Research and reports
Liz Truss is to be the next UK prime minister after winning the Conservative Party leadership race today.
With 57 per cent of the vote, Truss beat Rishi Sunak to the top job and will be appointed prime minister on 6 September.
We take a closer look at how Liz Truss could affect buy-to-let landlords.
Liz Truss is MP for South West Norfolk with experience in the cabinet and as a government minister, most recently as foreign secretary.
Some of her biggest pledges that could affect the rental market include:
Liz Truss is promising the “biggest change in economic policy for 30 years” through cutting taxes and simplifying regulations.
Her pledge to reverse the planned rise in corporation tax (with hints she may even reduce the current rate of 19 per cent) could provide a boost for limited company landlords.
Meanwhile, her stance on simplifying regulations could lead to a slowing down of the regulation of the rental market. For example, some of the proposals in the Fairer Renting White Paper could be watered down or scrapped altogether.
With little detail on how Truss plans to review the Bank of England’s mandate, it’s hard to predict how landlords could be affected. However, a change to how the Bank of England works could see interest rates rise or fall, which could affect landlords’ buy-to-let mortgage repayments.
The new prime minister will have plenty of housing issues to deal with, from the construction of new homes to cladding regulations.
But what will Liz Truss need to consider when it comes to the rental market?
The government recently published its long-awaited white paper on rental reforms. It’s pledged to remove Section 21 evictions, encourage pet ownership in rental properties, introduce a rental sector ombudsman, and more.
What will happen to the Renters’ Reform Bill with a new prime minister and a reshuffle at the Department of Levelling Up, Housing and Communities?
It seems unlikely that the bill will be completely scrapped as the white paper has already been published.
However, some of the measures may be watered down to favour landlords.
A joint review of short-term holiday lets was launched by the Department for Digital, Culture, Media & Sport and the Department for Levelling Up, Housing and Communities at the end of June.
It aims to find out whether spot checks of short-term rentals, as well as a ‘kitemark’ registration scheme, would improve the quality of accommodation and compliance with health and safety rules.
Many believe that short-term lets are putting pressure on traditional housing stock, while the National Residential Landlords Association (NRLA) argues that those providing holiday lets can still benefit from the tax relief that long-term landlords can no longer claim.
The government’s consultation is due to close on 21 September. Traditional landlords, plus residents in holiday let hotspots, will be hoping Liz Truss takes the opportunity to tighten regulation of this part of the market.
In recent years the government has had plans to increase the minimum Energy Performance Certificate (EPC) rating in rental properties from E to C.
No formal plans have been published, but it’s thought the extension would apply to new tenancies from 2025 and all existing tenancies by 2028.
Our research found that if these changes were to be introduced, 55 per cent of landlords would need to make improvements to their rental properties. These costs would come at an estimated cost of over £5,000 for 46 per cent of those we surveyed.
As new prime minister, Liz Truss will need to weigh up the environmental and financial advantages of increasing the minimum EPC rating against the potential loss of housing from the market if landlords struggle to meet the criteria.
The NRLA is calling on the new prime minister to encourage investment in the rental sector to meet rising tenant demand.
It says that tax changes such as the restriction of buy-to-let mortgage interest tax relief and the three per cent stamp duty surcharge have caused the number of private rental homes in England to fall by almost 250,000.
Research carried out by Capital Economics suggests that removing the stamp duty surcharge could lead to an extra 900,000 rental homes entering the market.
Ben Beadle, NRLA Chief Executive, said: “The last six years prove that it was nonsense to think that cutting the supply of rental housing when demand is so strong would make it easier for those saving for a home of their own. Driving rents up just leaves tenants with less cash to save for a deposit.
“We need a strong and vibrant private rental market that meets the needs of those who rely on the flexibility it provides, those who need somewhere to live before becoming homeowners and those for whom the promise of social housing tomorrow provides cold comfort today.”
What do you want to see from Liz Truss as PM? Let us know in the comments below.
Conor Shilling is a Copywriter at Simply Business with over two years’ experience in the insurance industry. A trained journalist, Conor has worked as a professional writer for 10 years. His previous experience includes writing for several leading online property trade publications. Conor specialises in the buy-to-let market, landlords, and small business finance.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
6th Floor99 Gresham StreetLondonEC2V 7NG
Sol House29 St Katherine's StreetNorthamptonNN1 2QZ
© Copyright 2023 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.