What the Queen’s Speech means for landlords

The Queen’s Speech to Parliament laid out the entirety of the new government’s legislative plans for the coming year, many aspects of which will have a genuine impact on landlords and the private rental sector – although not in the universally positive way that the Conservatives’ election campaign promised.

Extending ‘Right to Buy’

The Housing Bill outlined in the Queen’s Speech will extend Margaret Thatcher’s ‘Right to Buy’ to housing associations as well as council tenants, in a move described by BBC News as “one of the first controversies of the new Conservative government”. Housing charity Shelter say that the Conservatives are ““selling off two affordable homes for the price of one”, while even Tory-leaning commentators have criticised this decision, with the Telegraph calling this element of the Housing Bill “economically illiterate and morally wrong.”

Right to Buy is great in theory, but the less attractive reality is that it will likely just drive up house prices and worsen the already severe shortage of housing. The real solution here is to build more – especially in London. The Housing Bill will also aim to give cities more power to build new homes, in addition to helping self-builders secure plots of land. It is unclear though, whether that is enough to counter the 1.3 million housing association tenants who will be eligible to snap up perfectly rentable properties with their Right to Buy discounts.

Lowering benefit caps

The planned Full Employment and Welfare Benefits Bill seemingly amounts to “we’re trying to trim £12 billion from the benefits budget”, but the lack of detail in how the government intends to achieve this has got many worried. Slashing housing benefits and freezing working age benefits means that more families will struggle to afford the cost of rising rents. Shelter’s Head of Policy Toby Lloyd states that “until the chronic shortage of genuinely affordable homes is solved, cutting the support people need to pay the rent will simply drive more people into the nightmare of homelessness.”

This also ups the risk factor for landlords whose existing tenants depend on housing benefits. Does David Cameron intend to shoulder the inevitable eviction costs when these renters can no longer fulfil the terms of their tenancy?

Introducing tenant immigration checks

The government has also announced that  checks on the immigration status of prospective tenants will be made mandatory for landlords, with a £3,000 penalty for non-compliance. Mandatory immigration checks for landlords have been piloted in the West Midlands since December, although many landlords and agents have yet to fill in a survey on the checks.

“It’s important that landlords and lettings agents respond to the final survey but even more important that the Government publishes the results to facilitate full discussion both within the lettings industry and also between the industry and the Government,” says Lisa Simon, National Head of Lettings at Carter Jonas. “It’s difficult to see how any sensible wider roll-out of the Right to Rent regime, although it has long been forecast to come this year, can be made before the full results of the survey have been analysed and made public for full discussion.”

This means we will have to wait until later this year to hear the official findings. While David Cameron is keen to take this scheme nationwide, it is crucial that the results of the pilot scheme are examined and made available first, to determine if it has been at all effective. If a decision is taken to roll out this scheme across the country, it will doubtlessly mean additional costs and red tape for landlords.

George Spencer is CEO at Rentify.