The private rented sector is being increasingly thrust into the political spotlight as the General Election looms, with Labour renewing promises to ban letting agent fees and introduce rent controls.
Yesterday, Labour launched a campaign aimed at ensuring private tenants are registered in time to vote, with shadow housing minister Emma Reynolds embarking on the first day of a national tour of marginal seats with high levels of private tenants.
It is currently estimated that over half (56%) of tenants are not eligible to vote.
Reynolds said that tenants “get no stability, poor standards and they have to pay hundreds of pounds in rip-off letting agent fees”.
Ed Miliband also reiterated pledges that if Labour wins the election, it will ban letting agent fees and cap rent rises. He said the measures would save tenants £624 each.
He said Labour would also introduce three-year tenancies as standard. Miliband claimed: “There are now 9 million renting their home and many of them are young people or families just starting out in life. This ‘generation rent’ has been ignored and let down by this government.
“The amount needed for a deposit on a home has risen beyond the reach of millions of young people and families starting out.
“As well as building more houses and helping people get on the property ladder, a Labour government will take action immediately to make life better for all those renting their home.”
Today, the private rented sector remains centre stage with an event organised by Generation Rent in Westminster including a debate on rent controls and a lobby of parliament.
Alan Ward, chairman of the Residential Landlords Association, is due to be one of the speakers.
He is due to say that three out of five landlords could leave the market if rent controls were introduced.
He will also refer to a survey of over 1,000 RLA members which showed that 75% of them had either frozen or cut their rents last year.
Ward will say: “These results blow a hole through the myth that rent controls would be good for tenants.
“At a time when tenants need more choice over where they live, state-controlled rents would choke off supply, increase rents and reduce quality. It would be history repeating itself.
“The reality is that rent controls would leave many tenants paying more than they do at the moment.
“Rather than coming up with ideologically-driven ideas, proponents of rent controls need to address the root issues, namely the need to boost the supply of homes to rent.”
Also hitting out at rent controls, Dorian Gonsalves, director at Belvoir, said: “In recent months, various organisations and individuals have bought into the idea that rents across the country are spiralling out of control and are supporting the need for rental controls.
“Unfortunately many of these organisations have little or no experience of the private rental sector and are using rental based statistics in the wrong way.
“This is a real concern, as there are many reasons why rent controls would be damaging and costly for tenants and landlords.
“Belvoir has 160 offices across the country and analysis of the Belvoir rental index for the past seven years shows an average increase in rents of just 4% across the entire period.
“When true statistics are correctly analysed, the call for rental controls due to rents spiralling out of control proves to be a flawed argument.
“Although on the face of it rental controls may appear to be a solution to controlling aggressive rental rises, the majority of studies show that rents are not rising sufficiently to warrant this sort of drastic action.
“If landlords feel they are unable to cover the costs of owning a rental property due to rental controls they are likely to dispose of their property or find another use for it, which will simply exacerbate the problem of reduced supply.
“The PRS operates in a free market and has done so very successfully for a very long time. Rather than destroying this, it makes much more sense to tackle the true problem of high demand.
“Successive governments have failed to provide long-term aggressive new-build policies and workable incentives that will enable first-time buyers to fulfill their dreams of buying a property.
“Ultimately it is this, rather than rental caps, that will help to reduce tenant demand and keep rents lower.”
Comments (22)
My recommendation to all Letting Agents and Landlords is not to vote Labour in the forthcoming general election. No wonder there is a shortage of rental property in Scotland. I’m wondering if this has got anything to do with agent fees being banned by the Scottish Assembly? I’m also not sure how three year tenancies will work for my tenants from India working in England on a two year Visa? My suspicion is that this Labour initiative hasn’t been thought through………..
mlettings well said, your comment is spot on. We are professional agents and we also serve some 1000 agents across the UK. The comment made by Emma Reynolds MP are not representative and is factually incorrect. The vast majority of letting agents in the UK are professional, they provide a first class service and deal daily with the complexities of landlord and tenant needs. A Labour Government would be disastrous for just about everyone other than Labour MP’s and the work-shy. Just look at what has happened in Scotland, rents are rising disproportionately and the PRS is in disarray. Many residential property investors are seriously considering alternative assets, this could have a substantial negative impact on the number of homes available to people who can’t buy their own home. If only politicians could leave well alone……
So Emma Reynolds MP said that tenants “get no stability, poor standards and they have to pay hundreds of pounds in rip-off letting agent fees”. Not true.
We don't all operate in London and we certainly don't charge London fees. When will MP's get away from naval gazing and look at the wider picture. Lets look at some facts; If all Tenants met the terms of their AST (paying their rents when due) then Landlords will have finds to invest in their properties. Tenants will not want necessarily want to be tied into a contract for 3 years.
Our fees reflect the amount of work it takes to check and administer an applicant. My advice would be for Landlords to use legitimate Lettings agencies who are registered with professional bodies like UKALA NLA NALS and Safeagent.
Sorry Mr Milliband, we regret to inform you that your request has been declined; the votes on this comment stream can't be used like postal votes and won't be counted in May. We fully appreciate this will be a disappointment but respectfully suggest you think of something to earn real votes.
Don't worry Robert, the good old British public will see sense. There is no way the electorate will vote for Milliband to run the ship especially when he quite frequently shows that his no idea what his doing.
Sadly its not just the old British public who get a vote. Generation Rent get a vote too; Alex Hilton has started electionering, same with Shelter.
They will get to the booth and (in most case) the electorate will choose Cameron over Milliband, and rightfully so.
My lettings business goes up for sale if Labour get in. I am not prepared to provide a public service to tenants whilst I have hungry mouths to feed at home. The blame for the situation lies squarely at politicians feet; they are the ones that decided that we could house anyone that wanted to come here from the millions of Europeans and others that have taken advantage of our generous and virtually open door immigration policies.
Good luck to those that come here, and yes I house them and employ them for jobs, but should I be responsible for the knock on effect? should my clients and I have to suffer financially as a result?
Beano get in touch through Ros if you want, I will explain how and why benefit assisted tenants can be very good for your business and provide higher yields to your landlords. One suspects the Housing Associations, institutional investors and financial institutions want private provision out of this high yield sector.
Just remember not to take the rent direct from the benefits office.
I think we should ban solicitors fees while we are at it, oh and what about accountants and then we may as well ban fees for everyone – I can see a Monty Python sketch in the making
The vote-grabbing tactics seem to get more desperate. We have awarded 100s of tenancies over the last 5 years and always ask tenants how long a fixed term they would like, 90% elect for 6 months, 5% elect for 12 months and the rest other periods from 2 months to 24 so let us be realistic about this – foisting a 3 year tenancy on tenants when we live in and age where mobility is the norm is really out of touch.
Another vote grabbing ill thought out policy idea. Why has Scotland seen the highest rent increases in the last two years????…..could it be because agent fees were banned??
3 year tenancy? Not sure the tenant would even want that! what if they want to move mid-term? Oh dear hundreds of pounds in rip off fees, how about thousands of pounds in rip off fees the government charge in stamp?! labour seem to be the new lib dem party! As for rising deposits it only 6 weeks rent, and is transferable from property to property as long as they leave the last property in a similar condition they got it.
I would consider it very unusual for a tenant to want to tie into three years, far too much of a commitment. Typical vote catching idea from Labour politicians who have never worked at the sharp end. Rent controls will lead to the inevitable repossession of properties when interest rates rise as landlords are left unable to pay the mortgages. Investors will be turned off and walk away from social housing, creating a greater headache.
Yorkshire Agent for PM!!!
Those who cannot remember the past are condemned to repeat it. George Santayana.
Oh dear…!
Labours policy is simply about making a political football out of something that they feel carries popular support and votes. I would be interested to hear from any of our colleagues in Scotland as to whether banning letting fees actually achieved anything other than seeing those fees being either absorbed by agents, which in turn would possibly lead to less consideration of tenants introduced to landlords, or in higher prices being asked for rental properties in the first place.
I'm not in Scotland but this was covered this morning on BBC news, rents have ben going up average 5% according to the report to cover the loss of tenants fees. This will happen every where, which in real terms means that tenants will be paying more than the fee they were originally being charged. I note the BBC was highlighting the disparity in fees towards the excessive being charged and never mentioned the average fee by responsible lettings agents. Labour have failed to get this through parliament at least twice during 2014 and the reason for the three cap is to stop agents/landlords from hiding the fees in the rent, but it will eventually catch up after the three year ends?
I am astounded that a potential government leader can even contemplate taking free market conditions out of the rentals market. Putting a cap on rental figures may help the tenants but what about the reluctant landlords that need to get as much as the market allows in order to pay their mortgage? The OAP's going into retirement homes that need to achieve as much as possible to pay their bills? What about the overriding element of a democratic society that allows market conditions to set prices? What about the letting agents that set their fees at competitive and reasonable levels just to make sure that they don't go out of business. Why do the Labour government have such an issue with Letting agents? Is it because the last Labour govt spent ALL our capital reserves so we can't afford to build any more council owned homes and now they are trying to pass their guilt onto the free market that they themselves created? This Labour may be just left of centre in the way they speak and dress but isn't this policy another show of Communism?
Communism. Short and sweet….
With respect to all Campbell Robb has been lobbying his Labour chums for more than a few months. A quick scan of the LAT archive shows stories back in 2012 where Shelter were banging this drum and producing unscientific evidence to support the wildest of claims and statistics. Like it or not Universal Credit will remove one of the few Aces new Labour has in its deck; the influence the party has over social tenants.
I hate to point out that the 56% of tenants not registered to vote might actually be the children. The problem of producing statistics extrapolated up to the full UK population to support one claim tends to backfire once the numbers don't add up to support another claim. 4.3 tenants per property consisting parents and an average 2.3 children…. 2.3 divide by 4 times 100 = 57.5 % of tenants are not eligible to vote.