On the eve of the General Election, 3 July 2024, London’s Landlord Investment Show at Old Billingsgate was buzzing with speculation and predictions for life under a Labour government. Here, we’ve cherry picked some of the highlights and key insights from experts in the industry, to help you successfully navigate life after the election.
General Election: positive news or total disaster, was the timely topic of the panel discussion hosted by Ian Collins (TalkTV). Joining Ian on the panel to discuss how the result will impact UK landlords, were David Smith, (Economics Editor, The Sunday Times), Maxine Fothergill (Founder and MD, Amax Estates), Carly Jermyn (Solicitor and CEO, Woodstock Legal Services) and Peter Littlewood (Director, iHowz)
Correctly predicting a Labour victory with a significant majority, David Smith opened the discussion, remarking that, to the extent that housing featured in the election campaigning, we saw a bidding war between the parties. Labour said they’d build 1.5 million new homes over the course of a five-year Parliament, with the Conservatives at 1.6 million and the Liberal Democrats going even higher at 1.9 million.
In her first speech as Chancellor, Rachel Reeves reiterated that Labour will build 1.5 million homes in England, promising to ‘get Britain building again’ by bringing back housebuilding targets and overhauling the planning system. Although she added that the new government won’t give a ‘green light’ to all housing developments.
But are these targets achievable? David Smith doesn’t think so.
“None of those targets will be achieved …. We haven’t built 300,000 new homes a week since the late 1960s, and that was when councils were building half the homes in the UK, and nobody has that as part of their political plans. We won’t be building anything like the number of new homes that are suggested.”
- David Smith, Economics Editor, The Sunday Times
Maxine Fothergill agrees.
“With the explosion we’ve had in population, we’d have to build a house every two minutes, and that’s simply not possible. It isn’t possible to do, so the only way that it’s actually possible is making planning easier, building on more brownfield sites and being able to release land, but not green belt land.”
- Maxine Fothergill, Founder and MD, Amax Estates
Peter Littlewood, Director, iHowz (the professional association for landlords), questions whether house building alone will solve the problem.
“In terms of house building, I’m not convinced it’s going to make the big difference everyone says it’s going to. When the M25 was extended we had an extra lane and all we ended up with was more traffic. Will we end up with the same situation? If we build in the south, will we just end up with more people in the south? The problem is, everyone wants to live in the south of the UK.”
- Peter Littlewood, Director, iHowz (the professional association for landlords)
It used to be said that the landlord investment area is safer under a Conservative than a Labour government, but would people question that now? What are the panel’s greatest concerns about a Labour government?
For Carly Jermyn, Solicitor and CEO, Woodstock Legal Services, strengthening grounds for possession and court reform are key.
“As a lawyer I wasn’t entirely happy with the Renters (Reform) Bill – I had my concerns around anti-social behaviour and a few grounds that were drafted. But I think we’d got to a fairly sensible position, particularly the commitment to court reform. Although the amount of money that requires … The courts are in a shocking state. My concern is with a Labour government that we won’t have those grounds as strong as I’d like to see them as a lawyer, for landlords. And that they’ve said that they’d abolish Section 21 immediately. Which we know can’t happen as there’s a process that has to be followed.
But if they don’t strengthen those grounds enough and put money into the courts, then I do see that as a problem for landlords. So that’s my biggest concern with a Labour government.”
But could Labour surprise the industry, or are we more likely to see the stereotype play out? David doesn’t think the difference between red and blue is as pronounced as it once was, but ultimately, we’ll have to wait and see.
“The Tories stopped being friends of landlords some time ago. And they’ve done lots of things which were in favour of renters and you know, what should be in favour of renters should be in favour of landlords too, but they decided to go for the young renters in particular and did lots of things which disadvantaged landlords. So, I think that difference is not as great as it was.
To fill in a little bit on what we might expect, I think it is clear that one of the things that Labour will prioritise even before the parliamentary summer recess is this sort of blast on planning reform. I think they intend to make that a priority over the rest of this month following the election.
I slightly disagree with Maxine on greenbelt, because I always think not all greenbelt is green. There are plenty of bits on the edge of the greenbelt that is unattractive scrubland, even built on land, and so on.
So I think this idea, if anything is going to get housebuilding going, it would be if Labour is successful at, as Keir Starmer has said, bulldozing through planning constraints. And even bulldozing through local objections to new house building. We’ll slightly believe it when we see it, but this is a more aggressive approach to planning than I think we’ve seen from an opposition for some time.
In terms what happens then, I don’t think we’ll know about tax until September, in the first budget. So, we’ll hear a lot more about what might happen on that, then. I think for everyone in this room it’s fingers crossed slightly until then. But that’s the kind of timetable – an initial blast on planning, August not much happens, and then September come back with the first budget of a new government.”
Whether it’s relationships between landlords and tenants, or relationships between the private rented sector and government, the industry has been the subject of damaging and unhelpful stereotypes. The panel of experts feel that this needs to change. But how hopeful are they that this will actually happen?
Peter, noting that there’s been on average a new housing minister every single year under the Conservatives, highlights that as a landlord association one of iHowz’s own manifesto requests includes a housing minister that stays for the whole duration of Parliament, emphasising the need for continuity there.
“I hope it’s the rental system as a whole in discussion with the Government, because I hate this landlords and tenants being against each other. Completely not true. We’re supplying a service, at our own risk, and tenants are our customers. And we want to look after our customers. At least if you’re a decent landlord you’d want to. So it’s not us and them, and it shouldn’t be us and them when we’re talking to government. It should be about the system as a whole. So yes, it will be delightful to have more round tables and to have more representation on that round table. And we’d like to have input to that.”
Commenting on Ian Collins’ observation that there is nowhere else in life where you’d get away with stereotyping one group of people in the way that landlords are portrayed as not caring about tenants, Carly echoes Peter’s call to look at the system as a whole.
“My experience is that the majority of landlords do care… Not every landlord is perfect and we do come across landlords who need reminding of their responsibilities, or who don’t have the systems and processes to manage their responsibilities properly. But in the main landlords are trying to do a good job, and most tenants are trying to be good tenants. The system as a whole causes difficulties, so that is incredibly frustrating. The constant pitching of the two against each other. You’ve got to look at how the whole system works, and then when you’re looking at the legal system as part of that whole eco system, it’s important not to create a system that continues to pitch people against each other.
Take Section 21 going, as a lawyer, I won’t be sad to see the back of it because it’s actually got nothing to do with justice, it’s a tick box exercise. As a landlord you’ve got to tick these boxes otherwise you can’t get possession. But actually, the fact that you’ve not ticked those boxes shouldn’t really impact the justice of getting possession… Moving to Section 8 means it becomes more about justice. It’s important to focus on a legal system that’s fair and balanced and make sure that it works.”
Maxine adds her voice to the debate on why there is this tricky relationship between politicians and landlords.
“A lot of politicians in mainstream parties don’t like landlords, they seem to think it’s a dirty word to be a landlord, which I really don’t understand. Many politicians are actually landlords so this has always been a bit of a strange thing to me.
Yet we are the people that are actually providing the properties for people at our own risk. So I have no idea why we have this bad relationship and I would like to see the Government working a lot closer with landlords, listening to landlords, having far more open roundtables. Years ago we used to have a lot more closer relationships with our local authorities. Of course all of the money has been taken away from a lot of local authorities now, so we don’t get the landlord forums we don’t get the discussions locally and our voices I don’t feel are heard any more. And politicians are making decisions for us which are unfair and unreasonable in many circumstances.”
One solution to this, suggests David, would be to have a housing department solely for housing, highlighting that the problem with housing ministers has been that the role has been regarded as a ‘Cinderella job’ - if they are any good, they get promoted. If Keir Starmer succeeds in his aim to have at least most people in the main jobs for a long time - Chancellor for five years, Foreign Secretary for five years etc. – perhaps this will change. Only time will tell.
On the controversial topic of rent controls, David adds, “We’ve seen with the Scottish experiment what a failure that has been. I just think Labour has got enough sensible economists in there including Rachel Reeves, not to even contemplate introducing rent controls. They always backfire and reduce supply and they make things in the end more difficult for tenants than the idea that they help tenants. So, I’d be very surprised if they went down that road.”
Planning is an issue that often comes to an abrupt cul-de-sac because of local issues. Would the housing industry benefit in other ways if there was more of a local focus? Keir Starmer is suggesting that maybe Labour override areas of local concern. Carly would certainly welcome a more holistic approach.
“I’d like to see more joined up thinking with local authorities and although we talk about pitching landlord and tenant against each other, actually quite often we see landlords and tenants working together to play the system because they need to find housing for this tenant who can’t make themselves intentionally homeless and has asked for a Section 21. They’re then having to put them in temporary accommodation, which is incredibly expensive. Why aren’t they supporting the landlord? This person can’t afford to pay the rent because housing benefits are so low compared to rising rents. Why are they not supporting that landlord and tenant to keep the tenancy going, rather than having to take money from another pot to then go and put them in really unaffordable temporary accommodation? It just doesn’t make sense. It’s another example of how the law and the system need to work together.”
Commenting on the Government’s approach to tackling the housing crisis, Maxine says, “The government did try to deal with the housing crisis with build to rent schemes but we’re a good 10 to15 years away from this being a possible solution for the future, because they simply haven’t built enough of them.”
We’ve not built enough houses since McMillan. Why can’t we build enough houses? David explains.
“If you go back to the 50s and 60s obviously there was a lot of replacement building after the war and we did get up to around 400,000 new homes a year in that period. But it’s a question at the moment of capacity. Private house builders probably have capacity to build around 200,000 new homes a year. And if you want more than that, you need the workers and the skilled workers and it’s difficult to get such people. There are not enough apprenticeships and it’s an industry that’s got a high number of older workers who will all be coming up for retirement in the next few years. So I think it is a real problem.
But the one thing we can be more cheerful about is that interest rates are going to be coming down quite soon. I would expect the Bank of England to start putting down interest rates in August, possibly September. And then we’ll move through this period of quite high interest rates that we’ve had in recent times. So I think in that respect, there is a little bit of a light at the end of the tunnel for anybody who is borrowing. So, it's not all gloom, it’s not all downbeat at the moment.
So mortgage rates I think will be lower, official interest rates will be lower. So, there is a little light at the end of that tunnel. Even though I think we are all sceptical about whether a new government is going to change things much for the better for the private rented sector and for housebuilding.”
While there may be light at the end of the tunnel, bearing in mind the amount of regulations, the amount of uncertainty and interest rates which of course have been a killer for some businesses, there has been a lot of talk of landlords exiting the market. Carly shares her insights as a lawyer dealing with landlords every day, into the sense of drop out from the industry.
“Yes, we are seeing that, but I don’t think it’s as huge figures as people were concerned about. But it is really tough for landlords. We’ve been moving to more professionalism in the industry for a very, very long time and we will continue to do so. And I don’t necessarily think that’s a bad thing.
“I think where we’re moving to it being more professionalised, if you have a decent sized portfolio – more than one, two or three – then it is worth it. It’s worth investing that time to make sure you have the systems and processes.
But because of the amount of regulation landlords are up against, even if I know and they know they’ve done the right thing, if they can’t evidence that they’re done the right thing, at the right time, sometimes it can be really difficult to give them that certainty that they need that they’re going to gain possession. So, it’s letting agents becoming even more important, and education … and making sure that you know exactly what you’re doing and you’ve got that team around you so that if things do start to go wrong you can deal with it quickly and efficiently.
For landlords that don’t have those big portfolios and the infrastructure around them it can be really difficult. They’re trying to do their best but it’s a tough system.
For example, EPCs – we know they’ve given them to the tenant, but unless they have evidence that that particular document was given to that tenant on that particular day … it should be on the balance of probability. It’s not a criminal court. A judge is going to err on the side of caution and favour the tenant, unfortunately, because what they’re being asked to do on the day is a bit deal. So systems, process, evidence and professionalism is really important. And that’s tough, unless you’ve got a decent sized portfolio to invest that amount of time and money into it.”
Peter echoes Carly’s sentiment, “yes, it’s now a proper job, it’s no longer a hobby. We favour, and I’ll be unpopular saying this, that all landlords should be trained and accredited. They should know what they are doing. They’re looking after peoples’ homes and they’ve got a legal obligation to do that. It’s no longer acceptable to say ‘my neighbour told me it’s xyz and it’s turned out to be abc’. How often do you hear that? And people just don’t recognise the system. We occasionally get landlords saying they’re not going to do work to a property. Well, you have a legal obligation to do it.”
Maxine, who has been a landlord for 25 years, has run a property company for the last 22 years, and been a trainer with Peter for the last 20 years, agrees. “Never has there been a better time to actually make sure you get trained, because your case will fail if you don’t know what you’re doing. And more and more cases are getting thrown out in the courts. So if you don’t have time to actually manage your portfolio, you’re far better to use an accredited agent that will do the job for you. Or at least get trained, because it’s getting more and more difficult. And we’re hearing of more and more cases that are being thrown out. So joining a landlord association, being accredited, and if you don’t have time then look at getting an agent.”
Opening his talk on ‘life after the election’, Ben Beadle, CEO at the NRLA, admitted to feeling a little nervous about the reality of what lies ahead for the next government - the private rented sector contributes £45 billion to the economy and employs almost 400,000 jobs, yet we have an average of 15 tenants applying to rent a property. The only way, argues Ben, that this problem can be solved, is by putting bricks in the ground or investing in social housing.
“The reality is that independent sources tell as that we have a massive demand and supply imbalance. So, whether the sector is growing, reducing, landlords are leaving or landlords are joining, either way it is not enough. And that is the problem that awaits the next government.”
The NRLA has identified three priorities:
“I’ve been talking about our desire to see the Renters (Reform) Bill, and I know that’s a controversial subject for some. Well, in 100 days time, what we’ll see is a much harsher and challenging rental reform bill. Whether or not it will be quite as wide reaching as the previous bill I don’t know. I expect what will happen is that we’ll have a short, sharp bill that just abolishes Section 21 and worry about the rest later. That’s what I think will happen.
So much work and so much consensus was achieved through the last draft of the Renters (Reform) Bill that it’s a great pity to lose that. So yes, there has to be compromise with Section 21 going. And it is going. All the political parties have a consensus that it will go. We have to carve out what a reasonable alternative looks like. We got so close so close. Right to the last day and I still think it’s a pity it didn’t get through in washup. But what will happen now is that parts of it will come back and we have to be prepared for that.”
Ben emphasises the importance of the next government finding a balance and striking a consensus.
“With the average tenancy being four a half years, if you rethought the tax arrangements, removed some barriers to entry like stamp duty, you sorted out Universal Credit and direct payment, actually maybe a landlord wouldn’t give a Section 21. There are things that have to be done in a really holistic way to bring landlords and tenants along. Our argument is that the PRS is a vital part of the economy and the Government must recognise the contribution that landlords make and the provision of decent homes.”
So, increases in homes of all tenure, making homes fit for the future.
“I was actually disappointed when Gove scrapped the EPC of C, because we all know what’s going to happen, it’s going to come bouncing back and it’s going to be EPC with a much shorter deadline than we would like. Actually, I’d rather he said let’s go for D by 2035 and here’s some funding to help you. That’s actually what we need. We’ve done loads of research about retrofit and how we can help government succeed in their ambitions. We’ve got to work really hard with Angela Raynor, Matthew Pennycook, not necessarily natural allies to our cause. But as an association we have to work really hard to show that we can be a helpful ally in conveying landlords’ sentiments and what’s going on in the private rented sector. But we have to earn that trust. We also need to make sure that we see some movement around Universal Credit. We’ve just put out our commitment to upgrade housing allowance annually, and I think that will be a really big test for Labour. They’ve said nothing on that so far and that’s something that will help renters and landlords. It’s our job to find areas where we can make subtle improvements, and I hope that direct payment will be one of them.”
On the topic of tax, Ben argues that mortgage interest relief was always put across as a landlord tax, but actually what it is, is a tax on tenants. Not only do you have fewer properties, he says, but you only have to look at rents to see that they are at record highs. The argument the NRLA will be making to the Government, is that the PRS is a strong contributor to economic growth, jobs and everything else.
“We’re spending almost £2 billion on temporary accommodation because there are no other houses. My challenge to a Labour government, is would you rather spend this money that serves no real purpose, or would you, with commitment to improving the PRS, make some changes to tax levers so that you are investing in sustainable housing, with decent landlords who provide decent properties?
Helping landlords support the construction of new energy efficient homes, removing the stamp duty surcharge where a property adds to the net supply of housing, we think, is sensible to encourage the right sort of investment, upgrade the stock… actually tinkering around with stamp duty is the right thing to do, and if you abolish the additional rate of stamp duty, you not only bring in £10 billion through taxes, you’d also add 900,000 new homes.”
Ben argues that we have to think creatively and offer incentives to encourage people to bring their homes to market.
“Renters reform is coming, we have to be prepared for it. All parties are committed to removing Section 21. The positive is that seven out of 10 landlords said they could envisage living without it, so long as the alternative works. It is so important that alternative grounds are available, and I don’t know whether there will be. This is why we’re encouraging the Government with our cross-industry statement, to pick up the Renters (Reform) Bill as was drafted and build on the consensus and take it forward, rather than do something draconian that spooks the market.
It’s so important that with the abolition of Section 21, that we do see meaningful court reform, and this can be dealt with through phased implementation.”
Ben sums up the NRLA’s stance.
“So, we want to see comprehensive possession grounds that sustain landlord confidence, proper funding of the court, and the development of a decent homes standard that’s fit for purpose and that works for the private rented sector. We’ve done loads of work on this and are well prepared. It’s just finding that sweet spot of giving tenants the security they need, but also giving landlords and investors that confidence to continue their property businesses.”
“There are more tenants than ever before, tenants are paying more rent than ever before, you’ve got fewer void periods than ever before, and yes, there is legislation and what’s happening on the horizon and Labour coming in. But one thing that landlords are is very astute, and very adaptable and flexible.”
Commenting on how renters reform under Labour will affect landlords, Paul says, “We know that renters reform has gone. We’re going to have a renters’ reform mark two. We’ve heard what Labour have said. They’ve said they’re going to ban Section 21 on day one. Angela Raynor has said that we’ll be doing it straightaway, but we need legislation to do this.
You can’t just ban Section 21. You need to strengthen grounds of Section 8, bring mediation in, use high court sheriffs … there’s a whole load of stuff you need to do to do it, but of course it’s headline grabbing.”
- Paul Shamplina, founder of Landlord Action and Chief Commercial Officer at Total Landlord
Having spent over 25 years in the legal field helping landlords and letting agents with problem tenants, Paul emphasises the need for professionalism if landlords are to change stereotypes and have successful tenancies.
“Landlords have a duty to be professional in the way they speak and the way they act and the way they communicate. It’s very important, because that changes the anti-landlord feeling. We have great organisations like the NRLA, but it has to change. The problem is we have 2.74 million landlords out there and every one is different. Some of them are bad landlords. There are far more bad tenants than landlords, but the problem is we don’t have enough enforcement. Care about your properties and care about your tenants. You want to make sure tenants treat your property as their home. That way they will stay there longer. As long as the rent is paid, as long as they give you access, and you’re not in breach of regulations and the neighbours are happy, then we are happy. We need to make sure that we are on top of our game.”
The final panel session focused on property predictions and advice for the next 12 months. Featuring Herschel Santineer (Chartered Tax Advisor – Premier Property Tax Planning), Gavin Richardson, (Managing Director – MFB), Kam Dovedi (Founder, Premier Property Group), and Paul Shamplina, (founder, Landlord Action).
Mortgage expert, Gavin Richardson, focuses on solutions if you have a mortgage coming up which doesn’t work because the stress tests are higher than they’ve ever been before, so it’s difficult to achieve the borrowing that you want.
“Your existing lender has an obligation to refinance you, so long as you’re not borrowing any more. No additional borrowing. So your existing lender is your first point of contact if it doesn’t work for a remortgage anywhere else.
The other thing is that you must use a broker in this scenario because they have access to products that aren’t on the High Street. They have access to exclusive rates, and they understand the criteria of all the lenders in the market and the underwriting process between different lenders is so different, even though the initial headline criteria looks similar. Some will stress your portfolio completely at a certain rate, others won’t stress it at all. So that, and not chasing the headline rate are the two biggest cautionary tales I’d give you, because you may see a headline rate that looks very attractive, but behind that is a five per cent, seven per cent, sometimes 9.9% fee in the market.”
For more mortgage advice, read our ultimate landlord guide to buy to let mortgages.
Paul Shamplina highlights the creaking legal system, “We need a thousand more judges. The courts need to be fixed and there needs to be confidence. Labour want to put a stop to bidding. But regards to the reality of Section 21, once the renters reform mark two happens, and that includes the banning of Section 21, I think it is going to be a year to 18 months. There will be ping pong and amendments. But the reality is there will be some more severe rules and regulations for landlords. I’ll give you an example, notice periods for Section 8 rent arrears is 14 days. Labour want to bring in a four month notice period, so you have two months’ rent arrears, you serve a notice for four months, and what does that mean? It means you have six months’ rent arrears before you go to court. So they are worries for landlords but we have to watch and wait. Section 21 is going - I’ve lived and breathed it for five years.
When Section 21 goes, landlords will need to be more stringent with referencing, you’re going to have a lot of landlords that are going to insist on having guarantors, you’ve really got to protect yourself. And then there’s rent guarantee insurance.”
Read LandlordZONE’s article, Landlords congratulate Labour but worry about eviction changes, for more analysis from Paul and other industry commentators.
Kam offers his advice first to landlords with up to four properties, emphasising the need for specialised knowledge and questioning why landlords are currently leaving the market, when there are serious opportunities right now.
“It’s about finding out the correct strategy that works now, not what worked last year, what works now with a new government and new legislation, it’s a new set of rules and you’ve got to learn the rules. It’s about finding your specific goldmine areas – there are areas across the country where the market is still buoyant, it’s not all declining across the country, and you can find these pockets of postcodes that can serve you well over the coming years.”
If you’re in the region of four to 10 properties, Kam advises that now is the time to change from a self-employed person to a business owner. “As a business owner the difference is you’ll have more time to do the things you want to do. It’s about minimum input and maximum output. Start to leverage everything you possibly can. Specifically, instead of self-managing, use a letting agent. Instead of analysing yourself or using an excel spreadsheet, use good tools, use software that means you’ll use minimum of your time... Financial freedom isn’t the end point, it’s the starting point… Financial, time and location, they’re the things you want to be dealing with. How do you practically achieve this? If you’re like me you do a lot of reporting, so at this stage you should have a small, good quality team that’s going to help you and give you the quality information to make informed decisions.”
Kam highlights some free tools that landlords can use such as Hometrack, a valuation tool that provides good quality data on a quarterly basis. And Rightmove, a tool which can be used in a number of ways, for example to compare property prices, to identify goldmine areas, local estate and letting agents – there is a lot of information available there.
Herschel identifies tax changes over the last few years as the key challenge. But advises that rather than worrying about the changes, landlords need to identify solutions that mitigate the changes. “That might be adopting a different strategy in terms of your property activities that gives you a different tax treatment as a result of taking those different structures. Differentiating between how you’re managing those projects that you’re involved in. And also in terms of moving forward, how, if you’ve made that structure work property for you, how do you extract the funds tax efficiently? Because so many landlords are in a situation where they find they don’t have enough money coming out of the property, and then they don’t know how to get that money in a way that they can actually utilise it. Whether that’s to recycle it into more property projects, or to be able to fund their living and lifestyle. So really important two factors.”
While the detail of what lies ahead has yet to be revealed, it is clear that reform of the private rented sector and the housing market, including a ban on Section 21 evictions, looser rules on green belt building with plans to build on the ‘grey belt’, and new homes targets for local authorities, will be a priority for the Labour government.
Industry experts may not always be aligned in their predictions of the impact the Labour government will have on landlords, and there will no doubt be challenges ahead. But there is also a sense of optimism for those landlords who understand the need for professionalism. Whatever their area of expertise, whatever their specialist topic of discussion, the resounding advice for landlords is the importance of education. Make sure that you are keeping on top of your game by joining a landlord association, staying abreast of tax and legislation and keeping up with industry news by subscribing to LandlordZONE and visiting Total Landlord’s Knowledge Centre. For more analysis on whether landlords should be worried about the new Labour government, listen to The Property Cast , hosted by Eddie Hooker, CEO of Total Landlord and Paul Shamplina, founder of Landlord Action and Chief Commercial Officer of Total Landlord. With special guest, Sean Hooker, Head of Redress at the Property Redress Scheme.
