With the general election on June 8, I thought it would be a good idea to look at which of the two main parties is the most landlord-friendly. Frankly, it is really a case of trying to decide which is the lesser of two evils.
You might think the Conservatives would be least likely to do private landlords much harm, but the party has proved it can’t be trusted to take care of us. They’ve already taken away buy-to-let mortgage interest tax relief for private landlords and added a three per cent stamp duty levy for anyone who already owns a property.
These tax changes will make it much harder for private landlords to profit, but what makes the withdrawal of loan mortgage interest tax relief even more damaging to accidental and amateur landlords who own just one or two properties is the fact that rentals owned by companies still qualify for loan interest tax relief, so it’s harder for us to compete.
Landlords who own their properties within a company structure will also benefit from the Tories’ planned reduction of corporation tax to 17 per cent by 2020, so while small investors like me could see our tax bills rocket over the next few years, corporate landlords will pay less and less.
Labour has promised to push corporation tax back up to 26 per cent, which will level the playing field a little. However, if this results in fewer jobs and less investment in the UK, it will damage the whole of the rental sector.
Also, while the Tories have said they want to “encourage” landlords to offer more secure tenancies, Labour is intent on introducing minimum three-year tenancies combined with rent caps, which could be an utter disaster for the private rental market.
While I’d do everything short of nailing tenants to the bedposts to get them to stay for three years, and I hardly ever increase the rent, these policies will give lenders the jitters so landlords will find it harder to borrow, and the added risks will force many to sell up.
Let’s not forget that this Labour Party has also floated the idea of extending right to buy to private tenants, which would see landlords forced to sell their properties to their tenants at hefty discounts. This proposal has been dropped for the time being, but that doesn’t mean it won’t rear its head again in the future.
Additionally, Labour leader Jeremy Corbyn is known to be in favour of a ban on letting agents’ fees. While former Tory leader David Cameron announced his intention to introduce such a ban, Prime Minister Theresa May appears to be back-pedalling. She has voted against the move in the past and, if she stays in power, she might let the idea slide.
I would actually support a ban on letting agents’ fees to tenants because I don’t see how they can be justified, but I know that many landlords believe that agents will just pass the costs on to them, which will ultimately lead to higher rents, so no one wins.