GE24: What are the parties saying on tax and welfare?

With the election in full swing, all parties have now published their manifestos.  

With around half of landlords and agents still undecided, the property sector’s vote is likely to be influenced by each party’s plans for the private rented sector (PRS).  

To help keep our members informed, we are doing a series comparing the various promises in each manifesto. Last week we looked at rental reform and this week we’re looking at tax and welfare. 

Taxation 

All of the political parties have something to say about tax, but relatively little is focused on taxes on landlords specifically. Though there are some interesting commitments nonetheless. 

Mortgage interest relief 

Only one manifesto talks about mortgage interest relief. Reform have said that if they were elected they would reintroduce mortgage interest relief and scrap Section 24 within the first 100 days of parliament.  

Stamp duty 

Labour and the Lib Dems would add a stamp duty surcharge on overseas residents which may impact on landlords living outside the UK. It is unclear if either of these proposals would be in addition to the existing surcharge for purchases of additional properties though. 

Capital gains 

For most other parties, capital gains is the main focus of reforms that could impact on landlords.  

The most eye-catching policy in the main party manifestos is in the Conservative one, which promises a capital gains tax exemption for landlords who sell to a sitting tenant. However, detail on this is relatively light and it’s not clear how restrictive access to this exemption would be.  

Estimates suggest this capital gains tax exemption would save a typical landlord around £21,000 on sale. However, the costing document for the Conservative manifesto indicates that only around 950 sales would qualify for the exemption. This suggests that the policy will either be significantly more expensive than forecast or heavily restricted. 

Labour doesn’t mention capital gains in their manifesto, though they have faced repeated calls to clarify whether they would raise CGT. So far, the Labour Party has only committed to not raising CGT on the sale of a primary residence though. 

In contrast, both the Lib Dems and the Greens have been very clear on their plans for CGT. The Greens would align CGT with income tax rates, while the Lib Dems would reform CGT so it was payable exclusively on gains and taxed at - 

0% for gains below £5000 

20% for gains between £5,000 and £50,000 

45% on gains above £50,000 

Universal Credit and Local Housing Allowance 

After a number of years of being frozen, LHA rates were raised earlier this year. This brough them back up to the 30th percentile of local rents. However, this was a one-off raise and the next Government will have to decide whether they will annually uprate them to reflect increasing local rents.  

Unfortunately, despite widespread support for annually improving Local Housing Allowance (LHA) rates, no party mentions it in their manifesto, leaving it unclear whether the next government will provide the support needed to tenants on lower incomes. 

On Universal Credit, the major parties haven’t provided a great deal of detail on their plans: 

The Conservative party intend to accelerate the rollout of Universal Credit and give DWP more powers to investigate potential fraud by claimants.  

The Labour Party have committed to ‘reviewing Universal Credit so it makes work pay and tackles proverty.’ 

Latest announcements from the campaign trail 

The Labour Party provided a little more detail this week on what rental reform might look like should they form the next government.  

This week they announced two policies that were not included in the manifesto: 

• A ban on rental bidding wars; and  
• Capping upfront rent payments. 

Detail on these policies is still very much required and, should Labour form the next Government, we will be working constructively to ensure that these policies allow landlords the flexibility to let to the most suitable tenant for them.4  

Further information 

If you’d like to read more about the various manifesto commitments, the NRLA General Election page has a dedicated page covering all the manifesto promises to help keep our members informed.  

In addition to this, the NRLA has published its own set of key asks for the next Government. These asks are aimed at supporting responsible landlords to provide homes in a thriving private rented sector. They are available to read here.