation tax (below £300,000) will be reintroduced and raised as follows:
    • To 20% from 2018-19, and
    • To 21% from 2020-21.
  • Exclude small businesses (turnover under £85,000) from the Government’s Making Tax Digital scheme, which will mandate digital quarterly reporting.
  • Reintroduce the Landlords Energy Saving Allowance (LESA) to incentivise landlords to make energy efficiency improvements in their properties by offsetting the cost against income tax (up to a certain, as yet undefined amount)

 

  • Introduce a new Rent to Own model where rent payments give tenants an increasing stake in the property, owning it outright after 30 years.
  • Ban lettings fees for tenants, capping upfront deposits and increasing minimum standards in rented homes. 
  • Establish a new Help to Rent scheme to provide government-backed tenancy deposit loans for all first-time renters under 30.
  • Give tenants first refusal to buy the home they are renting from a landlord who decides to sell during the tenancy at the market rate according to an independent valuation.
  • Promote longer tenancies of three years or more with an inflation-linked annual rent increase built in, to give tenants security and limit rent hikes.
  • Improve protections against rogue landlords through mandatory licensing and allow access for tenants to the database of rogue landlords and property agents.
  • Pass a new Green Buildings Act to set new energy-efficiency targets, including a long-term ambition for every home in England to reach at least an energy rating of Band C by 2035.
  • Ensure that at least four million homes are made highly energy efficient (Band C) by 2022, with priority given to fuel-poor households.

 Estate Planning

  • There is no indication that they will alter the recent tax changes to landlords brought in this April;
  • Reverse a number of the Conservatives’ tax cuts, including:
  • –  The cutting of Corporation Tax from 20% to 17%.
  • –  Capital Gains Tax cuts.
  • –  Capital Gains Tax extended relief. 
  • “Reform” dividend tax relief (although does not go into detail on how it will be reformed).
  • “Reform” Corporation Tax, shifting it away from a profits-based tax to one that takes account of a wider range of economic activity indicators, such as sales and turnover.
  • Consider the implementation of Land Value Taxation.

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