Labour Sees Red Over Taxing Greedy Landlords
It's party conference time again, with Labour seeing red over rich and greedy landlords making money at everyone else's expense. At least, that's how the rhetoric goes.
As a warm-up for the main conference, Shadow Chancellor Rachel Reeves and Shadow Housing Secretary Lucy Powell revealed Labour's plans for property investors in separate speeches.
Reeves explained how the party intends to bring in new taxes on wealth, with landlords and shareholders the main target of a new, fairer tax system.
"I do think that people who get their income through wealth should have to pay more, like people who get their incomes through stocks and shares and buy-to-let properties," she said. "We should use the tax system to ask those with the broader shoulders to contribute more."
New commercial property tax
She added that the COVID-19 pandemic has forced the government to borrow more and that paying down that debt could take generations if the government does not raise taxes for the wealthy. Reeves spoke at a People's Vote press conference at the National Institute of Economic and Social Research in London.
In another speech at the Brighton conference, Reeves disclosed Labour would scrap business rates in favour of a new commercial tax.
The plan is to freeze business rates until 2023 in England. By then, the party will have a plan and replace rates with a new tax. Hundreds of property investors letting out furnished holiday lets pay business rates rather than council tax.
Tax hike not planned but still a possibility
She added that Labour had no plans to increase income tax – although leader Sir Keir Starmer did not rule out the measure and pledged any tax changes would not 'unfairly hit working families. Reeves says she wants to scrutinise hundreds of tax breaks to scrap everyone that 'doesn't deliver for the taxpayer or the economy.'
"Tax reliefs create extra layers of complexity to navigate, and added together, they cost more than our entire NHS budget," she told delegates.
Also speaking at the party conference, Powell unveiled a range of measures designed to help first-time buyers with a knock-on effect for landlords.
Leg-up for first-time buyers
Firstly, she promised to limit the number of homes foreign investors can buy on new developments coupled with new rules allowing builders to only sell to first-time buyers for six months
"The Conservatives see housing as a commodity: to be traded, profited from, part of an investment portfolio, a pension pot, not as the bedrock of stable lives and life chances. Their record speaks for itself: Record numbers living in insecure private rents, a huge net loss of social housing. And with over-heated prices and homeowner numbers down –they can't even claim the mantle of homeownership anymore," said Powell.
"We will give first-time buyers first dibs on new developments and put an end to the outrageous practise of foreign hedge funds purchasing swathes of new homes, off-plan. These reforms are a first step to putting housing at the heart of the battle for Downing Street.
"Labour, the party of homeowners and tenants, the Tories, the party of speculators and developers. Labour, once in a generation, fixing the housing crisis with a new settlement."
Struggling to save £50 a month
Separately, new research hints at the precarious financial existence of many private tenants. Investment and pensions platform Hargreaves Lansdown has released a survey that shows more than one-in-three private renters have less than a month's savings to see them through hard times – much lower than the one in six with a mortgage or one-in-20 who own their home outright.
Only one in five renters agreed their finances are in good shape compared with half of mortgage payers and a third who have no loans against their home. But renters turned the tables on homeowners when discussing savings. While one in four homeowners struggle to save £50 a month, half of private renters manage to put at least that much aside.
Older renters hit hardest
"You might think this is a problem for young renters and is just a function of starting life with a low income and higher outgoings before you've had the chance to build up any savings," said Sarah Coles, the firm's personal finance analyst.
"However, the savings gap between renters and owners grows as we get older and is highest among those aged 65 and over. If you're part of Generation Rent, you need to improve your resilience because it will not get easier over time.
"Renters have to work much harder to build their resilience because they spend far more of their income on rent than homeowners spend on a mortgage. On average, almost 30 per cent of their income goes on rent, compared to 20 per cent for those with a mortgage. It means there's far less in the budget to save for emergencies.
“Working people should have between three and six months' money set aside for essential expenses just in case of nasty surprises. Retirees should have one to three years' worth, which can seem like a mountain to climb when you're only just making ends meet.”
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Investing in a private rented property can be achieved in a variety of ways. Sometimes landlords inherit a property that they then turn over to renting. Sometimes owners of properties become unintentional landlords because they are unable or unwilling to sell a property at the value the market currently dictates.