The commercial mortgage and bridging finance sector is urging the next Prime Minister to implement significant planning reforms and provide support for landlords. With the current planning delays and restrictive tax policies, the sector believes that these changes are essential to boost housing supply and stimulate economic growth.
TL;DR: The next Prime Minister must prioritise planning reform and landlord support to unlock housing supply; current delays and tax policies hinder investment in property markets.
What Planning Reforms Are Needed?
According to industry experts, the planning system in the UK requires urgent reform. The sales director at TAB highlighted the need for a refreshed planning system that includes statutory deadlines and increased resources for local authorities. A presumption in favour of converting redundant commercial spaces into residential units is also suggested. This would expedite the approval process for change-of-use applications, allowing vacant retail and office units to be transformed into mixed-use developments.
How Do Current Policies Affect Landlords?
The private rented sector (PRS) plays a vital role in meeting the UK’s housing demand. However, landlords have faced increasing challenges due to policies that treat them primarily as sources of tax revenue. The call for reform includes reinstating mortgage interest tax relief for individual landlords, scrapping the stamp duty surcharge, and bringing back the Wear and Tear Allowance. These changes would alleviate financial pressures on landlords and encourage investment in rental properties.
What Does This Mean for Bridging Finance?
For property investors, the proposed reforms could unlock significant opportunities in bridging finance. The current planning system hampers the speed at which projects can be completed, leading to lost investment potential. By advocating for reforms that reduce transactional friction, such as adjusting stamp duty rates on commercial and mixed-use acquisitions, the industry aims to create a more conducive environment for property investment. This could lead to increased regeneration projects and a more vibrant high street.
What This Means for Landlords and Borrowers
Landlords and borrowers in the bridging finance sector should closely monitor these developments. The proposed changes could enhance the viability of property investments, making it easier to secure funding and complete projects. With a more supportive framework, landlords may find it easier to manage their properties and meet the growing housing demand. This could also lead to a more competitive rental market, benefiting tenants as well.
Frequently asked questions
What is bridging finance?
Bridging finance is a short-term loan used to bridge the gap between the purchase of a property and securing long-term financing. It is often used in property transactions to facilitate quick purchases.
How can I benefit from planning reforms as a landlord?
Planning reforms could simplify the process of converting properties and reduce the financial burden of taxation, making it easier for landlords to manage their investments and respond to housing demand.