Welcome to Part 2 of our coverage of The Property Breakfast Briefing at London’s Royal Academy of Arts, organised by the UK’s National Landlords Association.
The first part of this report generated a real buzz from readers earlier this week. Here’s the second and final installment of my report on this enlightening May morning in central London, focussing on the future of the UK residential market and the prospects for the private rental sector (PRS) in the new political world of taxed business expenses for some sectors of UK property investment.
In the second of this two-parter from the Briefing are key comments from the panel and in particular Jim Pickard, the Political correspondent of the Financial Times, who gave his views on the recent Mayoral changes in London and its likely effects on the PRS.
Part 2 : Speaker – Jim Pickard, Financial Times’ Chief Political Correspondent
Here are the key topics covered by JIm during his presentation at the gathering, followed by some animated Q&A…
On the impact to housing of the new London Mayorship
The new London Mayor Sadiq Khan won the election with two key issues in his manifesto : transport and housing, so expect reform of both of these to feature highly (and quickly) during his term. At the end of the day London is a basically a labour city, so such a vote for a labour Mayor during a mid-conservative national term comes as no great surprise.
Issues with private lettings agencies are in focus and the mayor looking at setting up a public run letting agency. No details are available yet but we watch with great interest.
London has a population of 8.6m and this is widely expected to rise to 10m by 2030. The private sector is nowhere near meeting this with new build construction.
Another area of concern has been the proliferation of Iceberg basements (the construction of very large living spaces below existing high end properties, in prime central London – Moves are afoot to tighten up on planning permissions for these.
More significantly it is likely that foreign off-plan investments into London will be made more difficult, to level the playing field for UK based buyers.
Indeed a recent survey on behalf of KPMG indicates that 2/3 of foreign investors are concerned about potential policy changes following the Mayoral election.
Despite a widespread concern, the Mayor has no direct power to place a cap on rental income.
The mayor is expected to encourage all London boroughs to introduce landlord licensing, based on the results of the “test case” in the Borough of Newham. But there are government restrictions on how widely this can be implemented. If a borough wishes to have more than than 20% of its rental stock to be under license, it would need to seek direct permission from the housing minister, who can refuse this.
Pickard believes there would likely be an Immediate depreciation of sterling in the event of a vote to leave the EU.
This would further increase the popularity in London and elsewhere for foreign property buyers.
Not surprisingly much of the discussion centred on the impact of the new world of tax legislation for private landlords.
One audience member, a landlord of 30 years, commented that despite the many challenges during that time, she has never felt so gloomy.
The panel commented on methods likely to be used by landlords to survive in the new climate. Landlords will need to carefully control their costs.
Notably, there was a prediction that landlords are likely to shop for better letting agent deals. In particular they will be more critical of tenancy renewal charges. They expect the market to become less complacent and more competitive, good news for those relying on agents.
Landlords are expected to be more likely to self manage their properties to improve cashflow. Whilst professionally-minded landlords will respond to the challenge appropriately this is seen by some to represent a danger to the quality of property management in the PRS in the near future.
One final sobering word came from Richard Lambert, CEO of the National Landlords Association: Given the track record, and the current political and popularist sentiment, It’s quite possible that rent controls could be introduced by the present conservative government.
For that, we will just have to wait and see…
Please post your comments or questions on any of the issues raised, or if you’d like more detail with a one-to-one chat with me over the next few days, contact me directly using link below.