Rishi Sunak vs Liz Truss | Who Will Benefit the Property Market?

Sunak’s Land Banking Ban
Could Affect Developers

Land banking involves a property developer purchasing land to develop further down the line instead of developing immediately. In the meantime, the land sits in the land bank of the developer. However, land could be unused for long periods, or the use of the land may temporarily change into a car park, for example. Therefore, Rishi has proposed a ban on land banking.

Those who land bank do this to generate profit on the land in the long-term when prices increase. Purchasing land without planning permission is much cheaper than that with planning permission. Therefore, once planning is approved and the property is complete, the value of the land will increase. Accordingly, the developer will gain instant equity on the land which was purchased at a lower price.

On the other hand, land banking ensures developers have a considerable number of projects in the pipeline to continue building once a project reaches completion. However, if the practice of land banking is stopped thanks to Sunak, the process of developing a new build will be much slower. As a result of a land bank ban, the developer would need to source the land, gain planning permission, and then find available builders and resources. Therefore, the process of developing a property could be much slower.

Truss to Ease Buying &
Renting Property for People

Unlike Liz Truss, Rishi Sunak has not prioritised the topic of taxation. Sunak believes tax cuts will intensify inflation. Instead, he is keen to shift his focus on the energy efficiency of houses. Liz Truss aims to cut taxes. However, economist Patrick Minford has said that interest rates will rise to 7% to accommodate these tax cuts. Therefore, hugely impacting those with variable mortgage rates.

Liz Truss has stated she wants to make buying and renting property cheaper and easier. Therefore, landlords will not have to face as many regulations as they do currently.

• Supporting Tenants: To support tenants and to help prepare them when buying property, she wants to introduce PRS tenants to record their rent payments with credit reference agencies to boost credit scores.

• Supporting Landlords: The proposition of Liz Truss will benefit landlords because they can see if a tenant has a decent and timely payment history.

• Supporting Developers: Truss has also proposed to develop low planning zones. Zones with clear planning rules. As a result, developers can start building much more efficiently, generating more jobs, and softening the chronic housing supply shortage.

Liz Proposes to Slash Taxes

Reverting to the issues of taxation, Rishi Sunak has proposed to increase the corporate tax rate from 19% to 25% from April 2023. This will impact many landlords who have limited companies. In addition, Sunak inflated the National Insurance Contributions to 1.25%. His opposition, Liz Truss, plans to cut taxes worth £30bn. Sunak believes this slash will only intensify inflation. The driving factor for inflation is the Russian invasion of Ukraine. This year, rates are forecast to hit a 42-year high of 13.3%.