Labour tackling the private rent market

(174 Posts)
Pantone363 Sun 26-Apr-15 08:41:55

guardian link

They seem to be the only party tackling what is a huge issue for a lot of voters.

Pantone363 Sun 26-Apr-15 08:42:51

Especially when you put in up against the Tories right to buy announcement!

lotsofcheese Sun 26-Apr-15 08:54:15

Whilst I agree that the industry needs an overhaul, I'm not sure this is the way to go about it.

I think tying rent increases to mortgage rates rather than inflation would be preferable.

And regulating letting agencies, particularly in charges they make to potential tenants (this is already happening in Scotland, where the landlord bears the cost, as they should do).

As a landlord, I would prefer to have a 6 month initial contract, then longer extension period, as 3 years with bad tenants is too long.

I'm always horrified when I read the threads about renting in England; there are some dreadful landlords & letting agencies there. Here in Scotland, there is compulsory landlord accreditation & I think it's a far better system.

NonDom Sun 26-Apr-15 09:03:02

Crazy policy. Rent levels are governed by the market, not legislation.

Let's say you are a property developer - think local builder rather than banker. You go to auction and buy a near derelict property. You modernise it and put it on the rental market. You need a 7% yield to justify the risk.

If the government cap rents, and your yield is only potentially 2%, the risk is too great and you won't bother. The derelict property remains uninhabited and a blight on the neighbourhood.

I do agree that tenants need a better deal in terms of contract length and holding the owner to task on maintenance.

SensibleMe Sun 26-Apr-15 09:54:48

Great if you want landlords to pull out of the market. Think about it. They are not all wealthy, they might be renting out because they have moved with their job and are having to rent elsewhere. If their landlord pulls out, they might have to do the Sam.

Erudite Sun 26-Apr-15 09:57:23

Be careful what you wish for.
Capping rents and locking LL into 3 year deals will hav eonly one consequence and that will be fewer rentals in an already under supllied market.

Labour never seem to learn that mesisng with teh free market economy hits the poor hardest and longest.

TeWiSavesTheDay Sun 26-Apr-15 09:58:42

some landlords pulling out of the market is a good thing, at the moment first time buyers are competing against landlords to buy the cheaper properties pushing prices up.

suzannecanthecan Sun 26-Apr-15 10:00:01

since when did we have a free market economy, it's rigged through and through!

SensibleMe Sun 26-Apr-15 10:01:43

This is not the problem you want to make it. There are people living in those homes. They are not available for anyone else anyway, so you don't lose houses. The policy says that the money received from the sale will be used to build new homes. Very different from the policy under that Thatcher government.

Erudite Sun 26-Apr-15 10:01:45

That's simply not how it works, TeWi.

Too many people chasing too few properties full stop is pushing prices up. If LL stop buying and private buyers buy - where are all the renters going to live ?

suzannecanthecan Sun 26-Apr-15 10:05:37

If landlords find that their profits are squeezed by regulation of the rental sector they'll want to take their capital out of property and into something that gives a better return.
They'll have to sell properties for relatively low prices to private buyers who would have been renters but are now able to buy as prices normalize ‎

fairgame Sun 26-Apr-15 10:06:23

Something definitely needs to be done about the private rental market.
I would like to see a similar system to Scotland. Letting agent fees are ridiculous. I also agrees with pp that a 6 months initial deal before a 3 year deal would be much better.
Something also needs to be done about DSS tenants as a lot of places won't rent to them and they are shoved out of the market. I say this as a tenant who is in and out of work due to disabled dc. I can't apply for social housing as they don't consider me to have a housing need but a lot of local agents have a blanket ban on tenants on benefits.

suzannecanthecan Sun 26-Apr-15 10:07:06

We can all speculate but no one knows how these things will pan out, unintended consequences are highly likely

PausingFlatly Sun 26-Apr-15 10:16:53

"Let's say you are a property developer - think local builder rather than banker. You go to auction and buy a near derelict property. You modernise it and put it on the rental market. You need a 7% yield to justify the risk."

So you sell it instead. Making your yield on the increase in value from derelict to newly refurbished. And getting your money back a damn sight sooner.

Erudite Sun 26-Apr-15 10:24:07

*If landlords find that their profits are squeezed by regulation of the rental sector they'll want to take their capital out of property and into something that gives a better return.
They'll have to sell properties for relatively low prices to private buyers who would have been renters but are now able to buy as prices normalize ‎*

That's astonishingly naive. Prices will not fall to the levels that low renters to buy. There is a severe housing shortage and BTL LL are not the main cause of that.

PausingFlatly Sun 26-Apr-15 10:30:21

Erudite, where do you think your "private buyers" are living now?

NonDom Sun 26-Apr-15 10:38:13

Pausing,

Selling only works for the developer if they have managed to add enough value. At the cheaper end of the market, this is not always possible, so renting is how they can recoup costs.

If the house is sold to an owner occupier, it means one less property on the rental market.

suzannecanthecan Sun 26-Apr-15 10:39:34

how can anyone be sure that prices wont (or will) fallhmm
have you the gift of prophecy?

MythicalKings Sun 26-Apr-15 10:43:22

Last year we installed a new central heating system into the house we rent out.

This year we are replacing all the windows and doors.

Next year there will be a new bathroom.

Of course we are going to put the rent up above inflation rates. But our tenants are very happy with the improvements and are happy with the increase which they see as fair.

Madbengalmum Sun 26-Apr-15 10:45:20

Yet another ill thought out Labour policy.

PausingFlatly Sun 26-Apr-15 10:47:04

"If the house is sold to an owner occupier, it means one less property on the rental market"

<headdesk>

AND ONE LESS FAMILY TAKING UP PROPERTY IN THE RENTAL MARKET, BECAUSE THEY ARE NOW OWNER OCCUPIERS.

Sorry to shout, but it seems some people are having trouble with this concept.

PausingFlatly Sun 26-Apr-15 10:53:16

NonDom, if the builder thinks he can't make enough profit on developing, he can leave the property to be bought by an owner-occupier who will pay him to renovate, and then occupy it themselves.

It will cost the owner-occupier more to renovate because he would have done it at cost, but on the other hand they don't need to turn a profit at the end, just to fit their own budget.

lotsofcheese Sun 26-Apr-15 10:54:51

And it's not going to help those requiring large deposits or who can't get a mortgage. Been there for 5 years

PausingFlatly Sun 26-Apr-15 10:57:53

And of course the fewer builder-developers bidding for the property against the owner-occupiers, the less they'll pay for it in the first place.

caroldecker Sun 26-Apr-15 11:14:56

If you read through to the policy, it is not what is headlined.
1. It won't apply to current BTL mortgage holders
2. The landlord can end it early for a number of 'easy' reasons
3. The benchmark for increases may be average rents, so a circular issue that could actually increase rates faster than today

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