How will the General Election affect Home Owners?

With the country set to elect the next government on Thursday (7 May), the political parties have been unveiling their policies in a bid to win votes.
The future of the NHS and the state of the economy have been central to all the main party’s campaigns, but landlords, tenants, first time buyers and established home owners alike are no doubt keen to know what each is thinking when it comes to housing.
Stamp duty, bedroom tax and the housing stock are all key issues in the race to Number 10; each has proved decisive as the main parties provide potentially conflicting solutions to benefit their core voter base.
While earlier this year an Ipsos MORI poll revealed 75% of the general public and two-thirds of MPs agreed there is a housing ‘crisis’ in Britain .
In light of these findings, and with election campaigns gearing up, we look at what are the biggest issues facing landlords, and what have each of the major political parties pledged to do to solve them?

New homes

In recognition of a housing shortage the three major parties seem to have each committed to building new homes:
• The Conservatives have pledged to build 100,000 new homes for first-time buyers only
• Labour has said under their leadership 200,000 new homes would be built every year until 2020
• The Liberal Democrats have pushed even further saying they would like to see 300,000 new homes built each year for the next five years
• The Green Party say they would invest £6bn a year into social housing, and there would be 500,000 social rented homes in place before the next General Election

Renters’ market

Due to rising house prices as a result of demand, tenants are feeling the pinch of higher prices. According to Ipsos MORI 41% of renters are feeling worried about affording the rent a year from now and 57% aren’t confident that any party has a solution.
• Labour would only allow landlords to review rent every three years and any increases to be in line with inflation or demand. Tenants would also have more security with a three year tenancy, as opposed to six months
• The Greens have also pledged to introduce a rent control of their own
• The Lib Dems want to cap rent increases and crack down on letting agent fees

Bedroom tax

The controversial under-occupancy penalty, quickly dubbed the bedroom tax, was introduced by the coalition government back in 2013 in a bid to save money by reducing the benefits of social tenants with a spare bedroom. What is each party saying about this in the 2015 General Election?
• The Conservatives stand firm and say they would retain this policy if they were re-elected
• The Liberal Democrats have adjusted their stance and say they would only apply the ‘bedroom tax’ on those who have refused reasonable alternative accommodation
• Labour, the Green Party, UKIP and Plaid Cymru all say they would scrap the policy if elected

Stamp duty

The government’s last Autumn Statement before the election contained changes to the rules on stamp duty – with buyers expected to pay a certain percentage on the price of their new home within different brackets, in reply to Labour’s bid to impose ‘mansion tax’ on higher earners.
• The Conservatives remain steadfast on their new policy, which will net an estimated £800 million per year
• Labour wants to abolish stamp duty for all first-time buyers purchasing a property worth up to £300,000
• The SNP’s new land and building transaction tax (LBTT) replaces stamp duty in Scotland; the tax will cost 10% on homes bought between £250,000 and £1 million

Inheritance tax

As it stands, estates worth above £325,000 are liable for 40% inheritance tax of the difference. If your estate is worth £350,000 for example, your survivors would stand to pay £10,000 in inheritance tax (40% of £25,000) before they can divide up the rest of the estate.
• The Conservatives wish to raise the current inheritance tax threshold to £1 million by introducing a Family Home Allowance worth up to £175,000 per parent
• Labour is strongly opposed to this idea, stating that the Treasury estimates such an increase means 90% of cases would not apply, and would rather use the money to lower VAT rates
• The UK Independence Party (UKIP) has pledged to completely scrap inheritance tax

With many contrasting stances taken by the UK’s political parties on what’s become a very divisive issue, before you cast your vote at the 2015 General Election it’s important to understand how each party’s policies on housing may affect you and your investments.

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