NRLA CEO Ben Beadle on what a new leader could mean for the sector.
Liz Truss and Rishi Sunak continue their battle to win the hearts and minds of the Conservative Party members in the fight for Number 10, but what would a win mean for housing in general and the private rented sector in particular?
Neither candidate has specifically addressed the PRS in their campaigns to date and the message on the ground, during the ministerial meetings I have attended has been ‘business as usual’.
Consultation on the Government’s White Paper ‘A Fairer Private Rented Sector’ continues at pace and, with rental reform a Conservative manifesto promise, while there could be delays, the suggestion is that changes will still happen.
What would a Sunak win mean for housing?
At a recent hustings event he stressed the importance of homeownership, a longstanding Tory commitment saying: ‘We’re all Conservatives…we believe in homeownership.’
The focus of this comment seemed to be encouraging people from social housing to buy their own homes, as he went on to say: “We also have a very big social housing budget that the Government supports.
“One of the things Robert Jenrick [former Housing Secretary] did very well was start to shift that budget in the direction of ownership.
“That’s a philosophical difference we have with the Labour Party because we believe in supporting homeownership, not just keeping people in rented social accommodation.
“Lots of people don’t like that but we need to make sure we stick up for that because ownership is something that as a value is really important to us as a party.”
Whether this will mean policy decisions that discourage investment in the PRS is unclear, but it is a concern.
Sunak also wants a renewed focus on developing brownfield sites and stopping the practice of land banking, where developers buy up land and wait for it to go up in value before they build on it.
Of course it is not just housing policy that will have an impact. Tax changes have had a huge impact on landlords and, by default, tenants, with the effects of George Osbourne’s changes to stamp duty and mortgage interest relief still being felt keenly today.
Sunak has not called for immediate tax cuts, arguing that it would drive inflation up and that they could not be afforded at the current time.
As Chancellor he announced in March that the basic rate of income tax would be cut from 20 to 19 pence in the pound before the end of the current Parliament, in 2024. A source in his leadership campaign has said it’s unlikely that this date would be brought forward.
He has also made a big play of the need to improve the energy efficiency of the housing stock. He has hinted that he will prioritise insulation for low-income households over new technologies such as heat pumps.
What would a Truss win mean for housing?
Liz Truss has gone on record expressing ‘worry’ that people are getting older and older before they can afford their first home, arguing this is a problem for the country and an electoral problem for the Conservatives.
However, like Sunak she hasn’t elaborated on how she would attempt to tackle this issue.
She has called for the development of low regulation planning zones: new investment zones around key parts of the UK with much clearer planning rules so people can get on with building straight away to generate those jobs and opportunities.
She has also pledged to “abolish the top down Whitehall-inspired Stalinist housing targets”, telling the Sunday Telegraph she would replace centralised targets with tax cuts and reduce red tape.
Tax cuts are central to her campaign, and she wants to scrap the rise to National Insurance, a planned rise in corporation tax and would temporarily scrap green levies on energy bills to be paid for through borrowing.
Her favoured economist, Patrick Minford however, has said that interest rates will have to rise as high as 7% to allow tax cuts, something that would have a huge impact on landlords with interest only mortgages.
What is the NRLA doing?
The NRLA has written to the campaigns teams of the two leadership candidates, stressing that the next Prime Minister must address the supply crisis in the private rented sector if homeownership ambitions are to become a reality.
Data shows 23 per cent are going to sell off homes in the next 12 months. This is forcing up rents in the midst of a cost-of-living crisis and has seen waiting lists for council houses grow. Increased rents mean it will take tenants much longer to save for a deposit for a home of their own, something both candidates have flagged as an issue.
In our briefing we have stressed this is a direct result of the restrictions on mortgage interest relief for landlords and the stamp duty levy on additional homes.
Since this began to be implemented in 2017 the number of private rented homes in England has fallen by over a quarter of a million and we are calling on whichever candidate is ultimately successful to end this hostility to landlords and take steps to encourage investment to meet the rising demand.
Removing the stamp duty levy alone would see almost 900,000 new private rented homes made available across the UK over the next ten years. This would lead to a £10 billion boost to government revenue through increased tax receipts according to Capital Economics
A change of administration is the perfect chance for a new start, a change of attitude from the top down, recognising the value of private landlords in providing vital homes to let and generating much needed income for the Treasury. We will continue to lobby on these issues and question candidates on their housing policies ahead of the vote, closing on September 2.