Ed pledges to cap rent rises, extend standard tenancies & scrap fees

[thevelvetoverground]

"At Labour's local and European election campaign launch tomorrow, he will pledge to cap rent rises and to extend the standard tenancy period from six months to three years. As well as this, he will commit to banning letting agent fees, promising to save the average new household £350."

www.newstatesman.com/politics/2014/04/milibands-pledge-cap-rent-rises-smart-politics

Ed will kill the BTL market stone dead, forcing landlords to sell their properties, whivh will result in a glut of properties on the market, causing a house price crash.

Is that what Ed wants?

How can he cap rent rises? Private landlords can charge what they like, provided someone is prepared to pay.

The man is an idiot.

WetAugust: why do you think that would happen? Wouldn't a lot of landlords like long term tenants?

"How can he cap rent rises?" Laws can do that.

'Laws can do that'.

This pretty much sums up the whole of what is wrong with a Labour government. They should not even be considering trying to legislate in a market in this way, it is crazy.

What next - farmers can't put their prices up? Supermarkets? Petrol stations? Train operators? Car manufacturers?

From what I read it seems he is proposing a cap on only how much a landlord can raise the rent during a tenancy. I know people who have been made homeless after a rent rise of £150 pm on what had been a £550 rent. Raises like that are not on if you ask me. Tenants need safeguarding. They are not reintroducing fair rent officers or putting a max on rents.

The government already have quite a lot to do with the price and cost of things. There are farming subsidies. The government proposed a cap on rail fare rises last year. They decide fuel duty, so have some impact on price. Etc.

I actually think this is long overdue. And that some diminution in house prices is no bad thing in a situation where so few people can afford to get on the ladder. The pendulum has swung far too far in favour of the investor landlords and tenants have far too few rights.

Farming subsidies are to do with ensuring that land is managed in a certain way, and that there is food for us all to eat.

Fuel duty has no impact on price, it is a tax pure and simple. The scrapping or not of any increase is merely a political tool.

Proposed cap on rail fares, which I think was promptly ignored.

If the proposal is just to cap an increase during a tenancy then that is one thing, but if it goes hand in hand with tenancies being increased to 3 years then that is another altogether. 3 years is a long time - what happens if interest rates rise during that time and the LL is paying more in interest on their mortgage than they are getting in rent? If I were renting I would set the rent much higher at the start of a tenancy to give myself leeway in case that should happen.

I agree lessonsintightropes.

As far as I can see they are not saying no to rent increases, which would allow for interest rates, just a cap to prevent large increases.

And I agree Lesson. I rented for many years and feared the call from the landlord asking for more money or, the worst, that they need the house back after all and you have 2 months. Not always an easy task when you have 4 kids and a school catchment to think about. Why should renting mean a transient existence, especially when more and more have to rent due to exorbitant house prices.

Rents should be in line with what the market can bear, not how much the landlords mortgage is though.

We haven't put our tenants rent up in 5yrs, when I enquirer about it recently with our property manager he advised against it as people were really struggling. Being reasonable people we took his advice. We could have pushed for another 50quid or so a month but may have our tenant leave and house unoccupied, not worth it really.

If only all landlords took that approach! Sadly too many are all about fast money than long term steady money

Fanjango that's exactly it - why should families have to move frequently to deal with the whims of LL? Not even the States allows such naked profiteering at the expense of tenant rights (BTL strongly discouraged through federal legislation). I understand and have some (but not much) sympathy with people who invest in BTL as an alternative to shares for a pension, but as someone who was personally made homeless 4 times in 5 years due to LLs selling up etc and having to bear the cost of moving and new fees each time think it's impossible. The presumption in favour of right to occupy is much more sensibly arranged in Europe, where in Germany for example if the LL has to sell, the tenant's rights are protected (and the property is then purchased with them in situ). If LL can't manage the vagaries of investment (instead of relying on such tight margins on BTL mortgages that they need to up rent if they have a financial problem) then they should exit the market. A good result all around. Apart from the poor LL who no longer make 16% margins on rental properties along with 12% capital gains here in London - my heart does not exactly bleed for them.

Our rent (Belgium) is only allowed to increase in line with inflation. Rental contracts are for a minimum of three years. We have more responsibility for maintaining the property and it's contents. Landlords can raise the rent at the end of the rental period. They also have a reputation for screwing tenants at the end of the contract with high charges for 'damage' to the property (think €10 for each window that hand't been cleaned on the outside or people being charged for watermarks on the inside of the dishwasher).

I don't have a problem with a government intervening in a market which is not allocating resources efficiently.

I'm a LL BTW. I want to have long-term tenants who would rent the property for a number of years.

The proposed ban on letting agents' fees for tenants is long overdue and follows the Scottish model which came in a few years ago. At the moment agents get paid by both sides for the same work, and rip off the tenants with extortionate charges.

I do think that 'rentiers' will have a huge influence at the next election and they've been neglected for far too long (and yes, both parties can be blamed for this). All the parties need to address this in their manifestos.

The initial Tory response is extremely disappointing. I don't think Grant Shapps has any idea about how precarious renting in the private sector is.

And I'm sure some landlords would welcome the changes too. My parents have two flats they rent and want good tenants that stay for a long time. They would gladly play by these rules because they're decent people. They also have DC who rent so understand the flipside too.

We've seen it before with the bankers and others, but I really despise this "Let us behave how we want/badly or we'll screw you over another way/leave the country" type attitude. Well, I say go on then, leave... try it.

Family business has something like fifty flats let out, and we purely despise the buy-to-let numpties. Tenants who've been through that mill come to us expecting all kinds of shenanigans and behave accordingly until they settle down.

The proposed changes will make not a jot of difference to how the professional housing providers do business. And the more bloody amateurs it drives out of the market, the better.

As for 'you can't intervene in markets with laws', that's purest horseshit. Without laws and the enforcement thereof, there'd be no market at all. You write the laws to shape the market to serve the society it's part of.

The Venezuela response shows just how much of a shite the Tories give about those of us who can't afford to buy our own homes. Laughable.

I was pleased to hear about this proposal this morning. I live in privately rented accommodation in the south east. I'm lucky (so far) in that I'm being charged a reasonable rent which has only minimally increased in the 5 years I've lived here. My ll isn't greedy (though he is a bit tight with repairs) and I feel reasonably secure. However, that isn't the same as actually being secure and knowing that the roof over your head isn't just going to disappear.

The tenants in the flat below us (different ll) were given two months notice when they made the mistake of mentioning to their management agent that they were thinking - just thinking, mind! - of maybe moving out towards the end of the year. The agent passed this info onto the ll and notice duly arrived - my friends were devastated. It just doesn't make any sense.

Something has to change in the rental market. Frankly, I'd be happy to see an end to the 'BTL numpties' and a reduction in house prices. You know, so then maybe 40-something professionals in fulltime jobs with an above-average salary and a family to keep, like me, might have the tiniest chance of a bit of actual housing security. Too much to ask?

No landlord is going to want to have to be locked into a longterm contract with their tenant. Many of these landlords are just renting to gave advantage of longer term house price increases or because interest rates are low., Once interest rates rise or house prices fall, they are quite likely to sell.

Something needs to be done about private sector rents, that I do agree.

Watching Homes Under The Hammer and seeing a landlord buy a wreck for 30,0000, spend a few thoushand to do it up and then rent it out for 650 a month is ridiculous. Some of the returns they are achieving are in the 12% range!

And who can afford 650 a month for a one bedroom flat outside London, or 1200 for a family home? What sort of salary would you need to have that amount nett and available to hand over as rent, in addition to all your other living expenses. If you have that sort of money available you could probably afford a mortgage - if you had the deposit.

It's even worse when you consider that in many cases it's the tax payer who is paying these obsencely high rents to house people on housing benefit.

We now have a rental housing sector that primarily relies on private small business landlords - hobbyists in many cases.

It's absolutely obscene.

Meant to say...

But Milliband's blunt stick way of going about this is stupid.

He could stop mortgage tax relief on 2nd properties. landlords can claim mortgage interest as an expense - stop that. He could stop the allowances for wear and tear - they rent should cover that. He could add a purchase tax for 2nd properties and should certainly abolish any council tax relief for holiday homes. He could increase the capital gains tax on BTL proerties when they are sold.

There's lots he could do.