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01.05.14

Labour pledges new controls on private rented sector

Labour has promised to introduce new rules to protect private rental tenants if it wins the next election, including restrictions on when landlords can terminate contracts, and new three-year tenancies with strict rules.

At the party’s local and European campaign launch in Redbridge, Ed Miliband will set out a series of reforms for the sector,in an attempt to tackle the cost of living crisis and help what he called ‘generation rent’.

Labour said three-year tenancies they would start with a six month probation period at the end of which the landlord would be able to terminate the contract if tenants failed the probation for anti-social behaviour, as an example. However, after the initial six months, the tenancy would automatically run for a further two-and-a-half years.

Tenants would be able to terminate contracts after the first six months with one month notice, as they can now. But landlords would be able to terminate contracts with two months’ notice only if they can have good reason:

  • The tenant falls into rent arrears, is guilty of anti-social behaviour or breaches their tenancy agreement;
  • The landlord wants to sell the property, needs the property for their own or family use;
  • The landlord plans to refurbish or change the use of the property.

Additionally, landlords would not be able to terminate tenancies simply to put rents up.Landlords and tenants will set initial rents based on market value and conduct a rent review no more often than once a year. Rents could still be reviewed upwards, downwards or stay the same, subject to market conditions.But the legislation would place an upper ceiling on any rent increases to prevent excessive rises.

Miliband will say: “One of the biggest causes of the cost of living crisis in our country is the price of renting or buying a home. People simply can’t afford it, they’re priced out, saving for a deposit year after year, decade after decade, or having to look for somewhere to live further and further away from where they go to work or where the kids have always gone to school.

“A Labour government will make sure that Britain builds 200,000 more homes a year by the end of the next Parliament so that more families can fulfil their dream of home ownership.

On top of the three-year tenancies and predictable rents, there are plans to ban letting agents’ fees for tenants. Landlords would continue to pay charges just as people selling houses pay fees to estate agents. But letting agents would be banned from charging fees of up to £500 to tenants.

“This is Labour’s fair deal for rented housing in Britain: long-term tenancies and stable rents so that people can settle down, know where the kids will go to school, know their home will still be there for them tomorrow.”

However, Conservative Party chairman Grant Shapps said the Labour plan was a "short-term gimmick" and accused the opposition of "political tampering".

“The only way to raise people's living standards is to grow the economy, cut people's taxes and create more jobs. We have a long-term economic plan to do that, Ed Miliband doesn't,” he said.

The free-market Adam Smith Institute was apoplectic, calling it “one of the worst policy decisions of recent years”, “a policy that would devastate Britain’s cities by creating massive slums and exacerbate the housing crisis”, and “a stunningly bad idea that could devastate Britain’s cities and clobber renters”.

Its research director Sam Bowman added: “The only good way to lower rents is to allow more construction in places people want to live. We simply must build more…To paraphrase the socialist economist Assar Lindbeck: the only thing worse for cities than rent control is bombing them.”

Labour has denied that it is planning rent control, as the market will still set the actual rent levels.

Housing charity Shelter welcomed any move towards more "modern, stable rental contracts". But the National Landlords Association (NLA) stated that the proposals are “poorly thought through” and are probably “unworkable”.

NLA chief executive officer Richard Lambert said: “We are concerned that the proposals will actually increase the insecurity of tenure for renters. This does nothing to create a fair and balanced rented sector that works for landlords, tenants and agents. 

“Frankly, I’m surprised that, after the effort Labour front-benchers put into consulting on how to make the private rented sector work better, Ed Miliband announces a change which risks putting landlords in a position of conflict with their tenants and leaves future housing provision on a knife-edge.”

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