As financial planners, it’s important that we have a finely tuned radar that constantly sweeps the horizon for opportunities and threats to our clients financial well-being.
Today’s Queen’s Speech whilst lacking the usual pomp and circumstance still provides some useful insight into likely future government policy:
IMPROVING RIGHTS FOR RENTERS (Decreasing benefits for landlords?)
The Queen told us that her Government will bring about a White Paper to help millions of people in (English) private rented accommodation. The proposed reforms are due to be published during the Autumn sitting of Parliament and are expected to include:
- Abolishing Section 21 “no-fault” evictions, removing the ability of landlords to evict tenants with two months notice once their fixed-term contract has ended without giving a reason.
- Creating a ‘lifetime deposit’ scheme to remove the need for renters to have to prefund a deposit each time they move.
- “To drive up standards in the private rental sector” it is expected that an ombudsman style service will be created which landlords will have to be members of (and fund) to which tenants can take disputes and receive satisfaction (compensation or enforcement).
Whilst much can change in politics in a very short period of time, these proposed changes are consistent with the policy trend over recent years which has made being a private property landlord more challenging.
IMPROVING RIGHTS FOR LEASEHOLDERS
The Leasehold Reform (Ground Rent) Bill reiterates the Government’s intention to introduce a zero-ground rent policy for all new residential leases going forward in England and Wales, but there is very little detail about limiting the costs of extending existing leases. Nor can we see any ‘get outs’ for many recent new-build buyers who feel trapped by leasehold, however, they should benefit from proposed caps on the ground-rent increases.
As the Bill doesn’t currently have a timescale, we expect that the valuation of property builders will have time to adjust to reflect this policy change, rather being faced with a “shock”.
We expect to hear a lot of “noise” from both passionate individuals and those individual who just want to raise their profile about including protection from online scams in the Online Safety Bill. However, thus far we see no sign of such provisions being made, so the “old rules” continue to be valid:
- Caveat emptor (let the buyer beware)
- If it looks too good to be true it probably is.
Whilst we tend to agree that individuals who make catastrophic financial decisions, usually motivated by greed, who have not considered the above points (or taken professional regulated advice), we are much more concerned about individuals who are not digitally literate who do respond to phishing emails and cloned websites. However we think it’s unrealistic to expect the government of their financial providers to carry the burden, we feel that’s a little like expecting the taxpayer or the housebuilder to compensate you when you’ve been burgled.
The current system of social care funding is widely acknowledged as being unsustainable, yet proposed solutions have been few and far between successive governments. In his first speech as prime minister in 2019 Boris Johnson declared “I am announcing now… that we will fix the crisis in social care once and for all, and with a clear plan we have prepared to give every older person the dignity and security they deserve.”
We don’t think the colour of the rosette is relevant when considering the failings of successive governments. Add in getting the UK’s finances sorted post-pandemic and we can not help but think that whilst everyone has a desire to solve the conundrum, and the challenge for the government, very difficult and inevitably contentious reform is likely to be kicked a little further into the long grass.
We’re concerned about this from two perspectives:
 The system is not sustainable, and
 Fixing the system will be painful and will impact our clients’ financial planning and financial resilience.
This overview is provided in good faith, remember politicians don’t always follow through on their promises so no one should take any action based on the contents of this article without taking professional advice first.