View more on these topics

Ed Miliband pledges buy-to-let rent cap

Labour leader Ed Miliband will today pledge to cap rents and introduce three-year rents in a bid to create stability for landlords and tenants.

Speaking at the launch of Labour’s local and European election campaign in Redbridge later today, Miliband will renew his promise to build 200,000 new homes if elected in May next year.

Labour is also planning to legislate to make three-year tenancies the “standard” in the UK.

In addition, Labour would place an upper ceiling on any rent increases to prevent “excessive” price hikes. Labour says this would be based on a benchmark such as average market rents.

Miliband will say: “We need to deal with the terrible insecurity of Britain’s private rental market as well. Many tenancies last just six months with families at risk of being thrown out after that with just two months’ notice with no reason.

“Some are told to accept huge rent rises or face eviction. It breeds instability and that is bad for tenants, bad for families, bad for landlords, and bad for our society.

“The next Labour government will legislate to make three-year tenancies the standard in the British private rented sector to giving people who rent the certainty they need.

“These new longer-term tenancies will limit the amount that rents can rise by each year too – so landlords know what they can expect each year and tenants can’t be surprised by rents that go through the roof.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. Inevitable. If this does happen then no doubt there will be tears and I wonder how long before a BTL investor goes to the FOS for them to kiss and make it better?

  2. Clueless, we live in a free market economy and he is going around trying to put caps on everything.

  3. He will also need to make it easier for Landlords to evict non paying tenants and therefore needs to rewrite S8 and S21 options. Also needs top have a word with the Courts to reduce their fees back down again!!!
    He will also need to speak to mortgage lenders as few will lend on Buy to Let where tenancies exceed 12 months.
    Take heed Mr Milliband – you might be saving the tenant but if there’s no property available for rent or you’ve forced landlords to hike rents for longer term commitments, you’ve done everyone and injustice!

  4. Ann-Marie O'Neill 1st May 2014 at 10:28 am

    Unfortunately Labour seems to forget that many landlords provide good quality accommodation and that rents reflect the local market. After all you very rarely get a landlord increasing rents out of line with the market as the tenants will simple leave.

    With so many people investing in the buy to let market many believe that this has had an adverse effect for tenants however it has had the opposite. It’s made the market highly competitive as landlords now have to keep rents competitive and forces them to maintain their properties to a high standard.

    Offering protection for both landlords and tenants is a good idea as long term lets are common in Europe.
    However there are several aspects that need to be considered.
    1. What protection will these new long terms lets provide to the landlord if the tenant stops paying the rent? On average it can take up to 6 months to evict a none paying tenant. This puts the landlord in a very difficult position as they still have to pay the mortgage.
    2. This will also cause the rents to increase initially. If a tenant is about to embark on a long term let with no reviews then the landlord will have to take into account potential increases in costs that may occur over the 3 year period therefor increasing the rent. At the moment with the current 6/12 month AST’s in place if the landlords costs don’t increase then the rent is unlikely to. By keeping to a 3 year rental agreement the tenants costs will increase from day one.
    3. Labour also want to impose restrictions on the charges made by letting agents. However, what they fail to understand is letting agent, like any other business have costs which have to be meet so if there are restrictions on fee’s then these costs will be passed on elsewhere in the process. Letting agents also offer protection to tenants as we’ve all heard stories of rouge landlords taking money from tenants for properties they don’t even own!

    It’s important to protect tenants AND landlords but looking at the bigger picture will offer long term security for all parties concerned.

  5. Sascha Klauß 1st May 2014 at 10:31 am

    Well, if you’re a landlord, you know what to do. Raise your tenants’ rents to the absolute maximum you can get away with now while you still can. This is not profiteering; it is essential insurance against the possibility that upkeep costs rise by more than the rent increase cap over consecutive three year periods.

  6. Another cluless politician not living in the real world. Does he not realize that by giving the tennant a three year contract the landlord will be in breach of his mortgage conditions ? Secondly by not having the option to increase the rent in line with future interest rate hikes could mean that the stress test calculations may be breached and the landlord forced into a loss making position. Cleverley thought out Mr Miliband.

  7. It seems Miliband is aiming to gain votes from the majority of voters who rent, he obviously doesn’t realise that its the private sector Housing who provides better housing than any property the councils can offer and at the cost to the private Landlord, without them there would be an awful long line of homeless families queuing out side the council housing offices. which will happen should this pathetic idea be implemented.

  8. James Hurdman 1st May 2014 at 1:40 pm

    “Labour would place an upper ceiling on any rent increases to prevent “excessive” price hikes. Labour says this would be based on a benchmark such as average market rents.”

    So in other words, landlords can increase the rent in line with the market. Hardly a cap is it?

  9. I have had a chance to think about this a bit more.

    I absolutely agree with rent control, but three years is nonsense. If we are to achieve something like the continental model tenants must be given some security. A 20 year lease with controlled increases is much more appropriate in my view.

    Average market rents is no benchmark at all. It should be referenced to mortgage rates and some inflationary factor. But then you wouldn’t expect anyone from the Labour party to have any sense when it comes to money.

    I think it would give tenants the needed security (provided they pay on time and don’t trash the property) and it may also cool the housing market as far less people may find BTL attractive – which again in my view would be no bad thing. The money they would have spent might find a proper home – like boosting industry via equity investment.

  10. In some cases the landlord or tenant or both will want a shorter lease. Not every occupier is a family and not every landlord is a buy-to-let owner. Some tenants are students or sharers whilst some landlords are absent because of work or other reasons and will want their home back. How will the proposed changes deal with these people?

Leave a comment