Labour has announced a new wave of proposals for the UK's growing private rented sector. With under two weeks to go until May's general election, they are set to prove popular with tenants, but landlords are notably less keen.
There are 11 million people â including 1.5 million families with children - currently renting in the UK. The next Labour government would introduce legislation in its first Queenâs speech to cap rents so they cannot rise by more than the rate of inflation (CPI), require landlords and letting agents to disclose the rent levels charged to previous tenants so that householders can negotiate the best possible deal at the start of their contract, and penalise rogue landlords by reducing buy-to-let tax relief for those who own properties which do not meet basic standards.
These new announcements follow previous measures Labour has already set out to help people who rent, including a ban on letting agent fees charged to tenants, a national register of landlords, which will enable rogue landlords to be identified and, most controversially, secure three-year tenancies for all people who want them, so landlords will no longer be able to terminate rental agreements simply to put rents up.
"Weâre going to have fairness for those who rent their homes with three year stable tenancies and a real cap on how much rents can rise in that time, set at no more than inflation. So that people can enjoy real security in the place they live," said Labour leader Ed Miliband.
The move is likely to win favour with those in the private rented sector: the 11 million renters are a growing sector of the electorate and, with previous research showing that they are least likely to vote, could prove decisive in the election.
Almost three quarters (72 per cent) of ARLA letting agents, though, believe that the measures would prompt landlords to pull out of the market, and lead to a decrease in the supply of rental property.
The monthly PRS report found that landlords in the North West and East Midlands would be most likely to pull out the market, with 84 per cent of ARLA agents in these regions expressing concern.
As well as seeing a reduction in landlords and therefore supply of rental housing, three quarters of ARLA members (74 per cent) believe the proposed three-year tenancy agreements with rent controls and strict rules to make it more difficult to evict tenants will not actually benefit tenants at all, up from 69 per cent in February.
Almost four in 10 ARLA agents prefer the promises offered by the Conservatives to keep the system largely unchanged, with 200,000 new starter homes to be built at 20 per cent discount to first-time buyers.
David Cox, Managing Director of ARLA, comments: "A vast majority of ARLA letting agents are worried that Labourâs proposed three year tenancies with strict caps on rents will only cause the gap between supply and demand to widen. Flexible tenancies are what makes the sector work, if this changes, some landlords will be forced to exit the market and tenants are likely to automatically incur rent hikes and feel driven to stay in agreements for longer before getting on the housing ladder; thus not freeing up rental properties for other tenants."
The rules would see its three-year default tenancies start with a six-month probation period. Tenants would be able to terminate contracts with at least one month notice as they can now, while landlords would be able to terminate contracts with two monthsâ notice, if they can provide good reason. There would also be provision for new tenants like students or business people on temporary contracts to request shorter-term tenancies subject to the landlordâs agreement.
Matt Hutchinson, director of flat and house share site SpareRoom.co.uk, comments: "With rents having risen faster than salaries over recent years, the real damage has already been done. Until government gets to grips with the acute supply and demand crisis, housing will always be too expensive.
"Fixing rents for three years won't be popular with landlords but it'll get a thumbs up from renters, as long as there are break clauses to allow flexibility - one of the real benefits renting has over ownership."
Photo: Labour (Facebook)Maisonette for sale in