RLA examines impact of BREXIT on residential landlords

John Stewart, Communications Manager at the RLA (Residential Landlords Association) has looked at the potential impact on landlords of leaving the EU.  He says: “The UK has voted to leave the European Union. Where does that leave landlords and the private rented sector? In many ways, exactly where we were before the vote – surrounded by a huge cloud of uncertainty.

The leaders of the Leave campaign have been short on detail when it comes to what a post-Brexit UK would look like, beyond ‘taking back control’ and making Britain great again’.  The Prime Minister will step down in October, adding a Conservative leadership election to mix.

So much depends on the manner in which the UK exits and how far any new Conservative Government wishes to compromise with our erstwhile European partners. With thousands of laws and regulations dependent on EU directives and treaties, one thing is clear – unpicking this legislation will dominate Westminster’s timetable for the remainder of this parliament.

For the PRS, Brexit and Conservative turmoil may offer opportunities. Changes at the Treasury could mean a new Chancellor, receptive to reconsidering the Government’s tax onslaught on independent private landlords and the damage it will do the housing market.  The RLA will certainly be escalating campaigning efforts in this area.

Also key to the sector will be the response of the Bank of England.  Will a record-breaking run of low interest rates end, or will economic turmoil mean rates remain frozen, or even be cut further?

There is a raft of PRS legislation on the cards from the Housing and Planning Act and Immigration Act. Can the Government find time to implement these changes? Will proposed changes to mandatory HMO licensing also bite the dust?

A new immigration bill is now inevitable.  Right to rent checks have only just been rolled out. Could tighter immigration controls and the end of free movement of EU citizens see these abolished?  Or could landlords find themselves having to retrospectively check EU tenants, who lose their unlimited right to rent? It is also possible that even more substantial controls will be imposed on landlords under such a bill.

Climate change has driven many EU regulations, and legislation affecting energy and environmental measures will need to be revisited including VAT on energy saving materials, EPCs, and the heat network regulations.

A large amount of consumer protection legislation affecting the PRS is also EU led, including protection from unfair trading which is key for property buyers as well as tenants as it deals with all aspects of property misdescription.

All these regulations must inevitably fall as they are only made under authority conveyed by the European Communities Act 1972.  Government will need to decide on an item by item basis if they intend to retain each regulation and then make a provision in primary legislation to do so. Alternatively, they could make legislation retaining all existing regulations and then look to selectively repeal some of them. In either case there will doubtless be a great deal of interest in which regulations are to be kept and which dispensed with.

A key factor will be how quickly markets adapt to the economic shock of exit.  The pound has already plunged. It may recover once the initial surprise has passed but a weak pound makes overseas investment in UK property cheaper, leaving UK investors at a disadvantage. The market has also punished lenders and house builders and so the slowdown in housebuilding and lending is likely to continue until we see some clarity in the way forward.

The road to leave will be a long one, probably longer than the two years stipulated in Article 50 in the Treaty of Lisbon. The long-term impact on the UK economy in general, and private renting in particular, cannot be predicted with any accuracy. A period of uncertainty is unavoidable in the short to medium-term while attempts to restore stability are made.”

Leave a Reply

Your email address will not be published. Required fields are marked *

CAPTCHA Image[ Change Image ]