The Eve of an Election! Here are our thoughts on key economic policies from the big Four Political Parties set to run tomorrow onn July 4th, and how they will affect future Buy-To-Let Property Returns:
THE LABOUR PARTY.
Labour's Property Policies:
1.5 Million Homes over Five Years [MANDATORY].
Removal of Right-To-Buy Schemes.
National Landlord Register:
All Landlords will now need to register with a national landlords register so their presence in the business is mapped.
Grey-Belt Housing Development:
Reclassifying poor-quality green-belt land as grey-belt and starting construction - aiming for 1.5 Million new houses.
Bidding Wars and Quality Incentives:
Landlords are no longer allowed to start a bidding war for properties. Although Tenants can still offer to pay above the asking price. To increase rent the landlord must improve the quality of the property.
Labour's Tax Policies:
Labour will not increase income tax, national insurance or VAT.
Cracking Down on Tax Evasion:
An additional 5 Billion budgeted for tracking down Tax-Dodgers.
A New Fiscal Lock:
To guarantee in law that any government making significant tax and spending changes will be subject to an independent forecast from the Office for Budget Responsibility.
Business Tax Incentives:
For the period of the next parliament, Labour will cap the headline rate of corporation tax at its current rate of 25 per cent, the lowest in the G7.
Labour's Tax Policies:
Increasing the Minimum Wage to a ‘Living Wage’.
Bolstering and Updating Trade Union Legislation:
To remove unnecessary restrictions on trade union activity and ensuring industrial relations are based around good faith negotiation and bargaining.
Banning Zero-Hour Contracts:
To guarantee that all contracts clearly state working hours.
Ending ‘Fire, ReHire’:
To end the practices of ‘fire and rehire’ and ‘fire and replace’ that leave working people at the mercy of bullying threats.
Our Takeaways:
Housing: While increased regulation and mandatory grey-belt housing development will initially drop housing prices and rental ROI, this will create a market fit for purchasing new properties at low prices, which can then be leveraged into higher asking prices through a positive record on the National Landlord’s Register down the line.
Tax: Capping Corporation Headline Tax will incentivise foreign investment in UK development projects.
Employment: Raising wages and bolstering worker’s rights will lead to a natural increase in all outsourced costs when implementing a Buy-To-Let Strategy.
THE CONSERVATIVE PARTY.
Conservative Property Policies:
1.6 Million New Homes over Five Years.
Renters Reform:
To "deliver fairness in the rental market for landlords and renters alike". Plans within the bill include abolishing Section 21 ("no-fault") evictions and strengthening other grounds for landlords to evict private tenants guilty of anti-social behaviour.
Leasehold Reform:
Blocking landowners from leasing properties, capping leasehold rent at £250,
Stamp-Duty Tax Reform:
SDLT is charged on all land and property purchases with valued at £250,000 or more.
Conservative Tax Policies:
Maintain Current Income Tax Policies:
Cut Taxes for Workers:
Halving National Insurance from 12% to 6% by April 2027.
Cut Taxes for Self-Employed Workers:
Halving National Insurance from 12% to 6% by April 2027.
Introduce a “Triple Lock Plus” for pensioners from April 2025:
“Triple Lock” Pensioner Tax rates to ensure a higher spending allowance for Pensioners.
Stamp-Duty Tax Reform:
SDLT is charged on all land and property purchases with valued at £250,000 or more.
Conservative Employment Policies:
Mandatory National Service:
To reintroduce National Service, mandatory for all 18-year-olds and will involve young people being given the choice between two options:
Military or Civic Service work.
30 hours free childcare a week for working parents.
Funding 100,000 high quality apprenticeships:
Cutting costs on poor-quality university degrees and reinvesting in high-quality apprenticeships.
Minimum Service Level Legislation:
Clamping down on strikes through legislation that requires a minimal level of service from unions/workforces.
Our Takeaways:
Property: 1.6 Million homes is not stated as a “Mandatory Policy”, and given the current conservative track record is of no concern. however increasing SDLT will raise the initial costs of investment. Leasehold reforms will inevitably limit possible ROI.
Rental reforms have been frozen in parliament since 2019, and are unlikely to be employed in the near future.
Tax: Capping Corporation Headline Tax will incentivise foreign investment in UK development projects.
Employment: Mandatory National service will decrease the young workers pool, providing the demographic with greater wage leverage.
REFORM UK.
Reform UK Property Policies:
“Unleash House-Building Across the Country”.
Local Priority for Social Housing:
Prioritising local people and those who have paid into the system for social housing.
Reform UK Tax Policies:
Reducing the Headline Corporation Tax-Rate:
Reducing from 25 per cent to 20 per cent and raise the threshold for paying the tax from £50,000 to £100,000.
Abolition of IR35 Rules:
Abolishing regulations introduced by the Conservatives, liberating off-payroll working.
Scrapping Business Rates & Online Delivery Tax:
To “create a fairer playing field” for high-street businesses versus online competitors.
The VAT threshold would be raised to £120,000 to “free small entrepreneurs from red tape”.
Raising Income-Tax Threshhold to 20,000.
Reform UK Employment Policies:
Fixing the Benefits System:
Fixing the benefits system by enforcing a two-strike rule for job offer, if jobseekers have not found a job in four months, they must accept the 2nd job offer they receive. If they reject it, benefits are withdrawn.
Prioritising Local Workers:
To raise the national insurance rate from 13.8% to 20% for foreign workers to “incentivise businesses to employ British citizens”
Our Takeaways:
Property: Reform’s property policies are highly vague, but bidding wars will now be leaning towards British Nationals. If implemented exactly as written the UK Housing Market could become a race-based economy.
Tax: Reducing the Headline Corporation Tax encourages foreign investment, and raising the cap to 100k protects small businesses, allowing for a greater investment pool for Buy-To-Let opportunities.
Employment: To incentivise the hiring of British Nationals decreases opportunities for cheap foreign labour. Reducing ROI. Also gives a smaller pool of workers greater leverage in terms of wages.
THE GREEN PARTY.
Green Party Property Policies:
Right Homes, Right Place, Right Price Charter:
To simultaneously protect valuable green space for communities, reduce climate emissions, tackle fuel poverty and provide genuinely affordable housing.
Insulating Homes:
Creating better insulated homes to raise EPC ratings and cut energy costs.
150,000 New Social Homes Per Year.
Local Authority Rent Controls:
Local authorities can now ensure rental markets are affordable. No-fault evictions will also be removed, Tenants can also request clean energy for their home.
Green Party Tax Policies:
Wealth Taxes:
A Wealth Tax of 1% annually on assets above £10 million and of 2% on assets above £1bn.
Reform of Capital Gains Tax (CGT):
To align the rates paid by taxpayers on income and taxable gains.
Removing the Upper Earnings Limit:
To un-restrict the amount of National Insurance paid by high earners.
Green Party Employment Policies:
Repeal of Current Anti-Union Legislation:
Creating a Positive Charter for Worker’s rights.
A maximum 10:1 pay ratio for all private- and public-sector organisations.
An increase in the minimum wage to £15 an hour for all ages:
To reduce National Insurance payments for a higher Minimum-wage.
Equal Rights between Employers/Employees:
Immediate mandatory equal rights on their first day of employment, including zero-hours contracts.
A move to a four-day working week.
Our Takeaways:
Property: Buy-To-Let ROI will significantly decrease under Green Party Housing Legislation. Local Autheority Rental Regulation will pulverise return on investment and remove bidding entirely. Green energy requirements will also increase property development costs.
Tax: Wealth taxes will impact high-value ROI on larger property deals. Reducing National Insurance caps on high-net worth individuals will also reduce investment incentive into projects.
Employment: Increased Worker’s rights will lead to lower ROI on development costs.
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