With Labour’s recent victory in the 2024 general election, the UK’s rental market is set for transformation. As private rentals continue to play a critical role in housing, both landlords and tenants are preparing for the changes ahead. At Lansdown Insurance Brokers, our Landlord Insurance team and Associate Director, Darren Bee have outlined the Labour Party policies under the leadership of Sir Keir Starmer, which are set to be implemented and their potential impact on landlords.
A Turning Point for the Rental Sector
With Parliament resuming and Labour taking the reins, the focus now shifts to the implementation of their manifesto promises, particularly those impacting the rental sector. The changes introduced could reshape the market, bringing both challenges and opportunities for landlords.
Here’s a summary of the key policies and what they mean for landlords:
Immediate abolition of Section 21 evictions
Labour plans to abolish Section 21 ‘no-fault’ evictions, which currently allow landlords to evict tenants without providing a reason.
This will provide tenants with greater security and could reduce the turnover rate in rental properties. However, it may also limit landlords’ ability to manage their properties flexibly and deal with problematic tenants efficiently.
Tenant powers to challenge unreasonable rent rises
Labour intends to empower tenants to challenge excessive rent increases, providing them with a mechanism to dispute hikes they deem unfair.
This policy aims to protect tenants from sudden and substantial rent increases, promoting affordability and stability. For landlords, it will be essential to justify rent increases and ensure they are in line with market trends and property improvements.
Extension of Awaab’s Law to the private rental market
Awaab’s Law, which mandates social landlords to address severe hazards like mould, will be extended to include private rentals.
Landlords will be required to maintain higher safety and habitability standards. Addressing such safety concerns promptly will be crucial, potentially leading to increased maintenance costs but also enhancing property value and tenant satisfaction.
New energy efficiency standards by 2030
Labour proposes that rental properties meet new energy efficiency standards by 2030, although the exact minimum EPC rating has not yet been specified.
This will likely require landlords to invest in energy-efficient upgrades to their properties. While these improvements may come with upfront costs, they can lead to long-term savings and make properties more attractive to eco-conscious tenants.
No increase in Corporation Tax
Labour’s tax strategy pledges stability across income brackets, vowing not to raise the basic, higher, or additional rates of income tax as outlined in their manifesto. Furthermore, the party aims to maintain the current 25 per cent cap on corporation tax, ensuring continuity for businesses under their governance.
No mandatory replacement of gas boilers
The proposed energy efficiency changes will not include the mandatory replacement of gas boilers, offering some relief to landlords concerned about the cost and logistics of such replacements.
Landlords can focus on other aspects of energy efficiency without the immediate burden of replacing gas boilers. This provides some financial stability while still working towards overall energy efficiency goals.
Darren Bee’s Perspective: “Interesting times ahead”
Darren Bee, Associate Director of Lansdown Insurance Brokers, offers a balanced view on the potential reforms. He highlights that while changes may bring challenges, they also present opportunities for landlords to improve their business models and relationships with tenants.
“There are interesting times ahead of Labour’s proposed policies, such as the abolition of Section 21 evictions and the introduction of tenant protections against unreasonable rent increases, which could foster a more stable and sustainable rental market.” Darren explains.
“By encouraging longer tenancies and promoting fairness, landlords can reduce turnover and create more predictable income streams. Additionally, adhering to higher safety and energy efficiency standards not only benefits tenants but can also enhance property value and attract conscientious renters who are willing to pay a premium for quality living conditions.”
Darren’s insights suggest that by embracing these changes, landlords can position themselves advantageously in a more regulated and tenant-friendly market. This proactive approach can lead to better tenant relationships and long-term financial stability.
Preparing for Change
With Labour’s potential reforms on the horizon, landlords should start preparing now. Here are some steps to consider:
- Review Tenancy Agreements: Consider offering longer-term leases and fostering strong tenant relationships to align with potential reforms.
- Evaluate Rental Pricing: Ensure rent increases are fair, transparent, and justifiable based on market conditions and property improvements.
- Maintain Property Standards: Stay proactive in maintaining and improving property conditions, particularly in light of potential safety and energy efficiency requirements.
- Plan Financially: Monitor your financials closely and plan for possible changes in costs, including mortgage rates, tax implications, and property upgrades.
By staying informed and proactive, landlords can navigate these changes effectively and continue to thrive, regardless of the election outcome.
About Lansdown Insurance Brokers
Lansdown Insurance Brokers are specialists in Landlord Insurance, Block of Flats Insurance and Home Insurance. We can provide flexible policies to suit individual client needs and provide advice on what cover is needed. For more information call the team on 01242 524498.
Lansdown is part of the Benefact Group, a charity-owned, international family of financial services companies that gives all available profits to charity and good causes.