There’s no doubt that we live in politically charged times and every day appears to bring something new to the ‘party’.
For instance, the Supreme Court recently ruled that the prorogation of Parliament wasn’t legal, and therefore another layer of complexity is added to the current situation.
Regardless of what happens next, it seems fairly obvious that we are going to see a General Election sooner rather than later, perhaps before the end of the year.
The government is not just a minority administration but – given the decision to expel 21 of its own MPs – is a long way off a majority, even with the support of the DUP.
Given it has also recently been the Labour Party conference, it makes sense to review what the party who might well be in power before the end of the year are saying, specifically when it comes to the housing market and the areas of most interest to us as an industry.
The Conveyancing Association (CA) recently issued its response to the Labour Party’s report on leasehold, entitled: ‘Ending the scandal: Labour’s new deal for leaseholders’.
The CA’s work was referenced a number of times within the report, so it’s perhaps not surprising that we are able to back many of the proposals outlined within it.
For instance, these cover the banning of the sale of new leasehold houses and flats unless in ‘special circumstances’, as well as providing leaseholders with the ability to buy the full, freehold ownership of their home for 1% of the property’s value.
Alongside this, the Labour Party has pledged to ‘revitalise commonhold’, making it the tenure of choice and proposed the capping of ground rents to £250 whilst also abolishing forfeiture, as both will prevent leaseholders from losing their homes to unscrupulous landlords.
What is clear is that whoever is in power will need to continue the work to improve the home moving process as, with current timescales stretching to 20 weeks on average and 34% of transactions falling through, we have over two million home movers trapped in economic stasis for five months of the year.
That is a massive drag on an economy and we’re going to need all the help we can get to change it.
All well and good, but the Labour Party are not just planning to act on leasehold, and I suspect a number of our member firms might have raised an eyebrow or two at some of the other housing-market related proposals that are up for discussion.
For instance, Labour has been talking about the introduction of rental caps in the private rental sector – a measure that has been fiercely criticised by many PRS stakeholders with some suggesting it will destroy activity there if landlords (and the market itself) are not allowed to set rental levels.
On top of this, the Shadow Chancellor, John McDonnell, has also suggested that existing tenants may be given the right to buy the property they live in from their landlord at a discounted price, set by the government, which again appears to have caused much consternation.
In effect, we would have Right to Buy extended to the private sector. Which begs a question from some critics of this policy: Why would landlords continue to be active in the market if they can’t set rents or could possibly have to sell their property not just below the market level, but potentially at less than they paid for it?
McDonnell has also talked about the compulsory purchase of ‘empty homes’ by councils in the future, which will lead to a discussion around what constitutes an ‘empty home’ and how long must it have been empty for, before it could be subject to purchase?
We can see that these are radical proposals which could have far-reaching consequences, particularly for transaction levels within the PRS, and given as a body we are always concerned about a falling level of housing market transactions anyway, I wonder whether the proposers have actually worked out the impact of lower transaction levels as these may work against other political imperatives.
How also might our membership react to policies which could mean lower levels of activity than we have now?
We already know that home buyers make a significant contribution to the economy at large once you take into account both the cost of the purchase but also the money spent on decorating and preparing a property for rent. What would be the impact of these policies on this?
It is certainly one to watch, and we would like to get stakeholders’ feedback on how they view these policies and whether they could actually do more damage than good.
*Beth Rudolf is director of delivery at the Conveyancing Association (CA)