What landlords can expect from the new Labour Government

As was anticipated, we now have a Labour government, and the big question for landlords in England and Wales is how things could change over this parliament and beyond.

Housing was one of the biggest areas of change in Labour’s pre-election manifesto, and this was reinforced in the King's Speech on 17^th July which prioritised Bills to speed up planning, introduce the Renters Reform Bill, make additional changes to Leasehold and Commonhold and also drive digital identities which could help improve buying and selling a home.

It will also be interesting to see what happens in Scotland, where housing policy is devolved to the Scottish Parliament.

Scottish National Party (SNP) policies for the Private Rented Sector (PRS) have been pretty controversial in recent years, but Labour now has a significant majority of 37 seats versus the SNP’s 9 (although the actual vote share in this election shows a much closer result at 35.3% vs 30%).

Meanwhile, here’s a round-up of Labour’s plans for the housing sector. With Deputy PM Angela Raynor at the helm of the newly named Ministry of Housing, Communities and Local Government, what can landlords expect to see enacted in the coming weeks, months and years?

Rental Reform

Under the Conservatives, the Renters (Reform) Bill (RRB) had got as far as the 2^nd reading stage in the House of Lords, before it was abandoned when Parliament was dissolved at the end of May.

Although Labour was broadly supportive of the Bill, they have their own slightly different plans under what’s been called a ‘renters’ charter’.

So, while they could resurrect the RRB, it’s possible that they will draft a new version.

Probably the biggest issue on the table is the scrapping of section 21. Last November, Angela Raynor promised that Labour would abolish section 21 on their first day in office.

However, the party has since said this wouldn’t happen within their first 100 days of power, and it’s hard to see how it could realistically be done quickly.

There are a lot of knock-on effects to consider, and the courts still haven’t recovered from the backlog caused by the pandemic.

The Conservatives had already said they wouldn’t move ahead until the court system had been reformed to ensure it could cope with the inevitable extra workload.

The other key differences between the RRB and Labour’s proposals for rental reform are:

• Ending automatic eviction for rent arrears
  Labour wants to remove serious rent arrears as a mandatory ground, to ensure tenants could challenge possession claims in court. This was not included in the RRB.
• Scrapping rent review clauses
  Both parties want to ensure that rents can only be increased once a year in line with the market. But while the RRB stated tenants must be given two months’ notice, Labour proposes doubling this to four months.
• Introducing a mandatory national landlord register
  Under the RRB, the Conservatives wanted to establish a Property Portal for the PRS, which would be:

1. A landlord and rented property register
2. An information hub to help landlords understand and comply with their legal obligations.

Labour is proposing a National Landlord Register, which is likely to require landlords to:

• Register themselves
• Provide details of their properties and rents
• Prove compliance with a new Decent Homes Standard
• Submit evidence of property and management compliance
• Submit a surveyor’s report regularly

There is currently no mention of this register also being an information resource for landlords.

• Introducing a Decent Homes Standard for the Private Rented Sector (PRS)
  There is currently a Decent Homes Standard for the social rented sector and both parties are keen to apply this to the PRS.

But Labour also wants to extend ‘Awaab’s Law’ to the private sector. The law was introduced for social housing landlords in 2023, after toddler Awaabs Ishak died due to his landlord failing to deal with extensive mould in the flat where he lived.

This would require private landlords to adhere to strict time limits to address dangerous hazards such as damp and mould.

The RRB also proposed ensuring tenants wouldn’t be able to give two months’ notice within the first four months of a tenancy, meaning they’d have to give a minimum six-month commitment.

Both the Conservative and Labour plans align on:

• Giving tenants the right to keep pets - unless landlords have a specific valid reason for refusing, such as the property being too small or a lease prohibiting pets.
• Allowing tenants to make reasonable alterations to their rented home, e.g. put up shelves or redecorate.
• Giving tenants the right to challenge unreasonable rent increases.

Raising the minimum EPC rating to C

The Conservatives had planned to raise the minimum EPC rating for rented properties to C – proposals were tabled to do this by the end of 2025 for existing and renewed tenancies and by the end of 2028 for new tenancies.

But then they scrapped those plans last September, as part of their overhaul of Net Zero policies, in order to make them fairer and more achievable. That took the immediate pressure off landlords.

However, Labour has more immediate plans to hit Net Zero by 2050 and has pledged a £6.6 billion injection into a Warm Homes Plan. As part of this, the party states: “We will ensure homes in the private rented sector meet minimum energy efficiency standards by 2030, saving renters hundreds of pounds per year.”

As such, we’re still thinking the new government could reintroduce plans to raise the minimum rating for the PRS to C within the next few years.

If Labour decides to follow Scotland’s lead, that would require all rented homes to have a C rating by the end of 2028.

So, if your rented property is currently rated D or E, it’s well worth considering making improvements to get that up to C or higher as soon as possible, for three very good reasons:

• It is highly likely to become a legal requirement before 2030
• Tenants are far more likely to rent an energy efficient home that’s cheaper and easier for them to heat
• Making improvements may increase the property’s value and potentially give you access to better mortgage products and rates.

Planning reform

At their last party conference, Labour promised to deliver, “a blitz of planning reform to quickly boost housebuilding to buy and rent and deliver the biggest boost to affordable housing in a generation… with fast-track approval and delivery of high-density housing on urban brownfield sites”.

Labour also plans to:

• Focus on developing ‘grey belt’ land – that’s things like disused car parks or wasteland
• Give more power to local communities over how housing can be built in their area
• Work with local authorities to ensure all local infrastructure and construction plans are quickly drawn up and agreed.

Building 1.5m homes and delivering more affordable and social housing

Because of the huge undersupply of social housing, there are now well over a million households on benefits renting in the private sector, where supply is now also under serious pressure.

Labour has pledged to continue with the new homes target of £300,000 a year and deliver a total of 1.5m by the end of its first five-year term.

It will take steps to ensure private developers contribute to the supply of affordable homes and help reinvigorate the social rented housing sector.

This is good news for the PRS. If Labour can succeed in properly supporting social housing and public and private funding initiatives, this should help take the pressure off the PRS. Landlords could even acquire or self-build properties that could be leased to the social sector.

Labour has also announced that it plans to build the next generation of ‘new towns’ - “new communities with beautiful homes, green spaces, reliable transport links and bustling high streets.” And it has promised that 40% of these new town homes will be affordable.

Of course, these developments will take some time to come to fruition, but it’s worth keeping an eye on developments within your area, to see what opportunities you could factor into your own future investment plans.

If you’d like to find out more about planning and development in your local area, or you have any questions about how the new Labour government’s policies might affect you, we’re here to help.

You can find the contact details for your local lettings team here.

 

Are you achieving the best rental income? Find out how much you could achieve in an instant with our online valuation tool.

Get an instant rental valuation