Residential Landlords Association (RLA)
Today in politics: Stamp duty, agent regulation, EPCs and Universal Credit
Today we examine a debate in the Lords over recent changes to stamp duty, look at questions to government on tenants’ fees, agent regulation and EPCs and evidence on Universal Credit.
Peers’ concerns over landlords’ stamp duty ‘advantage’
On Friday Peers considered and approved the Finance Bill, giving effect to the tax measures from the spring Budget.
It was also used as an opportunity to debate the legislation to enact the Government’s changes to stamp duty announced in the Summer Statement. Of note:
Lord Livermore of Rotherhithe (Labour, Opposition spokesperson and a former adviser to Gordon Brown) warned:
“The threshold increase also temporarily removes one of the few advantages that young people had in the housing market, while doing almost nothing to help first-time buyers.
“By including second-home buyers and buy-to-let investors, this measure will cost an additional £1.3 billion. It is surely right that we examine whether this delivers value for money, or whether these funds could be better spent supporting much-needed genuinely affordable and social housing.”
Lord Bruce of Bennachie (Liberal Democrat) said:
“Will not landlords take advantage of this holiday to put currently let flats on the market? This would cause distress and expense to tenants forced to look for alternative accommodation, which was surely not the intention of the measure.”
A former adviser to Gordon Brown, Lord Wood of Anfield (Labour) said:
“This is a cash boost for buy-to-let-landlords. Experts suggest that the move will certainly lead to greater transfer of buy-to-let properties into limited company structures to take advantage of mortgage tax relief, so that is one activity that will definitely be stimulated.”
Baroness Falkner of Margravine (Non-Affiliated) said of the stamp duty cut:
“I wish it had been longer-term relief for first-time buyers and not a rather blunt tax which will benefit second homeowners, buy-to-let landlords and all those who are the last people to need assistance at this point.”
A former Communities and Local Government Minister, Baroness Andrews of Southover (Labour) told the House:
“First, on the stamp duty issue and the problems facing young people, welcome though they are, the stamp duty proposals may have very perverse consequences for the most vulnerable people in the rented sector.
“Yesterday, I received the following message:
“Three days ago our landlord contacted us to say that he intends to put our flat on the market as a direct result of the proposed tax relief. The effect of this is increased anxiety, uncertainty and instability in a time when Covid-19 has heightened these feelings. While I understand the intention of the Bill is to stimulate the market and economy, the effect for those who rent is to precipitate an unplanned and unwanted search for a new home, affecting mental health, and at a time of financial uncertainty for many.”
“This is one personal instance to illustrate what my noble friend Lord Livermore said so eloquently. This is the voice of Generation Rent, for whom the prospects of owning their own home have disappeared over the horizon, who face a lifetime in rented accommodation and who could now well lose their jobs in the next six months.
“The Government are totally silent on the private rented sector, so my first question to the Minister is: how does he think people such as my correspondent should be protected? How would he answer that email?”
The Treasury Minister, Lord Agnew of Oulton told the House:
“The Government are committed to helping to support first-time buyers on to the property ladder.
“They will still pay no SDLT on purchases worth up to £300,000 once the holiday ceases, and although second home and buy-to-let property buyers will benefit from the tax change, they will continue to pay the 3% top-up of the standard SDLT rates.
“It is worth reminding noble Lords that it is this Government who have reduced some of the tax incentives for buy-to-let borrowers over the past few years.”
The full transcript of the debate can be accessed here.
Government quizzed on agent regulation
Karin Smyth MP (Labour, Bristol South) has received a response to her written parliamentary question asking with reference to the final report of the Regulation of Property Agents Working Group, published July 2019, when MHCLG plans to bring forward legislative proposals to establish an independent regulator.
Housing Minister, Christopher Pincher MP, responded:
“The Government remains committed to raising professionalism and standards amongst property agents and is grateful for the final report of the independent Regulation of Property Agents working group, chaired by Lord Best.
“We welcome the recent appointment of Baroness Hayter of Kentish Town as the Chair of a new independent steering group on codes of practice for property agents as an important development towards ensuring all customers are treated fairly and all agents work to the same high standards.
“Though our collective efforts are currently focussed on the response to the COVID-19 pandemic, we will respond to the report of Lord Best’s working group, setting out next steps, following careful consideration of its 53 recommendations, and we will consider any code produced by Baroness Hayter’s steering group in due course.”
No new legislation on tenant fees
Darren Jones MP (Labour, Bristol North West – Chair of the BEIS Select Committee) has received a response to his written question asking what assessment MHCLG has made of (a) the potential inefficacy of the provisions in the Tenant Fees Act 2019 in relation to preventing office and administrative costs being (i) improperly, (ii) excessively and (iii) arbitrarily passed to tenants by lettings agents; and if it will bring forward legislative proposals to (b) stop the charging of those costs.
The Housing Minister responded:
“The Tenant Fees Act 2019 bans unfair fees paid by tenants in the private rented sector in England. This includes most office or administration costs such as referencing, administration, inventory, renewal and check-out fees. Such fees are prohibited payments, and charging them to the tenant is a breach of the Tenant Fees Act.
“Letting agents or landlords that are found to have committed a breach of the Act will be liable for a £5,000 fine in the first instance, and if a further breach is committed within five years, they will be liable for up to a £30,000 fine, as an alternative to prosecution.
“The Act is enforced by local enforcement authorities, normally trading standards, who are supported with advice and information by a lead enforcement authority.
“The Act created this new Lead Enforcement Authority to support action against rogue agents. The Secretary of State has appointed the National Trading Standards Estate and Letting Agency Team to this role, and has provided them over £1,000,000 per annum in funding since the Act came into force.
“The Government has no current plans to bring forward further legislation at this time.”
Government questioned on EPC rules
The former Deputy Mayor for Housing in London, James Murray MP (Labour, Ealing North) has received a response to his written question asking what estimate the Government has made of the proportion of (a) fuel poor, (b) social rented and (c) private rented homes that will reach EPC Band C by (i) 2025 and (ii) 2030.
The Energy Minister, Kwasi Kwarteng MP, responded:
“As of the most recent fuel poverty statistics, 10% of fuel poor, 56% of social rented and 33% of private rented homes are EPC Band C or above.
“As set out in the Clean Growth Strategy, the Government remains committed to fuel poor homes being upgraded to energy efficiency Band C by 2030, and our aspiration is that as many homes as possible are EPC Band C by 2035, where practical, cost effective and affordable.”
Draft Building Safety Bill due today
The Government is to publish a draft of the Building Safety Bill today (20th July). The legislation will provide the legal framework for a new Building Safety Regulator for blocks taller than 18 metres, give residents more powers to challenge inaction on safety issues and protect leaseholders from huge bills to pay for safety work.
For more information click here.
Minister: ‘No-one has to wait five weeks for Universal Credit’
The Work and Pensions Select Committee has published the transcript of oral evidence from the Minister for Welfare Delivery, Will Quince MP, and the DWP official responsible for Universal Credit, Neil Couling, as part of its inquiry into the five-week wait for Universal Credit.
In the session, Mr Quince reasserted his claim that nobody has to wait five weeks wait for a payment under Universal Credit as advances were available to those who needed them and people could have 13 payments over the course of a year instead of 12.
He also added that the Government had removed the initial seven-day waiting period and that the Government also has plans to reduce the maximum deduction that could be taken from UC payments and to double the amount of time claimants had to repay advances.
Of note, the committee also heard:
- People with rent arrears reduce their levels of arrears over time whilst on Universal Credit
- People are applying for Universal Credit far too late, which is leading to them building up more rent arrears and other debt, and more needs to be done to encourage people to apply as and when they need support
- The plan was for Universal Credit to be introduced with a four-week assessment period, as confirmed by former Work and Pensions Secretary Iain Duncan Smith in an evidence session earlier this month. The Bacs three-day waiting period for a payment to be processed means that claimants cannot begin to receive their UC entitlement for five weeks. Mr Quince added that there was no way to reduce this from five weeks to four weeks. Mr Couling said that there were limits on the number of fast payments the Department could make, making the Bacs waiting period unavoidable.
- In theory the system could be redesigned to align with calendar months, rather than claimants being paid on a specific date each month but it would create a massive strain on the system as payments would have to be made manually rather than automatically.
- The DWP is reluctant to introduce non-repayable grants as this would require a “fundamental redesign” of the system and there could be a risk that it could both increase waiting times and fraud. Mr Quince also said the DWP does not currently have the capacity to explore these grants and had not been granted funding from the Treasury to do so.
A transcript of the session can be found here.
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