There was a huge sigh relief amongst many in the property industry (including landlords) as David Cameron returned to No. 10. Labour’s pre-election threats of 3 year tenancy agreements, rent controls and a ban on letting agent’s fees have thankfully gone.
Many agents have reported renewed energy in the property market with (allegedly) enquiries up though I would take what estate agents say with a large grain of salt. To add to the excitement RICS (Royal Institute of Chartered Surveyors) say they expect London house prices to rise by 30% in the next 5 years – inevitably some of this fever will spread to other areas of the UK be it not as big a number.
With continuing high tenant demand and low supply, rental yields will inevitably go up which is all good news for landlords.
The Conservative manifesto was perceived by many to be less meddling and more positive than those fielded by other parties with plans to:
· Build 100,000 new homes
· Give 20% discount for first time buyers under 40, which must be repaid if the home is sold within five years.
· Extend the equity loan part of Help to Buy until 2020 in relation to new-build homes
· Introduce a new Help to Buy ISA to help first-time buyers build their deposit by 25% up to a maximum Government contribution of £3,000
· Cut the benefit cap to £23,000
· Not pay housing benefit for 18 to 21 year olds
· Roll out Right to Rent immigration checks nationally
· Roll out Universal Credit nationally, combining 6 benefits into one monthly payment direct to tenants.
Brandon Lewis will remain as Housing Minister (a post he took up July 2014) though it has come as a surprise to many that his post has not been given a Cabinet position especially given the fact that we are in the midst of a national housing crisis.
In 2015 153 MPs declared an income from renting a property, up from 117 in 2010. Many senior Tories were amongst the second property owners including Prime Minister David Cameron, Chancellor George Osborne and even the Housing Minister Brandon Lewis, but the list also included prominent Labour figures too. From this one would hope there is some level of understanding and support for landlords in Parliament!
Competitive mortgage products combined with political certainty, means many landlords who have been ‘sitting tight’ or even considering selling up will no doubt have renewed interest in the market and possibly look to expand their portfolios.
For those approaching retirement who can now access their pension funds following the recent reforms we expect to see a continued interest in Buy to Let. With gross rental yields of 5-6% and a tail wind of capital growth it is better than stuffing it under the mattress.
With no clear housing policy to create the number of new homes we need, and a decrease in social house building, the future continues to look bright for landlords. With the changes to pension rules, it is imperative that the over 55′s are attracted to invest in the private rented sector. Labour’s policies would have been a barrier. These new investors can provide much needed housing stock and there is little doubt that landlords of this type look after their investments and their tenants.
About Tom Morgan
Founder of Jungle Property the multi award-winning letting agent based in Glastonbury, Somerset. I am passionate about property and Glastonbury and about providing the very best advice to anyone who wants the best return on a buy-to-let property investment. For an open and brutally honest opinion on anything in the Glastonbury property market please contact me via tom.morgan@jungleproperty.co.uk
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