This month’s Queen’s Speech was a significant one for the property sector. It announced sweeping changes to the planning system, rules on tenant evictions, and also the controversial leasehold system. But what, precisely, were the changes? And will they have a positive impact? Here’s our Oprah-style ‘reveal all’ exclusive…
Fail to plan, plan to fail
We start with the new Planning Bill, which is designed to boost housing stock and help the government meet its target of 300,000 new homes per year. It comes hot on the heels of the new Help To Buy scheme and new rules allowing commercial premises to be converted into homes.
The crux of the plan is to simplify and speed up our archaic planning procedures whilst making it tougher for local residents to block new developments. Housing secretary Robert Jenrick’s vision is to transform a slow, document-based process into a streamlined journey that’s mostly done digitally.
The government also wants to cut red tape. It currently takes five years for standard housing developments to go through planning. That’s slower than molasses. The new Planning Bill therefore allows land designated for new homes, schools and hospitals to receive permission automatically.
Whilst these reforms will represent a seismic shift for local authorities, it’s hard to argue against any changes that will speed up planning. After months of record-breaking sales, largely inspired by the stamp duty holiday, the country desperately needs new housing stock. Consequently, developers and homebuyers should be pleased with this news.
Relief for renters
The next big news from Lilibet’s lecture was the reform package for the private rented sector. Nothing has actually happened yet – Boris’s crew will formally announce its Renters Reform White Paper this autumn – but we already know what’s on the agenda.
The most significant change will be the abolition of Section 21, which will outlaw so-called ‘no fault’ evictions. Landlords can currently give tenants two months’ notice once their contract has come to an end. However, landlords will have to provide legitimate reasons for turfing tenants out under the new law. This gives them more protection and encourages longer-term tenancies.
A lifeline for landlords?
It’s not all bad news for landlords though. The government is strengthening their right to either sell properties or move into them. However, this is likely to be limited to tenancies over two years old. What’s more, like the cessation of Section 21, it could take between 18-24 months before these reforms actually become law.
We can see the tricky balance that the government is trying to strike here. The intention is to enhance the rights of renters (which obviously has political benefits) whilst not upsetting property investors. At the heart of the reforms, however, is the assumption that both tenants and landlords prefer the security of a longer-term rental. But is this always the case? We’ll have to see precisely how the reforms work before passing final judgement.
A step too far?
The final item that will reform the rental market is the introduction of ‘lifetime deposits’. Also known as ‘deposit passports’, this is the government’s attempt to solve a perennial problem: tenants needing to pay a fresh deposit on a new home before they’ve received the deposit on their old digs back.
The ‘lifetime deposit’ concept is to simply transfer a tenant’s deposit from one landlord to the next when they move. This is great news for tenants but might make landlords fret about retaining monies for damaged items or unpaid rent. This is a concern because landlords might also be worried about the impact of abolishing Section 21.
Whilst tenants need protecting, we mustn’t forget that the eviction ban has already made life tough for some landlords during the pandemic. Consequently, there must be a danger that would-be investors now decide to put their money elsewhere as a result of these reforms
Grounds for abolition
The other big issue raised by the monarch’s monologue was the abolition of ground rents. Many will see this as great news because nothing puts off investors (not to mention mortgage providers) like ground rents that double every 25 years. Indeed, Propertymark have wanted the government to look at this problem for years.
We’re pleased, therefore, that Boris’s bunch have decided to ban ground rents on new-build properties. However, some industry experts would like the law to go further and extend the ban to existing properties to ensure a level playing field for all.
Before we sign off, we’d also like to mention the decision to establish a new Building Safety Bill to prevent future tragedies like Grenfell. This is extremely welcome. Grenfell was a terrible tragedy that’s now impacting thousands of leaseholders who can’t afford to replace unsafe cladding on their buildings.
As a B-Corp, we were also delighted by the government’s new Environmental Bill, which will make biodiversity, net zero and energy efficiency targets legally binding. It’s great to know that sustainability will be a factor in planning decisions in the future.