Commercial property owners could be affected by a future Labour Government’s plans to shake-up the housing market.
At the Labour Party conference in Brighton, Shadow Chancellor Rachel Reeves highlighted the buy-to-let sector together with people who get their income through stocks and shares, often in commercial property, as targets for tax rises.
She also pledged to phase out business rates to support the High Street after lockdown and replace it with a ‘modern’ business tax.
Buy-to-let investors already face higher interest rates on mortgages in this sector and higher deposits, in the region of 20-40 per cent of the property value.
This is because lenders fear that tenants may not be able to pay, and properties left empty for longer periods with no income coming in.
Foreign ownership restriction
Labour’s plans include restricting to 50 per cent the number of properties which can be purchased on a development by overseas buyers.
Shadow housing secretary, Lucy Powell, said the buying up of big parcels of property in some cities has led to so-called ‘ghost towers’, with buildings left empty. Labour says it will give councils the power to force landowners to sell vacant sites at a lower price than the compulsory purchase scheme currently allows.
Exclusive rights for first-time buyers
They say this will allow vacant shops and commercial premises to be brought back into use and even used for affordable housing and announced plans to give exclusive purchasing rights to first time buyers and also cut affordable rents.
Currently the definition of an affordable rent in many places includes properties which cost up to 80 per cent of market rents. Under Labour, this would be cut to about 30 per cent of average household income.
In response, The Home Builders Federation, quoted in the Guardian newspaper, said Labour’s policies giving priority for first time buyers and reducing affordable rent were workable, but it said the “first dibs” policy on new homes must only apply to cheaper properties and be “done in a way so that builders don’t lose out in a competitive market”.
It said cutting affordable rent levels could change the amount of housing that a developer could afford to build. As a result, local authorities might allow different types of development that also contribute to meeting targets for affordable housing but are not affordable rent.
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