Red Ed Calls For Rent Controls As Part Of Election Campaign

Red Ed Calls For Rent Controls As Part Of Election Campaign

Red Ed Calls For Rent Controls As Part Of Election Campaign

Labour leader Ed Milliband has called for a European style rent indexation to be introduced as part of the political party’s election rhetoric.

The re-introduction of rent controls under the new guise of a newly titled Rental Price Index, designed to stem excessive rent increases, is intended to be one of Labour’s biggest vote magnets

The current coalition Government decided late last year that they wanted private rental sector landlords to act as unpaid members of the UK Border Agency, controlling and reporting on the immigration status of tenants, in order to avoid excessive financial penalties. This legislation is due to come into effect later this year after passing through Parliament and the House of Lords without too much fuss from MP’s, despite lobbying from landlord associations and heated debates with lettings industry professionals. Labour leader, Ed Milliband, is proposing to take control of private rental sector rental prices, similar to the model that is already employed in some other European countries.

Controlling rental prices is something that UK private rental sector (PRS) landlords have been managing rather well on their own, with the majority of decent landlords only charging enough to make a small profit rather than exorbitantly ripping tenants off.

The opposition party appear to be acting on questionable information that appears to suggest that PRS rental prices have increased by 13%, year-on-year.

However, according to the Office for National Statistics (ONS), rental prices in England only increased by a national average of just 1 %, with London recording the largest increase at 1.4% in the 12 months to March 2014.

Going back 9 years from March 2014 to the same point in 2005 UK PRS rents have increased by 9.5% nationally and 12.5% in London compared to an inflation rate for the same period of 33.8%.

The Labour leader had tabled a debate on rental prices in the UK PRS for Wednesday (25th June) at around 12.30pm. Details are featured in full in an RLA briefing post on RLA News today.

Mr Milliband claims rent controls work in Germany. However Germany has a completely different rental market to the UK, with around 60% of German nationals living in rented accommodation, compared to just 20% in England.

In Germany rental prices cannot exceed the rental index and can only increase by 20% over a three year period. This figure is already greater than the observed rental price increases in the UK, even with London included.

In Germany, rental prices for new tenants cannot exceed 50% above local market rents and Capital Gains Tax is nil after ten years.

Government Housing Minister, Kris Hopkins, replied to the Residential Landlords Association, agreeing with the RLA’s views, stating: “The history of capping rents is declining investment and so less choice for tenants.  Before the Housing Act 1988 when rents were regulated, the private rented market was in decline. Since then, once rents were freed, the private rented market doubled to 17% of the overall market.  So the lesson is that capping rents doesn’t work. The real issue is that we need more homes, capping rents will not help provide more homes but landlords can, but certainly won’t if we are taken back to the days of regulated rents. The problem we have is that tenants lacking understanding of these issues are armed with a vote that can ultimately mean less choice for tenants, lower availability of private rented accommodation, and excessive rent increases as demand continues to surge ahead of supply”.

So What Can Landlords Do? 

If you are already a member of the Residential Landlords Association, you are already supporting their campaign on this subject.

Please help by encouraging other landlords to join the fight and join an association.

If the RLA is your landlord association, they offer existing members a great incentive to do this.

  • What are your views on Ed’s Rent Controls?   
  • Do you agree with rent controls?  
  • How much have your rents gone up in the last year? 
  • How would rent controls affect you?

 

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