What does the Conservatives election win mean for landlords?

Housing was a huge policy debate during the election and the private rented sector was no exception. 

Both major parties put forward proposals to shake up the sector and though landlords may be breathing a collective sigh of relief that they’ve been spared the prospect of Labour rent controls, many will still be braced for change in the face of the renewed Tory government. 

We’ve rounded up all the buy-to-let promises the Conservative party made during the campaign, as well as all the existing policies which are now set to be implemented next year. 

The Conservatives plan to scrap no fault evictions and introduce a lifetime deposit system 

What have the Tories promised?

Existing plans to abolish ‘no fault’ evictions by scrapping Section 21 of the Housing Act were reiterated in the Conservative manifesto. 

In England and Wales, landlords must currently serve tenants with the a Section 21 notice to repossess a property. 

They don’t need to give a reason for doing so, as long as they give the tenant two months’ notice. 

The Conservatives are looking to abolish this, which means landlords will instead have to serve what is known as a Section 8 notice if they want to evict tenants. 

Section 8 notices work in a similar way except that they can only be served under specific conditions, such as where the tenant has breached the tenancy. 

The Government has suggested that it may make Section 8 notices more robust by adding extra conditions under which they can be used, so as to not leave landlords without the power to evict tenants.  

There are also plans to encourage a ‘lifetime deposit’ system. 

This would replace the current system, which sees many tenants having to raise a deposit twice when moving. 

Currently one deposit is usually tied up in the property a tenant is leaving, leaving them with no other option but to raise a second one to secure a new home.  

The Conservative lifetime deposit suggestion would instead see one deposit transfer from tenancy to tenancy – though the Tory manifesto was light on the details of how this would actually work in practice. 

There is also a raft of reforms due to be implemented next year which landlords can now safely assume will be going ahead.

Energy efficiency rules that came in last year will be extended to all existing tenancies from April next year. 

Properties with an EPC rating of F or G will not be able to be rented out from that date onwards. 

Next year will also see the completion of George Osborne’s 2015 tax changes. 

From 2020, landlords will no longer be able to claim any tax relief on mortgage interest payments. 

Instead, they’ll receive a 20 per cent tax credit on their interest payments.

Private Residence Relief will also be changed, affecting ‘casual’ landlords. 

Currently, homeowners who previously lived in a property but went on to let it out can claim capital gains tax relief on property sales for up to 18 months after they move out. 

From April next year this will be reduced to nine months. 

The tax grab is expected to raise £470million for the Treasury over five years. 

David Smith from trade body the Residential Landlords Association said: ‘On the pledge by the Conservatives to end so called “no fault” repossessions, we agree that the system needs to be reformed, but this needs to be done properly.

‘Whilst any new system should protect tenants from the minority of landlords who abuse the current rights, it is important that good landlords can be confident that in circumstances such as tenant rent arrears or anti-social behaviour they can swiftly and easily regain possession of their property.

‘We want to see comprehensive reform that works for both landlords and tenants. 

‘This should include setting up a dedicated housing court offering easy and inexpensive access to justice for both tenants and landlords.’ 

Private Residence Relief changes will raise £470million for the Treasury over five years

Private Residence Relief changes will raise £470million for the Treasury over five years

What have landlords missed out on?

Labour had promised the electorate a slew of policies which would see a massive expansion of tenants’ rights, including open-ended tenancies, government funded renters’ unions, and the abolition of current rules which require landlords to check people’s immigration status or allow them to exclude people on housing benefit.

On top of that, the party pledged to introduce a cap on rent rises in line with inflation while giving cities the powers to cap them further, as well as introduce a new minimum standards for rented properties, enforced through a nationwide licensing scheme.

It would have also pulled capital gains tax rates in line with income tax while scrapping the current £12,000 capital gains tax-free allowance.

This is Money analysis found that this would lead to some landlords paying up to 50 per cent more when they sell up

However, a rate-of-return allowance buried in the manifesto’s small print could have also potentially slashed the capital gains tax bills of long-term landlords by tens of thousands of pounds.

David Smith added: ‘We look forward to working constructively with the Government as it develops its plans for the private rented sector.  

‘The election should also be seen as an outright rejection of Labour’s plans for rent controls. 

‘They would have undermined investment in the sector, choked off supply and made it more difficult for tenants to find the good quality homes to rent they need.’ 

How have tenants reacted? 

Tenant groups were broadly positive following the Conservative win, mainly due to the Tories’ pledge to ban no-fault evictions.  

Dan Wilson Craw, director of campaign group Generation Rent, said: ‘The Conservatives re-enter government with a manifesto commitment to abolish no-fault evictions. 

‘This is the key to giving renters security in their homes and preventing homelessness, and with cross-party support this should be at the top of the government’s agenda. 

‘But to get it right, the government’s reforms must protect tenants whose landlord needs to sell, and prevent unscrupulous landlords from using rent rises to bully their tenants.’ 


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