The Labour landslide and its impact on Landlords in the Private Rented Sector

Having historically been one of the more anti-landlord parties in parliament, the recent Labour win may have had many landlords quivering in their boots.

With little positive talk of the vital role landlords play in the Private Rented Sector and, in fact, the wider housing market as a whole, the manifesto instead focused more on the usual house-building targets and home ownership.

Yet, despite the reintroduction of the abolishment of Section 21 evictions being one of the only rental reform policies to hit the headlines, there is actually much positive news to take from the election results.

Let’s take a quick look at Labour’s key messages and promises around housing and the rental market and analyse what opportunities this creates for landlords – particularly those of high quality shared and affordable HMOs!

1.5 million new homes

This pledge is nothing new and everyone, including current and aspiring homeowners and property investors, is well aware of the housing stock shortage.

This, therefore, is only good news. We want more properties available for people to buy, which will inadvertently provide more homes to rent, closing the supply and demand gap.

For investors, this will possibly make more ‘old’ stock available, ripe for refurbishment!

More planning officers

As part of the proposed planning reform, which is long overdue, Labour has said they will boost the number of planning officers, aiming to expedite the approval process for housing developments.

This is promising news for HMO landlords looking to expand their portfolios or refurbish existing properties. With more planning officers, the delays often experienced in obtaining necessary permissions could be reduced, facilitating smoother project timelines.

This also aligns with the party’s commitment to ‘high-quality, well-designed, and sustainable homes’, all standards which PPP landlords are already very adept at.

Rent controls and longer tenancies

Labour’s plan to introduce rent controls aims to prevent exorbitant rent hikes, ensuring affordability for tenants. While this could limit potential rental income increases, it is also designed to stabilise the rental market as a whole, reducing tenant turnover and ensuring a steady income stream. However, where rent controls have been tried, they have been met with limited success and often distort the market, causing unintended consequences. Platinum Property Partner’s view is that the market would be better without rent controls imposed by central government.

PPP’s focus on fair pricing and long-term tenant satisfaction are fundamental to our model, and so our landlords should not be impacted. In reality, what this is likely to mean for the whole Private Rented Sector is annual increases using a specific type of ‘Notice’.

Equally, longer tenancies, offer stability for both landlords and tenants. And although the perception that shared housing is often an interim and somewhat temporary solution for tenants, who are perhaps saving to buy, our data shows that many tenants stay for two-plus years.

The devil, as always, is in the detail. Provided tenants and landlords still have the option of standard-length ASTs, (All tenancies will be periodic, meaning no more ASTS!) we would support longer tenancies being introduced.

Energy Efficiency Standards

The reintroduction of stricter energy efficiency standards is a critical aspect of Labour’s housing policy, and cause many landlords who temporarily breathed a sigh of relief, to panic once more.

However, with HMO landlords footing the energy bills, maximising the efficiency of PPP properties has been a key focus during refurbishment for some time, meaning that many of the HMOs in the network already meet the proposed Minimum Energy Efficiency Standards (MEES).

This also sets our Franchise Partners’ properties apart from the competition.

Tax changes

On the tax front, there is speculation about a review or reversal of Section 24, which limited mortgage interest tax relief for landlords and second homeowners. While this would be a welcome relief, we think this is highly unlikely and thankfully, the PPP model has already adapted into a Limited Business structure to mitigate this.

Labour also hints at increasing Capital Gains Tax (CGT). For PPP landlords, the strategy for most is to retain the properties in the long-term, focussing on income potential, with any capital growth over time being a bonus.

With legacy planning an added value service of being part of the network, our Franchise Partners also have support when they come to think about disposing of or passing on their portfolio as part of an inheritance.

Abolishing Section 21 and extending Awaab’s Law

One of the most talked-about changes is the proposed abolition of Section 21 “no-fault” evictions. While this might initially seem concerning, it’s important to note that the PPP model, which emphasises excellent tenant relationships and well-maintained properties, already mitigates many risks associated with tenant turnover.

By fostering a positive living environment, PPP landlords are less likely to face adversarial evictions, making this change less impactful on their operations. In fact, serving a Section 21 notice is an absolute last resort for us, and in the majority of cases, we support mediation-based strategies that lead to amicable outcomes for both the tenant and the landlord.

There will apparently also be new regulations introduced that do allow landlords to reclaim their property should they need to, for example, if they are selling it.

The extension of Awaab’s Law, which mandates landlords to address damp and mould issues promptly, underscores the importance of maintaining high property standards. PPP’s commitment to rigorous maintenance and proactive property management ensures compliance with such regulations, further safeguarding tenant well-being and landlord interests.

Does Labour see the value of private landlords?

Although on the face of it, and despite the proposed regulatory changes, it’s evident that Labour recognises the crucial role private landlords play in the UK housing market if you read between the lines.

The policies aim to balance tenant protections with sustainable landlord operations. The PPP model, with its emphasis on high standards and tenant satisfaction, exemplifies how private landlords can thrive by adopting best practices that align with policy goals.