Farage emerges as the landlords’ champion

Nigel Farage’s Reform UK party has made several bold pledges regarding housing and tax reforms in their “Contract With You,” aiming to implement significant changes within the first 100 days if they gain political influence. Here’s a breakdown of the key points:

Key Pledges on Housing and Taxes

  1. Reversing Section 24 Landlord Tax Changes:
    • Section 24: This change removed landlords’ ability to deduct most finance costs, including mortgage interest, from rental income before calculating tax. Reform UK promises to scrap these changes, allowing landlords to deduct these costs again.
  2. Abolishing the Renters Reform Bill:
    • Reform UK believes existing legislation is sufficient to address bad practices in the rental market and plans to boost monitoring, appeals, and enforcement processes instead.
  3. Reviewing the Planning System:
    • Fast-Track Planning: Reform UK plans to accelerate planning processes and provide tax incentives for developing brownfield sites, unused offices, and vacant high street properties.
    • Section 106 Contributions: They aim to review and possibly reform the system of developer contributions for infrastructure to speed up house building.
  4. Reforming Social Housing Laws:
    • Prioritizing local people and those who have contributed to the system, with foreign nationals placed lower on the priority list for social housing.

Beyond the Initial 100 Days

  1. Encouraging New Construction Technologies:
    • Incentives for modular construction and smart infrastructure to modernize building practices.
  2. Promoting Vocational Training:
    • Introducing new apprenticeships and vocational courses to increase the supply of skilled domestic workers, reducing reliance on cheap overseas labor.

Other Notable Economic Policies

  1. Cutting Residential Stamp Duty:
    • Stamp Duty: Reform UK plans to reduce Stamp Duty significantly:
      • 0% for properties below £750k.
      • 2% for properties between £750k and £1.5m.
      • 4% for properties over £1.5m.
  2. Abolishing Inheritance Tax for Estates Under £2m:
    • Estates below £2m would be exempt from Inheritance Tax, affecting approximately 98% of estates. For estates above £2m, a tax rate of 20% would apply, with an option to donate to charity instead.

Broader Implications and Challenges

  • Housing Supply and Immigration:
    • The contract notes a significant increase in the UK population and links housing pressure primarily to mass immigration. Reform UK suggests that reducing immigration and streamlining planning regulations are crucial to addressing the housing crisis.
  • Economic Feasibility:
    • Farage claims the ambitious tax cuts and reforms could be funded by eliminating £50 billion in unspecified “wasteful government spending” and stopping payments of bank interest on Quantitative Easing reserves, purportedly saving £35 billion.

Political Context

  • Farage acknowledges that Reform UK is unlikely to form the government after the July General Election but aims to establish a significant parliamentary presence and position themselves as a substantial opposition to a potential Labour government. He criticizes the Conservative Party for internal conflicts and a lack of cohesive policy direction.

Overall, Reform UK’s pledges reflect a commitment to reducing bureaucratic hurdles in the housing sector, supporting landlords, and implementing significant tax cuts, while positioning themselves as a future political force. However, the feasibility and impact of these proposals will depend on various factors, including political support and economic conditions

Interviewed by the Newspage agency, mortgage brokers had mixed views.

Scott Gallacher, director at Rowley Turton, says: “There are serious questions about the affordability of Reform’s tax plans. Consequently, we would be concerned about the potential repeat of a Liz Truss mini-Budget style debacle and the impact that would have on interest rates and mortgage borrowers in particular. Currently, we’re not convinced any party is being entirely honest with the voters about the state of the country’s finances.”

Amit Patel, an adviser at Trinity Finance, comments: “When a party has no chance whatsoever to get elected into office, they can offer everything under the sun. A vote for Reform is a vote for failure and bigotry.”

Meanwhile Ben Perks, managing director at Orchard Financial Advisors, sees it this way: “Scrapping Section 24 for landlords is a good policy. Allowing landlords to off-set financial costs and mortgage interest will help to alleviate the burden of the higher rates and fees they are now paying. In turn, this could reduce the rents that they charge their tenants. This would be a welcome change given the ever-increasing rents that many tenants are experiencing.”

And Rohit Kohli, director at The Mortgage Stop, adds: “Whilst I find myself in agreement with the changes to Section 24, when you are not likely to get anywhere near power it’s really easy to make headline-grabbing, unrealistic and unfunded promises without any clear plan of how they are to be delivered. Does anyone need to be reminded of the Truss/Kwarteng debacle? This has the potential to make the markets’ response to that appear like a minor economic blip.”

Simon Bridgland, director at Release Freedom, states: “For the housing sector, Reform’s contract is a humdinger. Love him or loathe him, it will be very interesting to see how the polls predict the election now that Farage’s party has announced its contract. I would now expect to see a further swing of favour to the Reform Party. Behind closed doors the Tory party will be reeling from this.”

And Colin Brown, Head of Planning & Development at property consultancy Carter Jonas, says: “Like the other parties, Reform is prioritising brownfield development by fast-tracking development proposals and providing fiscal incentives. The party acknowledges the need for planning reform and has referenced “loose fit” requirements for other large-scale residential developments but there is no clarification as to what this might look like in practice. 

“Reform’s contract is far shorter than other manifestos and contains a lot less detail. For example, there is no new homes target or comment on regional planning or the Green Belt. One senses it’s a rather rushed piece of work and Reform has other priorities which perhaps trump planning and housing.”

 

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