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TODAY'S OTHER NEWS

How will the election result impact landlords and tenants?

Although the recent election was indisputably dominated by the Brexit question, the fact is that there’s far more to managing the UK than “just getting Brexit done”.

The Conservatives will have to manage the UK’s economy in general and will need to decide their preferred direction of travel for the housing market.

As such, the last election could have a major impact for both landlords and tenants. Here are a few key points which emerge from it.

Brexit is now, effectively, a certainty

One point on which everyone can probably agree is that whatever form Brexit ultimately takes, simply having clarity on what to expect has to be an improvement on the uncertainty which has dragged on the UK over the last two-and-a-half years.

People will finally be able to make informed decisions on what the future is likely to hold for them and what, if anything, they want to do about it.

This could potentially bring a lot of buyers onto the market, which might be bad news for landlords (although it could be good news for property investors who wish to reduce the size of their property portfolio).

That said, it may well be that buyers will only start to trickle back into the market and will wait until the end of the transition period (i.e. the end of 2020) before deciding whether or not to make the major commitment of a property purchase.

As a minimum, landlords can probably expect renters to let leases run their course and if they are happy they may choose to stay a bit longer even if they could afford to buy, in order to give themselves maximum flexibility.

Given the fact that spring and autumn tend to be the busiest periods in the housing market, this could mean that it will be autumn 2021 before residential buyers really start to come out of their Brexit-induced hibernation, although investment buyers, bargain-hunters and other “early birds” will probably be busy long before then.

Residential landlords are likely to get some breathing space

One of the Labour party’s more infamous suggestions was to force private landlords to sell off their properties to their tenants.

The issues with this suggestion have been widely detailed and it’s entirely possible the idea was just thrown out there to see what sort of reaction it received so that the Labour party could develop more workable policies, but it’s probably safe to say that the Conservatives are highly unlikely to support these kinds of measures.

It’s also probably fair to say that with Brexit due, technically (and quite possibly actually) at the end of January 2020 and then a year’s transition period, the Conservatives are essentially going to have their hands full with Brexit-related matters at least until the end of 2021, if not 2022.

This would leave them very limited time for “business-as-usual” matters before the start of the campaign for the 2025 election (assuming the UK returns to the standard election timetable).

That being so, it’s highly unlikely that landlords will see any groundbreaking legislation. What is more likely is that the government may do a general “tidying-up” job on existing legislation and possibly introduce a few new measures which were already in the pipeline, such as the end of “no-faults” evictions.

Mark Burns is the managing director of Manchester-based estate agent Indlu.

  • Paul Barrett

    There is no pent up demand from FTB at all.
    They simply can't afford to buy.
    That remains the case and will do for the forseeable future.
    Very few properties will be bought by LL.
    The PRS is reducing itself.
    There is a very real risk in 5 years of a Marxist Labour Govt.
    LL will want to be out of the AST market by then.
    Indeed there might not even be an AST market by then as the Tories seem hell- bent on abolishing the AST and consequently S21.
    Both issues which are likely to drive more LL out of the sector.
    25% of the PRS comprises of mortgaged sole trader LL.
    With the ridiculous S24 in place along with these other stupid policy changes being such a LL becomes no longer viable.
    Only low IR are making such properties viable.
    If IR increases there would be mass homelessness and LL bankruptcies as such LL cannot support such IR on current rents.
    I would be one of those bankrupt LL which is why I intend to sell up well before the even worse threat if a Labour Govt arises again.
    It is bad enough that viability is tenuous enough and that is with a Tory Govt.
    So forget the idea that there will lots of FTB etc.
    The only real market that works is for those who upsize and downsize.
    Of course if 100% resi mortgages were introduced for FTB that really would get the market moving.
    But doing so would in effect discredit the whole MMR policy.
    Not sure how the PTB could square that circle!!!

  • Laurence Keilty

    Hi Paul,

    I would have understood more of your comment if you didn't use so many acronyms. I am not familiar with some of them. However, I agree with your drift and I too will use the breathing space afforded by the Conservative's win to wind down my portfolio. My intension is to be completely out of the business by the next election.

    The mere possibility that the country could elect a party with Corbyn's views has already frightened the horses. I never thought I would hear a party talking about dispossession of private assets in a Western democracy. I like my tenants and have a good relationship with them, but the universal denigration of landlords as being socially undesirable, has destroyed my confidence — especially as it is a business with a long exit time. Corbyn didn't get in this time — but what about next time?

    Paul Barrett

    Yep and that is precisely the point isn't it!
    The horses are proverbially s######g themselves!
    How can any LL build a successful business when there is a risk of every 5 years of a Marxist Labour Govt willing to expropriate property asset value from LL!?
    A major bullet was swerved this time.
    We can thank the BrExit effect for this.
    But in 5 years time that is highly unlikely to be a factor in a GE.
    The electorate will return to traditional tribal voting patterns.
    There is also the very real risk with the abolition of the FTPA that a PM can call a GE anytime they like.
    That just makes LL business sentiment even more uncertain.
    I'm surprised that BTL lenders were not concerned by the possibility of this mass expropriation possibility.
    The ramifications for the lending industry would be enormous.
    Basically they'd go bust as LL lost their equity and fell into negative equity as every LL bailed.
    Such expropriation would ultimately cause a UK wide depression.
    It is property rights that supports the general economy.
    Without them you have an Emperor without any clothes on!!!

    As an aside I am concerned you don't seem familiar with what are very common acronyms in the LL industry.
    Perhaps you aren't as engaged with things as you should be.
    Well never too late to start and by being so engaged you will pick up and under stand what is being stated.

    So just a little help

    FTB ......First Time Buyer
    PRS......Private Rented Sector
    FTPA.....Fixed Term Parliament Act
    PM.......Prime Minister
    GE....General Election
    LL....... Landlord
    BTL.......Buy To Let

     
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