In one corner, Russell Brand was previously advising young people disillusioned with politics not to vote; in the other, millions of young people are desperately trying to figure out how, or if, they’ll ever get their feet on the property ladder in the current economy without inheritance.
Politics influences everything, including the property market. Labour promises one million new homes and savings of up to £5,000 for first-time buyers, the Liberal Democrats are focusing on improving conditions for renters, and the Conservatives are the clear favourites with landlords.
Every five years, we all have a decision to make. Each party has its own policies regarding the property, although unlike their positions on the political spectrum, these move and change with the times. But to understand what might happen in the future, we can have a look at what’s happened in the past. How do politics and property impact each other?
Welfare reforms
When the Conservatives introduced the Welfare Reform Act 2012, social landlords were forced to put aside significant amounts of cash and resources for when the changes came into effect in April 2013. The total household benefit was capped at £500 a week, and the controversial ‘bedroom tax’ brought under-occupancy penalties for social tenants deemed to have spare bedrooms. David Cameron claimed his government had made “work pay, while protecting the vulnerable”, whilst landlords predicted that the reform would lead to an increase in homelessness and rent arrears.
So what happened? Well, homelessness in London has risen by a staggering 79 per cent since 2010, rising 37 per cent between 2013 and 2014 alone, according to government figures. Homeless charity Crisis says that this is a direct consequence of the welfare reform, as well as a housing shortage, and a failure to consider homeless people a priority. That hardly sounds like ‘protecting the vulnerable’.
Property regulation
Governments enforce legislation – that’s nothing new. But research by the Residential Landlords’ Association shows that landlords have grown increasingly concerned over the rising tide of regulation in the rental market.
Laws to crack down on questionable landlord behaviour were unsurprisingly supported by the majority of landlords, who don’t wish to be painted with the same brush. But there’s a general feeling among the landlord community that three recent issues and the way they are enforced have become a problem – those being tenancy deposit schemes, landlord and property registration, and the management of bad tenants.
According to the research, roughly £7million in deposits are returned to tenants as they have been judged to have been “unreasonably withheld”, whilst overall landlord fees are 40 times greater now than they were in 2007 (£275million annually). Scotland and Wales have introduced registration schemes aimed at improving ‘professionalism’ in the landlord industry, but in England, it’s local authorities who are able to set their own rules in landlord registration.
Landlords are required to be vetted by the local government, whilst some property types have to be registered under specific legislative requirements. Converting existing homes into student accommodation is one such example.
In the 2015 General Election, Labour has vouched to crack down on tax-dodging landlords, whilst the Lib Dems have banned landlords from letting poorly-insulated homes and enforcing retaliatory evictions.
Right to Buy
Introduced in the Housing Act 1980, the Right to Buy scheme entitled tenants to buy their homes at heavily discounted prices and was one of the first major reforms introduced by the Thatcher government. It was a controversial move at the time – forcing local authorities to sell their properties on request at a discount led to multiple strikes – but it was massively popular. By 1985 Labour abandoned its opposition to the policy, and by 1995, 2.1 million properties had been transferred from the public sector.
Throughout the noughties, the market slowed and discounts were cut. In 2015, the maximum Right to Buy discounts available to council house tenants are:
- £102,700 in London
- £77,000 for the rest of England
- £16,000 in Wales
- £24,000 in Northern Ireland
- Right to Buy in Scotland will end on August 1 2016
According to an April 2015 poll by Inside Housing, landlords are currently only able to replace one in five Right to Buy homes. The Conservatives have subsequently pledged to extend the Right to Buy to housing associations if they are successful in the election.
These are just a few ways in which politics and the property market intertwine. Landlords should continue to take a strong interest in the policies presented by the parties, as they’ll have a big impact on their property operations.
