- 19-12-2019 04:27 PM
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What does the Conservative Party’s election win mean for the property industry?
The Conservatives’ dramatic win in the recent general election, which saw them gain a huge 80 seat majority in the House of Commons, means we will now definitely be leaving the EU and has given a boost to the property market by providing the certainty and clarity that it has long craved.
But what does the Tory win mean for the industry in the coming years?
Below, Under the Hammer analyses the main pledges and proposals that could now be enacted.
Scrapping of section 21
The Queen’s Speech, which sets out the government’s agenda for the coming Parliament, included the axing of section 21 eviction notices. Often known as no-fault evictions, plans have been in place for a while to scrap section 21 and replace it with a beefed-up section 8 to allow landlords to regain possession of their property.
The plans, which weren’t mentioned in Boris Johnson’s previous Queen’s Speech, on October 14, have been heavily criticised by landlords and industry bodies for potentially making it much more difficult for landlords to evict problem tenants or regain possession of their property in a reasonable amount of time if required.
The Residential Landlords Association, for example, has called for an improvement to section 8 grounds and the retention of section 21 until grounds-based possession is fit for purpose, so landlords can have confidence in using this instead of Section 21. The body has also called for wholesale reform of the justice system to speed up matters for landlords and tenants when things go wrong, as well as calling for a specialist, properly funded and properly resourced housing court to be introduced.
ARLA Propertymark, meanwhile, has urged the government to think carefully about reforming section 21, with the trade body warning that supply will fall if changes to section 8 are not made at the same time section 21 is scrapped.
Changes to stamp duty
During his leadership campaign to become leader of the Conservative party in the summer, Johnson talked quite a bit about stamp duty reform – with one trade body even saying it had received his backing for its plans to switch the burden of stamp duty from the buyer to the seller.
He also suggested the possibility of scrapping the tax altogether on properties valued at below £500,000, and reducing the rate payable on homes valued at £1.5 million and over, from 12% to 7%.
Despite this, the only mention of stamp duty in the Tory manifesto related to its plan to bring in a 3% stamp duty surcharge on non-UK resident buyers to help it end ‘the blight of rough sleeping’ by the end of the next Parliament. This surcharge, originally mooted by Theresa May in October 2018 and out for consultation between February and May this year, would be on top of the existing 3% stamp duty surcharge that all buy-to-let and second home owners must pay.
Exactly when this will be introduced is still unclear, and it may take lesser priority than other measures the government is putting forward, such as reforming the homebuying and selling process and reforming leasehold and shared ownership.
Right to Buy continued, Shared Ownership changes and lifetime deposits
Unsurprisingly, as the party which introduced the scheme in the first place, the Tories are committed to continuing Right to Buy for all council tenants, while the government is also set to maintain the voluntary Right to Buy scheme agreed with housing associations – extending the pilot schemes beyond Christmas.
The government has already extended the Help to Buy scheme from 2021 to 2023, and says it will review new ways to support home ownership following its completion.
Its manifesto also committed the government to reforming Shared Ownership, ‘making it fairer and more transparent’ by simplifying shared ownership products and setting a single standard for all housing associations, ‘thereby ending the confusion and disparity between different schemes’. Plans to allow shared ownership homeowners to staircase up in 1% increments at a time may also be introduced.
Further leasehold reform is also likely to be on the agenda, including the implementation of the ban on the sale of new leasehold homes, restricting ground rents to a peppercorn, and providing necessary mechanisms of redress for tenants.
In one of its biggest manifesto pledges, the new government promised to bring in a Better Deal for Renters. As well as abolishing no-fault evictions, tenants would only require one ‘lifetime’ deposit which moves with them. Tenants are set to get greater protection from revenge evictions and rogue landlords, while good landlords will have their rights of possession strengthened.
Many new homes
The government is still committed to its bold plans of building 300,000 homes a year by the mid-2020s, with plans for at least a million more homes, of all tenures, over the next Parliament. The government also says it will make the planning system simpler for the public and small builders, as well as supporting modern methods of construction.
Many have called into question the viability of the government’s housebuilding plans, given that current levels (around 230,000 new homes a year) are well below the ambitious target. To help first-time buyers, the government says it will encourage a new market in long-term, fixed-rate mortgages which reduce the cost of deposits, ‘opening up a secure path to home ownership for first-time buyers in all parts of the UK’.
Changes to the system?
Back in July, a report from the Regulation of Property Agents (ROPA) working group was released, containing a number of recommendations for the government on a new regulatory framework for agents.
The working group was brought together in October 2018 to examine the options for raising standards across the whole property agent sector. In its final report, it recommended having a single, mandatory and legally-enforceable Code of Practice, a system of minimum entry requirements and continuing professional development, and a clearer means of clarifying processes and charges for leaseholders.
Government and the industry were broadly supportive of the measures outlined, but there has been little to no information since on when these measures could be introduced.
Now that the government has a sizeable majority, it will find getting things through Parliament much, much easier and this could mean the recommendations put forward by ROPA becoming legislation before too long.
The government has made a lot of promises on housing, but it will now be expected to stick to many of these pledges.
Here at Under the Hammer, we are a Birmingham-based property auction website with sales from the top estate agencies across the UK. You can use our site to search for all types of properties being sold under the hammer nationwide.