Labour Announces Further PRS Controls
The Labour party leader, Ed Miliband, has announced his party’s plans to reform the private rented sector (PRS), with longer term tenancies and rent cap proposals, should they win the May general election.
Labour have been at the forefront of the PRS reform movement for some time, campaigning for longer term tenancies for tenants in the private sector and now the political party leaders want to introduce even more legislation that would effectively cap rental prices so they cannot be increased by more than the rate of inflation (CPI) during the proposed secure three-year tenancies.
The PRS control proposals were supposed to win the hearts and minds of the 9.1 Million households currently living in private rented sector properties, however even tenant campaign groups can see that these new proposals have more holes in them than an old Swiss cheese.
The introduction of new legislation that Labour are proposing would require landlords and letting agents to disclose the rental prices charged to any previous rented property occupants, allowing tenants to have the upper hand in negotiating the best possible rental price with landlords, before the start of a new tenancy.
Do TESCO provide customers with information concerning the actual purchase price that they pay for items before they sell them on at a huge profit, do they reveal operational profit margins – No they don’t!
Prices fluctuate as do operational costs, why should landlords be singled out for special measures when other business sectors are left alone?
Labour’s latest election proposals include:
- Secure three-year tenancies for all tenants in the private rented sector
- Landlords will no longer be able to terminate tenants rental agreements in order to increase rental prices.
- A ban on letting agent fees charged to tenants.
- Penalising rogue landlords letting sub-standard properties by cutting tax relief on buy to let mortgages
- Introduction of a national register of PRS landlords, to enable rogue landlords to be easily identified and to allow local authorities to judge whether rental properties owned by rogue landlords meet basic housing standards.
Banning fees charged to tenants would effectively reduce business income for letting agents and landlords and increase the number of time wasting applicants that agents and landlords already have to deal with.
Fees are charged to tenants by letting agents for a number of reasons; tenant referencing does cost, both in financial terms and the time required for the administration and verification of all applicant documentation which means that someone has to be employed to perform these tasks.
Letting agents charge landlords between 8 -12% of monthly rental prices and unless agents are part of a larger organisation the scrapping of fees to tenants could prove catastrophic to many smaller letting agencies, reducing both tenant and landlord choice in a competitive marketplace.
Nearly all political parties have announced their intention for PRS control, with many proposals affecting the way that good existing landlord and lettings businesses operate. Each political party is taking a blanket approach to rid the PRS of the minority of rogue operators, assuming that all landlords must be of the same mindset as notorious 70’s landlord, Peter Rachman.
Which other business sector attracts the same level of political interest?
Labour party leader Ed Miliband said: “Britain only succeeds when working people succeed. But for so many people, life is tougher than it need be – not only at work – but also at home. Labour will build the homes which local people want to buy. But we will never turn our backs on Generation Rent. And we want to encourage all those responsible landlords who provide decent homes for people and earn a stable income for themselves. Labour has a better plan. The security of three year tenancies for all tenants who want them with rents capped, so they can fall but not rise by more than inflation. The rights they need to negotiate a decent deal with landlords and stop rip-off letting fees. And the protection for taxpayers and tenants against bad landlords who are being subsidised for providing accommodation that fails to meet basic standards.This is a plan for a stable, decent, prosperous private rental market where landlords and tenants can succeed together.”
Director of Generation Rent, Alex Hilton, reckons that Labour’s plans are riddled with loopholes, commenting: “Landlords can still kick out tenants after six months, they can still evict tenants by claiming they need to sell, and because there are no controls on rents between tenancies, that gives them an incentive to use those loopholes. Good landlords already treat their tenants fairly, but without better protections, bad landlords will still be able to exploit theirs. We’re pleased to see Labour proposing to withdraw tax breaks from landlords, but their plan to penalise negligent landlords is wide of the mark. Landlords letting out unsafe and unhealthy housing should simply be banned from doing so. In order to level the playing field, all landlords should pay a fairer share of tax – a levy of 22% on all rental income would recoup the £9 Billion (GBP) housing benefit that goes to landlords and could fund 100,000 social homes a year.”
Mr Hilton’s comments may draw sentiment from existing social and PRS tenants, but his comments are ill judged and damaging to the people they are supposed to be fighting for. Why should landlords pay a higher rate of tax just because they have taken the financial risk of controlling multiple properties in order to generate an income. Many landlords have purchased properties using buy to let mortgages, rather than pulling a large wad of cash from their back pocket. These mortgages have repayment costs, so do property repairs and maintenance. Any perceived income that could be generated from property will at some point be reinvested back into the landlords property portfolio’s in order to keep their rental assets in a safe, habitable condition for existing and future tenants.
The general election should be fought over the important issues affecting the UK as a whole and not by attacking landlords who are in the business of providing the necessary housing for the country’s population that successive governments have repeatedly failed to provide.
Rachmanism isn’t dead, but it is not commonplace either, stop treating landlords like we are only in it for the money, rental income is nice and helps to pay a few bills but providing housing for those in need is far more rewarding!
- Click to share on Facebook (Opens in new window)
- Click to share on Twitter (Opens in new window)
- Click to share on Google+ (Opens in new window)
- Click to share on Tumblr (Opens in new window)
- Click to email this to a friend (Opens in new window)
- Click to share on Reddit (Opens in new window)
- Click to share on Pocket (Opens in new window)
- Click to print (Opens in new window)
- Click to share on Pinterest (Opens in new window)