Our regular round-up of news items for you. This week we focus on the Chancellor’s spring statement, the impact it will have on the PRS as well as the industry’s response.
Spring Statement- Property Industry Response
This week the spring statement was released. Parts of it were met by a broad approval by landlords and agents organisations. However many commentators have slated the Chancellor for the lack of help given to low-income families, some even describing it as ‘cruel’.
There have been two significant changes within the PRS sector
- A reduction in VAT on the installation of energy-saving materials in residential properties from 5% to zero for the next five years, while £500m was put into the Household Support Fund. Energy-saving materials include solar panels, heat pumps and roof insulation.
- The Chancellor’s decision to not increase restrictions or tax on buy to let properties.
This has brought in broad support from most in the industry.
The reduction in VAT is perhaps the most promising news of the statement due to the uncertainties of how landlords would afford to improve their properties to an EPC band level ‘C’ by 2025 as per Government targets. This reduction in VAT will reduce costs for these improvements to be made.
In response to this decision, Dominic Agace, Chief executive of Winkworth said:
The Chancellor removing VAT on improvements to upgrade our housing stock and make them more energy efficient is a major boost for landlords and provide some relief against recent measure increasing the costs and reducing the viability of their investments.
However, the general view is that more should have been done to help landlords and tenants with the rising energy crisis and living costs. Ben Beadle, Chief executive of the NRLA welcomed the VAT changes, but said:
The Chancellor should have reversed his decision to freeze housing benefit rates. Without this, those relying on the benefit will find it increasingly difficult to afford their rent….. it remains disappointing that the government has again failed to explain what will be required of the rental sector when it comes to energy improvements. The sector needs clarity as a matter of urgency.
In addition, many within the industry have pointed out that while the VAT reduction will help landlords, support should also be provided to those who cannot afford energy improvements in the first place. Elise Coole of Keystone Property financed said:
If the Government is serious about nudging people into action it needs to provide more direct financial support, such as expanding the Boiler Upgrade Scheme so more people can take advantage of it.
Regarding the buy to let policy, this is perhaps a more controversial piece.
While this provides people more opportunities to purchase a property, the housing stock will naturally decline, which is worse for future generations of potential renters. In addition, with the new surge of Airbnb properties, it is uncertain how many properties will be available to long term renters. Government intervention or long term investment into the housing stock seem to be the two most sensible policies that could be used to revitalise the PRS.
The Renters’ Reform Coalition unveil manifesto
This week, a broad coalition of 20 groups of activists have revealed and sent their demands to MP’s regarding changes to the private rented sector.
Some of these demands are familiar and echo many sentiments that other groups have called for such as end of section 21 and the creation of a national register for landlords. However, there are demands which are more eye raising.
One of these is the introduction of open-ended tenancies to replace AST’s. The coalition would do away with fixed terms and break clauses and the tenants would have indefinite stay until a time of their choosing.
The coalition have argued in their manifesto that fixed term tenancies create:
a two-tier tenancy system [which] is overly complex for both tenants and landlords, with many renters assuming that they must leave at the end of the fixed period.
The full manifesto can be found here
Acorn call for buy to let landlords to let only to long term residents
The Property Activist Group Acorn this week have lobbied the Cornwall council into denying people the right to buy a second home or let it out unless the tenants have lived in the area for atleast three years.
In a post made by Acorn, it defined the experience in Cornwall as:
renting and home ownership has become increasingly unsustainable in Cornwall. High demand for second homes and holiday lets have priced locals out of their communities and decimated towns and villages.
Cornwall has experienced something of an ‘Airbnb’ boom as more second properties have been changed into holiday lets. However, this has caused property prices to rise and scarcity in long term rental properties, creating a housing crisis. One acorn member argued that there has been a ‘661%’ increase in short term letting properties listings as there were five years ago.
Newsround will be back next week.