What does Boris Johnson have in store for landlords?
August 2, 2019
Landlords are mostly quietly optimistic that he will prove to be an ally and perhaps even reverse some of the damaging policies and legislation of the Conservative party that has been introduced over the past 5 years.
Newly appointed Housing Secretary, Robert Jenrick was keen to push housing up the agenda, despite the challenges of delivering Brexit. He stated: “Housing delivery is one of the big priorities of this administration. We are going to be straining every sinew to increase the number of homes that are being delivered and getting more young people and families onto the housing ladder. I certainly intend to do everything I can to elevate this agenda and move it forward at pace in the weeks and months ahead.” Meanwhile, former TV presenter Esther McVey becomes Housing Minister.
Prior to his election, it was clear that Boris had stamp duty on his mind and it seems that this is an issue he will take action on. He has proposed a plan to reform stamp duty yet again. Reports suggest that Johnson plans to drastically raise the threshold for paying stamp duty from its current level of £125,000 to £500,000 at the same time as lowering the top rate from 12% to 7%. This should assist in stimulating the housing market, which is currently in the doldrums due to Brexit and economic uncertainty. Another proposed policy which could have a positive impact is if Boris raises the higher rate tax payer threshold. He has mooted raising the 40p threshold from £50,000 to £80,000.
Prior to becoming Prime Minister, Boris made the case for the cut in The Telegraph, saying, “We should be raising thresholds of income tax – so that we help the huge numbers that have been captured in the higher rate by fiscal drag.” It will certainly assist landlords, especially those who have been pushed into the higher rate tax bracket due to Section 24.
On that topic, Lord Howard Flight, a supporter of the private rented sector and also of the Axe The Tenant Tax Campaign against Section 24, has taken to “Conservative Home” magazine to give the new Chancellor, Sajid Javid, some advice. He is against the huge increase in stamp duty on residential properties in the London area and particularly more expensive properties. “As a result, the market has virtually dried up”. Lord Flight writes : “Stamp duty revenues have been much less than forecast. The professed objective was to make available more houses for the owner occupier market by reducing the buy-to-let market’s attractions for investors by installing higher taxation and higher stamp duty on buy-to-let. The relevant Treasury officials seem to have missed the point that the buy-to-let market and the owner occupier market are very much two separated markets; the relative pieces of property sit in one or the other market and rarely move from one to the other”. Read the full article here .
Industry stakeholders have reacted positively to Johnson’s appointment. Nick Leeming, Chairman of Jackson-Stops, says: “The announcement from the Conservative Party should inject some stability and confidence back into the property market over the coming months. “Although clarity is urgently needed on Brexit, our new Prime Minister Boris Johnson must also see the property market as one of his top priorities. Prohibitive stamp duty charges have long been a challenge for those on all rungs of the property ladder, and so both buyers and sellers will now be eagerly awaiting confirmation from him and his party on how he decides to address this. “Should Boris decide only to switch stamp duty liabilities from the house buyer to the seller this will do little to improve the overall market. “Buyers will look at the combined cost of a property purchase before deciding how much they should bid for it.”
Russell Gould, CEO of Vesta, commented:
“The UK housing market is in a very tough place right now. Whilst the obvious impact of indecision around the Brexit position is far from helpful, the anti-landlord approach around tax and stamp duty, in an attempt to fuel home-ownership has clearly backfired and has exasperated the already weak housing market. All corrections that Boris Johnson and his new team implement, like lowering stamp duty, will have a positive impact on both the home owner and landlords, will play a massive part in helping to kick-start the housing market, deliver more new homes and stimulate much needed investment in UK property.”
Boris has already announced some intentions concerning infrastructure, which is always a topic of interest to landlords and property investors. He has promised a faster rail route between Leeds and Manchester, claiming the benefits would be "colossal". In a speech in Manchester he gave his backing to the trans-Pennine transport link to "turbo-charge the economy” as “mass transport systems enabled people to prosper”.
Boris obviously has his hands full with organising Brexit, but the issue of stamp duty should be addressed as a matter of some urgency, as many people will hold off property transactions while waiting to hear what his policy is going to be. Overall for the property sector, Boris should be a positive compared with the last two Prime Ministers. In his inaugural speech, he stated that he wants to “"energise" the country and unite our amazing country to move forward into a new era”.
Hopefully private sector landlords will be supported and regarded as part of the solution to the housing crisis, being encouraged to invest further, rather than being sacrificed in favour of home owners and tenants, which has been the general direction of travel of Conservative policies in recent times. Only time will tell and there is a lot to play for.