Eric Walker, managing director of Northwood, was scathing about Labour’s proposals, including the pledge to make it illegal for agents to charge fees to tenants.
He said some agents would not be able to survive such a move. “Contrary to the universal misconception that agents are raking it in, many make small profits indeed and this policy may push some over the edge.”
He went on: “If agents are forced to scrap fees from tenants, then inevitably, landlords will end up paying more which in turn could increase the rent the tenant pays.
“Couple this with the proposed draconian rent-capping idea, then of course some landlords will reconsider their position.
“It is of sinister concern that rent caps would be introduced at a time interest rates are predicted to rise, which spells disaster for many landlords.
“The lettings market is fine. It’s regulation and consumer protection which should be Miliband’s priority, not State controlled pricing.”
Carole Charge, director at lettings chain Leaders, said: “Labour’s three-year tenancy proposals are unrealistic. Without the right to regain repossession of their property, most investment landlords would not take the risk and pull their property from the market.
“The picture painted by Labour of tenants being forced out of their homes is not accurate. Reliable statistics show that the majority of tenancies are ended by the tenant rather than the landlord.”
Dorian Gonsalves, director of franchising at Belvoir, said his firm would be “dead against” the changes proposed.
“The existing Assured Shorthold Tenancy agreement can already run for a longer period, and changes to this could have a devastating effect on the supply of available rental properties.
“Ultimately, tenants would bear the brunt of fewer rental properties, higher rents and no alternative housing solution being provided by the Government.
“Experts have warned of the dangers of making changes to the existing AST or forcing landlords out of the market, which clearly some of these proposed changes by a Labour Government are likely to do.
“Tenants already have the choice of not paying letting agent fees. They can rent privately and this may be attractive to those tenants who prefer a lower standard of service, with no consumer redress and a landlord who may or may not respond to maintenance issues.”
Carol Pawsey, lettings director at Kinleigh Folkard & Hayward, described Labour’s proposals as “disastrous”. She warned that rent caps could lead to “many” landlords quitting the market.
The National Landlords Association said the proposals were “completely unworkable”.
Richard Lambert, its chief executive, said: “Were they to become government policy it would strike a devastating blow to investment in housing of all tenures and further constrain supply at a time of real housing crisis.”
The Residential Landlords Association said Labour had quite simply got it wrong. Vice-chairman Chris Town said: “All the evidence clearly shows that rent controls of the kind proposed would critically undermine investment in new homes to rent and are not needed, given that official statistics show rents increasing by much less than inflation.”
The British Property Federation also savaged the rent controls proposal. Director of policy Ian Fletcher said: “It makes no sense.
“Good landlords will be getting a perverse message that if you are providing a premium product the most you can expect is the ‘average’, whilst bad landlords with sub-standard accommodation can find another justification for charging over the odds.”
I must say that I like the idea of longer and more secure tenancies but this way is just not going to work. Perhaps more choice can be given to both tenants and landlords at the start of the tenancy to have either a two or three year tenancy with a tenant only break at six months for example, (instead of either a six or 12 month AST) for landlords that want a long term commitment and tenants that want the possible stability then this could be in both their interests. And in fact those landlords can market their properties with a good USP.
But you can't force people to do it as Labour are trying to do and this is why this gimmick is simply unworkable on so many levels.
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It appears that Agents all want the same thing and I agree with Ian Potter
“Political posturing, when it has such an impact on people’s lives, is unfair.”
When will the Labour party and the Government listen to the industry? The industry requires one voice to stand against this political nonsense.
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Labour don't understand Housing. Look at the Home Information Pack debacle. Tenants can have longer term tenancies now if they want them, if letting Agents can't charge fees to tenants, will mortgage companies still be allowed to charge fees to buyers?
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And those mortgage fees are often HUGE!
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"Labour don't understand Housing."
Sorry, Mr Croft – do you mean that the current lot DO??
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Fees to tenants are not unfair – I think what happened in Scotland was remarkable!
It is not the landlords' responsibility to prove whether or not a tenant has good credit for goodness sake – why should they (or the agent) cover that cost?
And it is ridiculous to think that an agent should have to cover the cost of running around after a prospective tenant if they can pull out on a whim.
If there was no upfront charge to a tenant, they could change their mind in a heartbeat.
Fair, transparent fees to tenants is not a political issue in any way – it is a fair business practice – if tenants don't like it they can try to find an agent that doesn't charge them (good luck btw!).
Now, if you would like a good political topic we could discuss the CRIMINAL lack of house building for the last 50 years.
That would sort out both sale and rental prices at a stroke, but guess what…
(Here comes the politics)
Other countries will pay more than we can afford for cement, steel, copper, etcetera.
Because we did not spend the last 50 years building houses, and instead congratulated ourselves on how much our castles, homes and hovels had gone up in price (because demand was FAR higher than supply) it is now not economically viable to build houses except in the south east.
We need a national building plan NOW, not some watered down single party populist policy, but something that actually will benefit the likes of you and me.
Ooooh, I'm just warming up – Happy Thursday guys!
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There has been a ban on tenant fees in Scotland for quite some time now – the repercussions of which are felt not only by the agencies who have lost a substantial (and much needed) income source. Landlords now have the additional burden of either paying for referencing themselves or taking the risk of having an unreferenced tenant. This has been the last straw for many hard pressed landlords who would rather dispose of their properties than suffer any further incursions on their rapidly diminishing income. Not good news for the letting agents, the landlords or the tenants in a rapidly shrinking market.
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We could all see that coming. I wonder what Shelter's real motives behind their ruthless campaign in Scotland was…
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I am delighted that Red Ed & his merry band have been generous enough to give us plenty of warning of their intentions, rather than such proposals appear in their first or second Queen's speech and not give the nation the opportunity to at least vote on them.
I am sure that this will be the first of many spectacular PR gaffs and proposals from individuals who take council from the wrong places. If you only listen to the siren calls of the radical end of Shelter and a few other warped viewpoints it is not surprising you come up with such a proposal.
Sadly, I fear that the individuals they are claiming to protect will be the ones who are hardest hit and the good/ responsible will consider leaving the marketplace
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Good grief, what next in order to try and win votes from what Labour believe to be the masses. This type of legislation will destroy confidence in the UK PRS and result in less, more expensive housing rather than more affordable housing for people who want / need to rent.
The effect of the PRS legislation in Scotland has been disastrous. Many tenants take up occupancy of rental property without appropriate references being carried out as landlords take the short sighted view of reducing costs. Less than 50% of the total deposits held in Scotland have been paid into the custodial scheme and the government is unable to take any actions to police the scheme.
Result; less professional service to landlords and tenants, more risk exposure, cowboys will always be cowboys and dodge legislation oh…….. and rents are increasing.
Keep politicians and regulators away from the PRS in England & Wales and allow the professional letting agents to provide a great service and differentiate through their quality propositions for landlords and tenants. We are short of quality homes and government intervention will only worsen the situation.
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What is wrong with Letting Agents charging a fee for processing tenant applications. Sometimes it can take several phone calls and staff time to confirm the information supplied. No-one else is being targeted for charging such fees – banks, mortgage companies, lawyers etc.
All that is needed is for the Government to set a national fee to create a level paying field but abolishing such fees altogether is totally unfair.
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