As I write this piece we are just one week away from knowing the result of the general election, which, depending on which party gets a majority, and which combination of parties gain the balance of power, has the potential to have a profound effect on the Private Rented Sector (PRS) in England.
Whilst we can discount some of the wilder suggestions coming from the fringe parties such as the Greens, there is no doubt the proposals coming from Labour, whilst at first sight less onerous than Labour in the past, undoubtedly do pose a serious threat to the private landlord.
The Labour Party has now released more detail on their housing market policies they say are intended to address the supply crisis and pressures on the private rented sector (PRS). Ed Miliband confirmed their intention to introduce the following measures pretty quickly following the first Queen’s speech, if the Party is elected in next week’s polls:
- to cap rent increases at the rate of inflation (CPI) over a proposed new three-year default tenancy, in an attempt to ease pressures on prices. Tenants will have a legal right to stay for three years but will also have the right to leave at short notice
- to introduce a legal requirement for landlords to disclose the rent that was charged to previous tenants when re-letting property, in an attempt to enable tenants to better negotiate rents
- to introduce a national register of all landlords
- to restrict tax reliefs for landlords whose properties fall below ‘basic’ standards, to address rogue landlords and deter the very worst from the market.
Some of these proposals have been greeted with dismay by landlords and landlord bodies, but Labour shadow housing minister Emma Reynolds tries to justify her claims that capping rents and reforming the private rental sector would provide security and bring “piece of mind” to tenants and “chase the bad landlords out of the market… This is not an attack on landlords. There are lots of great landlords out there. Good landlords have nothing to fear from our proposals.”, she has said.
I think most private landlords would beg to differ on that last point.
Capping rent rises to the rate on inflation may not be a bad thing, as many landlords throughout the country don’t increase rents during tenancies when they have a good tenant. In fact it will work in some landlords’ favour as it will justify raising rents in line with inflation if every landlord is doing it – tenants could well come off worse.
Three year tenancies are much less welcome and would almost certainly deter some people from letting out their properties when they need to do so short term. It will remove flexibility from the rental market and result in even more housing shortages.
Taken as a whole, and when added to the measures introduced recently in the Deregulation Act 2015, which will make it more difficult to evict bad tenants, the proposals will inevitably lead to more not less pressure on housing; more cost and bureaucracy for government, and eventually higher rents for tenants, the very things the proposed legislation is intended to prevent.
These are damaging proposals which will affect both landlords and tenants. Parliamentary candidates should know the strength of feeling about them in the landlord and agent community, so I would urge everyone reading this to make their voices heard.
Both the National Landlord Association (NLA) and the Residential Landlords Association (RLA) have designed web pages so you can easily and effectively lobby key decision makers on these important issues affecting the Private Rented Sector (PRS).
Tom Entwistle, Editor.