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

You could do what the rest of us do - live far out and commute in if you want somewhere better.

I had thought of that, but my wages won't cover rent and a long commute. If they did, I'd happily do so.

Ok, personally I think you are both being rather impractical for those with few financial and rental options, but I’ve got your point, no matter how rubbish it is. lol

Isitmebut you may well rubbish and patronise my questioning around these issues but you appear to be missing the point I am trying to make (and Vitaminz, I believe). Perhaps I should underline the key bit. If "unfeasible" landlords sell up, leaving only those who can offer secure long-term lets (or can manage adequately with short gaps between tenants and any maintenance issues) ALONGSIDE an increase in housing supply, prices will come down and more people CURRENTLY RENTING will be able to afford to buy, therefore REDUCING the number left needing to blinking rent.

Those who do not want to buy (yet) could be adequately housed by effective landlords (and yes, potentially by the likes of serious and well equipped professional organisations, however I would prefer to see more socially minded and not profit-driven enterprises fill these shoes).

Those unlikely ever to be in a position to buy are way more likely to be better suited to social housing in any case.

I may well be barking up the wrong tree here, but I am not convinced the way we calculate our housing shortage really takes into consideration the number of actual residences in terms of the number of existing houses/rooms per person in our population; but rather is more based on the number on the number of homeless applications, from people priced out of the current market and existing housing. I question the fundamental ethos behind our view and approach to solving the housing crisis, not that I expect you to agree.

Please explain to me what is an “unstable way”, and why aren’t the tenants offered a 3-month, 6-month or 12-month Tenancy, like every other tenant in the private rental sector – unlike the somewhat longer ones via Housing Associations, or complete security of a Council Property?

Isitmebut, 3 month, 6 month and even 12 month tenancies are NOT stable situations for a family. That is an issue which seems to be spectacularly missed.

Someone who has difficulty in selling their home, or who wants ready access to their money for whatever reason should have no right IMO to pass on the vulnerability of THEIR situation to others. Perhaps the state could help in other ways, rather than pass the buck and ultimately foot the bill.

I appreciate you may see things differently.

…reviewing ways to ENCOURAGE existing private landlords to offer longer fixed term contracts, and ENCOURAGE institutional money in to fund the building of new homes and rent them out for 5-year plus fixed terms – and this will solve many of the costs and security issues, rather than reduce the availability of rental properties before the State raises it's game.

Isitmebut who is saying to reduce the availability of rental properties before the State raises it’s game? In fact we are agreeing on some aspects around this. I’ll repeat, it is not a case of either/or. I also agree that encouragement is better than force. I interpretted Vitaminz post of Wed 28-May-14 14:29:55 to mean just that, by encouraging investment elsewhere, and making letting more unattractive.

On longer commutes in London zone 5 - I have cycled from there to the centre - bit of a long haul but is very good exercise. The tube in is about £200 a month but rents are cheaper.

Huh - where would you recommend? Still quite new to London, any advice welcome!

I have looked as far as Southend, Southampton, Brighton, Reading, Luton and so on. It seemed like the London sphere of influence with regard to huge rents spreads quite far - certainly as far as Luton. And that's before the massive costs of the season tickets.

My old home town is actually only 1 hour from London by train, but costs £900 a for a monthly season ticket

HoopyViper ….. are you not contradicting yourself, as on the right hand you want to ‘encourage’ private renting, and then on your (far) left hand, you want to make private renting ‘unattractive’ to landlords – with that joined up policy thinking are you Ed Miliband in disguise?

Before I go on, let me remind you that this year was the first year that private rental accommodation has grown to become the largest provider of rented properties, and the numbers involved is around 4 million people.

So if say 5-10% do sell, it might help those who can buy, but NOT the poorer in society, who either may be renting now from the private sector or waiting for accommodation, and will find more competition for fewer rental properties, from better ‘heeled’ prospective tenants.

The problem is that Mr Miliband threats of legislation in 2015, making landlords offering a 3-year Tenancy compulsory, with all the rights to break the 3-year term on the tenants side (unless the tenant breaks certain covenants) will be a major discouragement to many not willing to take on a 3-year ‘risk’, and will come in years before government funds can take up any current rental demand, when private landlords sell up ahead of that legislation.

Such is the current private rental demand and government finances, professional institutions like pension funds building and renting out properties would seriously help solve the problem of more ‘professional’ landlords, and this has been planned for a few years now, as this link below pointed out.

“Pru plans foray into UK rented housing”

www.ft.com/cms/s/0/a35a999e-9893-11e2-a853-00144feabdc0.html#axzz330iRnEwP

“The Prudential is to become the first UK institutional investor to enter the UK rented housing market in recent times, paving the way for the growth of a corporate-backed letting market at a time of acute housing shortage.”

But enter Mr Miliband in populist policy mode, offering the public Private Sector cheques his unfriendly to business government will not be able to cover.

“Labour to take on private landlords”

www.ft.com/cms/s/0/569d1966-d07c-11e3-9a81-00144feabdc0.html#axzz337DLijKE

“The move is the latest element of the opposition’s campaign on the “cost of living”, which has seen salvos against banks, energy companies, betting companies, pension providers, housebuilders and transport firms. But critics warn the move could undermine attempts to create a more professional private rented sector.”

It will also enforce new three-year contracts which landlords would not be able to break simply for the sake of getting a higher rent. Instead they would only be able to end the contract – with two months’ notice – if they had a good reason such as rent arrears, antisocial behaviour or breaches of the agreement.

Landlords and tenants would have to set initial rents based on market value, with a rent review no more frequently than once a year.

At that point landlords would be prevented from raising rents any higher than an “upper ceiling” set in place by legislation. That cap would be based on a benchmark such as average market rents.

But Marnix Elsenaar, head of planning, at law firm Addleshaw Goddard, said the move could make undermine attempts to attract institutional investors into the incipient “build-to-let sector”

Meanwhile, start-up Essential Living has vowed to shake up the capital’s lettings market, dominated by small amateur landlords. Martin Bellinger, its chief operating officer, said landlords needed to offer the “flexibility” of both short and long-term leases.

At a time when everyone is falling over themselves to support a professionalised rental sector, proposing rent caps would be absolute madness. It will kill off institutional investment in one fell swoop,” he said.

And it is not just potential professional renters dreading Miliband’s badly thought out populist policies, businesses are too, even now holding back investment/jobs until 2015, as this link explains.
'Reverting back to old-fashioned socialism is stupid': JCB boss Lord Bamford warns of Miliband threat

www.dailymail.co.uk/money/markets/article-2642017/Reverting-old-fashioned-socialism-stupid-JCB-boss-Lord-Bamford-warns-Miliband-threat.html

HoopyViper …. Being a private landlord (especially a small one) is an investment, that provides a social service, not the other way around – that is what you and Mr Miliband have to get your head around.

Why can’t you see that legislating for 3-years when a landlord could have a personal /financial reason to sell at the end of a fixed term contract, never mind an economic one if homes prices start to crash and they wouldn’t be able get refinancing for their loans – and many will be nervous committing for 3-years when State controls are dictating commercial terms, that can change against them on a whim of an annual Chancellors Budget.

I GET IT a max 1-year plan is a constant concern of families, but many of them will want the flexibility of moving to smaller, larger, cheaper, properties within a three year period, they did not envisage at the beginning.

My point is, we have what rental stock we have, we need to encourage reforms, not State Controls that encourage landlord sales, as there is no back up plan – and Miliband’s policy is ALREADY discouraging the move to more professional, longer term rent supply.

P.S. You seem to say if landlords sell, THIS will result, if THIS happens, and THAT will result if THAT happens - but it is your wish, not the reality - look at the Shelter figures, if the poor had the options of cheaper social rented housing you think they have, they would not be in their figures unable to move to a larger property or a property at all.

The legislation is not as bad as being set out above. Most landlords only increase once a year and only if other rents locally go up so linking t market rents is no problem. Secondly you can get the tenant out of if you want to move in ergo the 3 year thing is just a smoke screen for the rules staying as they are.

JaneParker ..... as "most landlords only increase once a year" (when I found as I looked after the place we never had rent rises for 3-years on two properties) isn't this a Miliband 'elephant gun' to a rental mouse problem re the minority of landlords?

And where is the draft policy/legislation, "linking market rents (exactly to what) is no problem" to whom and whatever mortgage funding costs/investment yield the landlord thinks is worthwhile?

And "getting tenants out" for commercial/personal reasons are allowed - if the landlord's has the ability to sell WITHIN a 3-year fixed term, they don't have within a 1-year term - what is the point of a 3-year term other than pretend to tenants that they have a guaranteed period of tenure?

HoopyViper ….. are you not contradicting yourself, as on the right hand you want to ‘encourage’ private renting, and then on your (far) left hand, you want to make private renting ‘unattractive’ to landlords – with that joined up policy thinking are you Ed Miliband in disguise?

No, I am being quite clear. I would like to see STABLE renting encouraged where it is needed, only by those who can ride out the peaks and troughs in an uncertain market, who truly see their property as a long term investment. Not those with short term market concerns and who are clearly out to make the most profit in the quickest possible way at the expense (literally) of their tenants.

Then, those actually doing the work to pay off the investment and actually providing the long term revenue (i.e. the tenant) I believe, should be able to choose the length of their tenancy within a reasonable timeframe, of say 3-5 years. I don't see a problem in a tenant ending a contract early should they wish to move on, perhaps IF they are able to find a suitable replacement themselves, or pay for the advertising through a letting agent. I would think that perfectly reasonable.

Before I go on, let me remind you that this year was the first year that private rental accommodation has grown to become the largest provider of rented properties, and the numbers involved is around 4 million people.

That "4 million" is an interesting figure. When they are providing something like 9 million homes? It really is a big boys game, isn't it? That is at least 2 houses per Landlord, or more likely, a small proportion struggling with their own personal finance, and the rest lording it up with vast portfolios.

Either way, up to 10% selling up would release nearly 1 million homes onto the market, and as I say, I think it very likely the number actually needing to rent would probably drop drastically, or it COULD, if we enabled it through sensible and sustainable plans and keep social objectives at the helm.

And re: stating THIS and THAT will happen - again no, I am suggesting and questioning how we could manipulate the kinds of outcomes I would like to see, if we had a desire to. It is your assumption that making landlordship (or whatever you like to call it) less attractive, will reduce the number of rental homes without affecting the number of those requiring a rental property. That is the biggest assumption I can see on this thread.

Btw, you ask if I am Ed Milliband, clearly I am not as I don't think he is currently facing eviction for the 3rd time in 4.5 years resulting in being placed in social housing. But since you are asking, I am interested in your background. Pardon me if I am wide of the mark, or rude to inquire, but you seem very well versed in both the subject and conservative speak, and able to lay your hands quickly on a lot of "relevant" DM info to support conservative aims, are you a politician or professionally involved in championing conservative housing policy at all?

Oh, and speaking of Lording it up, there is an interesting petition currently running on 38 degrees regarding potential conflict of interests and to “Stop two Lords who are directors of Mayfield Market Towns from building 10,000 houses on rural Sussex land turning a wildlife area into an urban, concrete sprawl.”

And, interestingly, Sussex Wildlife Trust (already quoted on this thread!) are particularly anti the development, due to it being a site of National Importance with respect to the UK Barn Owl Recovery Programme. It also is an area which straddles the River Adur Corridor – you guessed it, a flood plain!

How can he cap rent rises? Private landlords can charge what they like

Haven't read all posts, so am hoping someone's already pointed out that rents have always been capped until recently. Fair Rent Act.

'Killing the BTL market' will be no bad thing, imo. It's nothing but a self-imploding bubble.

Oh good Garlic. I'm glad you've come along

Assuming you are the usual Garlic something on these kind of threads?

I am that bulbous, paper-skinned poster, Hoopy, just using up the last of this month's name Got to bugger off for a while now, but for the welcome!

Yes, my point was that Labour's reforms are nothing. Landlords will be able to get the property back if they want to move into it (which means no security of tenure other than the current one year etc) and second rents will still go up once a year as they do now based on other local market rents - i.e. no change at all therefore I don't fear these landlord reforms at all and they will not help tenants much at all. The requirement that the landlord pay for credit checks and other charges will be added to rents so won't help tenants either.

You are right JaneParker, Labour's plans don't go nearly far enough.

HoopyViper …. So basically you are not thinking for one moment of the concerns/feasibility of the investment for those putting up their savings and taking the risks of buying and letting out properties, you are for State “manipulation” and social engineering of markets - no matter what that does to lower the availability of properties to rent for those with no other choice but to rent – who said ‘the problem with socialism is eventually you run out of other peoples money’. Lol

As to your problem obtaining security of tenure in social housing you mentioned and enquiring about my life – in short I remember the 1970’s so I’m old and have globally followed politics and markets like interest rates/yields (see below) with great interest for years, so I generally know how ‘markets’ work, especially what kills them e.g. the threat of head-up-bottom thought through socialism on the private sector.
www.mumsnet.com/Talk/in_the_news/1977704-UK-Interest-Mortgage-Rates-WHO-S-in-control

As to knowing about homes, I started life until married in council properties, and during my life I have lived in my own homes, lost them, bought a property for an elderly relation to live in and then rented it out until I got stiffed on the rent I could not afford and sold it too early, rented for several years in the private sector and rented another council home – in no particular order.

Regarding my politics, I don’t hide it, far from it, but we are not talking ideology here, we are talking cold financial realities of the effects of State controls on the Private Sector being touted as populist solutions to huge overhanging problems, that the Public Sector failed to address when it had the money and is now clumsily, nay dangerously, trying to compensate for.

JaneParker ….. interesting comments, thank you, so once again Miliband offers sticky plaster solutions to complicated social problems, that sounds good to the electorate.

But as his policies still needs private sector money, he is likely to deter the private sector currently investing and/or putting in new money – especially as there are other market forces for them to consider as well e.g. interest rates rising from all time (Base Rate) lows affecting profitability/yields.

A problem I see in the next few years is when UK Government Bonds and other high grade bonds, offer better annual yields for investors than those renting properties, without the rent voids, insurance costs and general crap of dealing with the day-to-day problems being a landlord throws up at you.
www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/10743997/Could-now-be-the-worst-possible-time-to-buy-to-let.html

Prices might stall for a bit if interest rates start to rise which may put off investors. However the pensions changes mean those with say £20k in a pension might choose to take it out as cash and put it into a buy to let (or pass it to their children as a deposit). it is hard to tell. Those who did very well in property compared to other investments tended to borrow 75% so their gains were all the more than someone putting the same basic deposit without the borrowing to buy most of the investment into say shares. It was the gearing which made the biggest difference.

Most private landlords have 1 property they rent out only and they are almost the biggest sector I think for letting out in the UK so private landlords are a huge part of the housing market in the UK.

I am not on the left but I agree that if Milliband wants to do what he seeks to achieve - drive landlords out of business and have institutions and the state letting to private tenants then he needs much more radical methods than he has proposed.

I like Boris J's suggestions this week for London's issues - perhaps build on the water - Thames; secondly allow OAPs to downsize without paying stamp duty or give them some kind of exemption from inheritance tax when they die, to free larger properties for the young to increase the supply . In London (but by no means everywhere else) there is a shortage of housing. That is not the case in much of the rest of the country.

Isitmebut, perhaps you could read what I post, rather than the usual Tory defense mechanism of twisting it to suit your agenda and trotting out tired old cliches, IME used only when losing the argument. There is nothing in what I have posted which relies on MORE of other people's money, but LESS, PARTICULARLY IN HOUSING BENEFIT. In fact what I am suggesting would go a long way to ensure more people have more stability and therefore ability to earn and keep money of their own to support themselves.

The problem with being a fast-buck profiteering landlord is eventually people wise up and you run out of other peoples money to pay your mortgage. What has backfired for the landlord now is that the number of voting renters far outstrips the number of landlords, which apparently only Milliband has just worked out and seen the light. We will have to wait and see whether the masses feel more strongly about this issue or Europe.

I have stated throughout that we should do more to support accidental landlords. Acknowledging the source of their plight (bad practice) would be a fine start. As I have stated over and over again, is that if a landlord is so vulnerable to short term changes, they shouldn't be in the game and their losses are their responsibility, not their tenants.

What we need to do is provide better opportunities for people to invest elsewhere, so they are not so precariously reliant on the short term instabilities which will likely always exist in the housing market. Vast profits CAN be made, but it is high risk in the short-term, and usually depends a lot on luck (and that really is what it boils down to).

Just what is wrong with buying a sensible property to let out long-term?

If you haven't put enough by to ride out the peaks and troughs, then it is not something you should be taking on, or you have to cut your losses and move on, same as any business. Do something else more useful with your money to begin with. Dave was crying out (though gone a bit quiet on it) for people to become the Big Society, let's see it.

Jane, Most private landlords have 1 property they rent out only and they are almost the biggest sector I think for letting out in the UK so private landlords are a huge part of the housing market in the UK.

Do you have any stats to back that up?

Regarding my politics, I don’t hide it, far from it

Is that political wriggle speak for saying yes, you are professionally involved in housing policy for the conservative party?

Crumbs. I'm not exactly missing John Hemming, but he didn't hide and made it clear who he was.

HoopyViper ……. May I suggest that you spend more time reconciling your opinions of what you’d ‘like’ in socialist La La Land, with cold commercial reality, rather than be so concerned about another poster’s politics/status who is both speaking common sense and qualifying their opinions, re the current dire housing situation and the commercial possibilities that can help it?

I have started/posted on many threads on Mumsnet and it is clear I have Conservative economic views over Labours, as the former is at least sustainable, the latter always takes us to economic ruin - but I have never been an MP, Member or anything else within the Conservative Party – and sole contribution over my life time, was to deliver leaflets one year before a General Election, as I moved to a constituency with a thin Labour majority.

But frankly, I am so comfortable with my views/facts, I would not care if I was debating with fricking Miliband himself, in fact the more stimulating the debate over the REALITIES, rather than La La Land the better – as posters won’t need to ‘deflect’ and personally try to discredit the other poster(s).