How Might New Prime Minister Boris Johnson Affect the Lettings Market?
On the 24th July 2019, Boris Johnson became Prime Minister of the United Kingdom. As with any new regime at Number 10 Downing Street, the team behind the new premier have thrown out a host of potential policy ideas and aspirations. Some are simply suggestions, others seem more concrete, but how will they affect the lettings market?
Here are some of the potential knock-on effects for lettings agents and landlords of Boris Johnson becoming Prime Minister. Recent changes under Theresa May’s leadership to Section 21 eviction rules as well as the Tenant Fees Act have been seen by many as attacks on landlords, but will Johnson change course?
New Rental Rules Under Boris Johnson?
The good news for the private rental sector is that the new Prime Minister might be simply too busy elsewhere to tinker too much in all things lettings. Brexit is his most pressing concern and, although that may itself have repercussions for the lettings market, this should mean that more regulation on the industry takes a backburner for a while.
However, when he was Mayor of London, he did talk about implementing a blue badge kitemark for landlords and their properties. He also introduced the London Rental Standard, which accredited landlords and lettings agents who met certain criteria. However, as both of these schemes were voluntary, they had little effect and soon fizzled out. Whether he returns to these ideas on a national, and more formal, level after seeing through Brexit is yet to be seen.
Rent Controls and Regulations
Another encouraging sign for the lettings market is that Johnson has publicly spoken out against “over-regulation” of the sector, stating that he thought too much legislation would stifle an area in which growth was needed to meet housing needs.
Similarly, he has also dismissed calls for rent controls. The new PM claimed that such restrictions “deter investors at a time when more, not less, investment is needed.”
Building More Houses
Every government talks about building new homes to alleviate the UK housing crisis, and Johnson’s regime is no different. He has confirmed his support for building on brownfield land and for improving the stock of retirement properties to encourage older homeowners to downsize. In addition, there has been talk about scrapping Stamp Duty for sales under £500,000.
These are all policies designed to increase the availability of homes on the market and, in the case of the Stamp Duty cut particularly, to enable more first time buyers onto the ladder. Clearly fewer people demanding rental properties could have a negative effect on rental prices in time, but we will have to wait and see whether it comes to fruition. Johnson may want to build more homes, but he has also spoken out against the mandatory inclusion of ‘affordable homes’ in developments in the past. If he moves away from providing affordable homes, he may price new buyers out anyway, meaning they stay in the rental market.
It has noted that Johnson is a fan of home ownership over renting. He has publicly backed the continuation and even extension of Right to Buy. There has also been talk of creating new commuter towns on the outskirts of London. This could provide less expensive accommodation for the capital’s workers and, potentially, investment opportunities for landlords when they are built, as well as new markets for lettings agents to explore.
The Brexit Effect on the Lettings Market
One thing that can’t be ignored is the spectre of Brexit over the lettings market. We’ll write a full blog on this subject in the next few weeks, but it is worth touching on here.
Since Boris Johnson became Prime Minister, it has looked ever more likely that the UK will leave the EU with no deal. This could benefit the private rental sector in the short term. With no one able to explain exactly what will happen to the economy in the event of No Deal, people are likely to be wary of making major investments in property. It could mean that potential buyers look to rent for the foreseeable future until they have seen the results of Britain’s exit from the European Union.
What Could Boris Johnson Do to Invigorate the Lettings Market?
Many in the private rental sector are hoping for positive changes from the new incumbent of 10 Downing Street. Neil Cobbold, Chief Operating Officer of PayProp, told Landlord News “the buy-to-let market has stalled due to tax changes like the stamp duty surcharge and cuts to mortgage tax relief under Section 24. If Boris Johnson is able to remove all stamp duty and land tax surcharges for buy-to-let landlords, he could reinvigorate the sector – especially in areas with high-value homes where we’re not seeing a lot of movement at the moment.”
Unfortunately, there is no conclusive answer as to how Boris Johnson will affect the lettings market. He doesn’t seem to have a clear objective just yet, so we might have to bide our time until there are some solid announcements. However, it doesn’t look as though he will want to meddle too much in the sector. Time will tell.