Labour tackling the private rent market

[Pantone363]

guardian link

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

[Pantone363]

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

[lotsofcheese]

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]

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]

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]

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]

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]

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

[SensibleMe]

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]

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]

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]

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]

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

[PausingFlatly]

"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]

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]

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

[NonDom]

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]

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

[MythicalKings]

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]

Yet another ill thought out Labour policy.

[PausingFlatly]

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



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]

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]

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

[PausingFlatly]

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]

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

[specialsubject]

assuming the BBC have written it out correctly, here's the actual 'changes'.

• there are 3 year tenancies after a six month 'trial period'. So just the same as now, except it may make it easier insurance/mortgage wise to have longer tenancies. If a non-bad tenant wants to stay longer, fine with me as the landlord.
  

• ban letting agency fees for tenants. Fine - if market conditions allow it will go on the rent, just as it did in Scotland. So no difference to anyone. What WOULD be sensible is to regulate letting agents - but Labour are as blind to this as all the other parties.
  

• tenancy ending; if there is a fixed length tenancy the landlord cannot terminate it just to put the rent up. The reasons for ending a tenancy given as non-payment, anti-social behaviour or tenancy breach are the same as now. Landlords cannot now terminate a fixed tenancy to sell a property; they can sell but the new owner becomes the new landlord under the same agreement. So no difference.
  

-rent ceiling; it says that market forces will govern the rent at the start of tenancy, same as now. Apart from London where everyone fights over broom cupboards, rents are not rising as fast as you might think and in some places are falling. Inflation however IS rising but the legislation will use the faked figures.

so NOTHING WILL CHANGE except it may be easier for landlords to offer longer tenancies. If you think this is massive reform, you are fools. All these things are already in place!