Reform UK policies dismissed by mortgage chiefs as 'Truss Mark 2'

Mortgage experts have criticised the Reform UK housing and tax policies as being superficially appealing but risking a return to the financial damage created by the Liz Truss mini-Budget in 2022.

Reform UK leader Nigel Farage has pledged to repeal tax changes which have penalised landlords since 2015 and scrapping stamp duty for residential purchases below £750,000. Higher-value house purchases would see reduced stamp duty while the Renters Reform Bill would be scrapped once and for all, and some 98% of estates freed from any prospect of Inheritance Tax.

Here are the party’s critical housing reforms ‘within 100 days’, in their entirety:

Review the Planning System - “Fast track planning and tax incentives for development of brownfield sites, including unused offices and vacant high street properties. Review system of Section 106 Developer Contributions for infrastructure such as schools and surgeries to accelerate house building.”

Reform Social Housing Law - “Prioritise local people and those who have paid into the system. In parts of the UK almost half of all social housing is occupied by someone born overseas. Foreign nationals must go to the back of the queue. Not the front.”

Scrap Section 24 - “The tax system should encourage smaller landlords into the rental markets. Not penalise them.”

Abolish the Renters’ (Reform) Bill - “Existing legislation was adequate to address bad practices. Instead, we will boost the monitoring, appeals and enforcement process.”

And for the period beyond 100 days, Reform pledges:

Incentivise Use of New Construction Technology - “Such as modular construction, and smart infrastructure.” And

More Homegrown Qualified Traders - “New apprenticeships and vocational courses will increase the supply of skilled, well-paid workers to replace cheap overseas labour.”

Elsewhere in the Reform Contract, under other non-housing headings, the party pledges:

Cut Residential Stamp Duty - “Substantially boost economic activity and housebuilding by cutting Stamp Duty to 0% below £750k. Cut it to 2% from £750k - £1.5m and cut it to 4% over £1.5m.”

Abolish Inheritance Tax (IHT) for all Estates Under £2m - “That means some 98% of all estates. The rate above £2m will be 20% tax, with the option to donate to charity instead.”

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."