Liz Truss, MP for Southwest Norfolk
After a late surge in the voting amongst Conservative MPs, Liz Truss saw off Penny Mordaunt to reach the final two. Now Truss, with more experienced than Sunak, has won 57% of the votes in the leadership race to secure her place as our new Prime Minister.
Some of her biggest pledges include:
- £30 billion of tax cuts, including tax breaks for cohabiting couples
- a reversal of the planned rise in corporation tax
- a review of the Bank of England’s mandate
- getting rid of “top-down Stalinist housing targets”
How could landlords be affected?
Liz Truss is promising the “biggest change in economic policy for 30 years” through cutting taxes and simplifying regulations. Her pledge to reverse the planned rise in corporation tax (with hints she may even reduce the current rate of 19 per cent) could provide a boost for limited company landlords. Meanwhile, her stance on simplifying regulations could lead to a slowing down of the regulation of the rental market. For example, some of the proposals in the Fairer Renting White Paper could be watered down or scrapped altogether. With little detail on how Truss plans to review the Bank of England’s mandate, it’s hard to predict how landlords could be affected. However, a change to how the Bank of England works could see interest rates rise or fall, which could affect landlords’ buy-to-let mortgage repayments
Three key landlord issues for the new prime minister
Our Prime Minister will have plenty of housing issues to deal with, from the construction of new homes to cladding regulations, but what will they need to consider when it comes to the rental market?
1. Rental reforms
The government recently published its long-awaited white paper on rental reforms. It’s pledged to remove Section 21 evictions, encourage pet ownership in rental properties, introduce a rental sector ombudsman, and more.
What will happen to the Renters’ Reform Bill with a new prime minister and a reshuffle at the Department of Levelling Up, Housing and Communities?
It seems unlikely that the bill will be completely scrapped as the white paper has already been published.
However, depending on who gets the top job, some of the measures may be watered down to favour landlords.
2. Short-term lets regulation
A joint review of short-term holiday lets was launched by the Department for Digital, Culture, Media & Sport and the Department for Levelling Up, Housing and Communities at the end of June.
It aims to find out whether spot checks of short-term rentals, as well as a ‘kitemark’ registration scheme, would improve the quality of accommodation and compliance with health and safety rules.
Many believe that short-term lets are putting pressure on traditional housing stock, while the National Residential Landlords Association (NRLA) argues that those providing holiday lets can still benefit from the tax relief that long-term landlords can no longer claim.
The government’s consultation is due to close on 21 September, just a few weeks after the new prime minister is announced. Traditional landlords, plus residents in holiday let hotspots, will be hoping they take the opportunity to tighten regulation of this part of the market.
3. Energy efficiency rules
In recent years, the government has had plans to increase the minimum Energy Performance Certificate (EPC) rating in rental properties from E to C.
No formal plans have been published, but it’s thought the extension would apply to new tenancies from 2025 and all existing tenancies by 2028.
Our research found that if these changes were to be introduced, 55 per cent of landlords would need to make improvements to their rental properties. These costs would come at an estimated cost of over £5,000 for 46 per cent of those we surveyed.
The new prime minister will need to weigh up the environmental and financial advantages of increasing the minimum EPC rating against the potential loss of housing from the market if landlords struggle to meet the criteria.
What do landlords want?
The next prime minister is being urged by the NRLA (National Residential Landlords Association) to encourage investment in the rental sector to meet the growing demand from tenants. They argue that cutting the supply of rental houses over the past six years has done little to encourage new home ownership. Instead, rents have increased due to a limited supply and strong demand, thereby preventing tenants from saving money for a mortgage deposit.
There’s no denying that we’re set for an unpredictable few month – and of course, no market responds well to uncertainty. However, the past two years have shown us that UK property is incredibly resilient, evident through its ability to resist the adversity of Brexit, COVID-19 and now rising inflation/interest rates.
Within the first week of office, Liz Truss has vowed to announce new financial help with a package to tackle the rising cost of living crisis, but regardless of her first act, it is evident that rental reform is on the horizon.
