If
any private residential landlords were hanging on
for a Conservative-led government to radically overhaul
housing policy and ignite a bonfire of red tape, they
will have realised by now that they’re going
to be disappointed. Several months into this new government
have shown that whilst a coalition government is a
novelty, it isn’t necessarily radical or fast-moving.
Economic matters, and a zeal for cuts and austerity,
have dominated the headlines.
The
coalition government’s housing policy has become
slightly more clear in recent weeks. In the emergency
budget two key announcements were made of specific
relevance. The first was the increase to Capital Gains
Tax But more significant were the changes to Housing
Benefit and Local Housing Allowance which will have
a massive impact even on landlords who don’t
let to social tenants.
It’s
a mixed picture for private landlords, but the man
to watch isn’t the Housing Minister Grant Shapps.
We’re more interested in the Chancellor of the
Exchequer George Osborne. It’s the economy.
We’ll be glued to the Chancellor’s spending
review in October, there may be trouble ahead.
Housing
Benefit
Whilst there can be no doubt that the Housing Benefit
bill can’t keep rising as it has in recent years,
but it’s interesting that the proposed changes
will not save a great deal of money (9% saving in
2015-2016 on current levels). But even this small
decrease will have a massive effect on landlords.
In particular, it’s a crude approach to a complex
problem. By applying the same measure nationwide we
think that the changes will acutely affect the number
of private lets to benefits claimants in London and
the South East.
James
Davis, CEO of Upad, is himself a landlord with several
properties in London with tenants claiming housing
benefit. He’s going to stop taking social tenants.
“I’m a businessman,” he says, “and
I let to tenants on housing benefit because it makes
good business sense. But the changes to Housing Benefit
and Local Housing Allowance have made me reassess
that decision. It doesn’t make sense for me
to let perfectly good properties to tenants on what
is a lower than commercial rent. I’ll be seeking
tenants who are funding their own rents in future.
It would be business madness to do otherwise.”
With
an influx of Housing Benefit landlords coming into
the private rentals market, it’s likely that
there will be an impact on rent levels. Other policy
announcements made since the general election will
also have a serious impact on private landlords. The
rent threshold for which properties must be held under
an Assured Short term Tenancy will be raised on the
1st October 2010 from £25,000 to £100,000.
That means that all tenants will automatically be
granted all the rights AST affords them and deposits
will also need to be held in a deposit protection
scheme. There is also some confusion on whether this
legislation it retrospective and applicable to existing
tenants. It’s a move that has been bitterly
opposed by landlords.
And don’t forget that Prime Minister Cameron
has also indicated that he expects the private rental
sector to take the strain for social housing. A few
weeks back he said that he thought council housing
shouldn’t be for life and that that tenure should
end when council tenants could afford their own homes.
This hasn’t been announced as official policy
but is an interesting indicator of how the PM is thinking.
