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Written by Emma Lunn

Labour’s plans for private rented sector rent controls have been widely condemned by housing and landlord groups.

Landlord Today reported yesterday how a Labour government would introduce legislation to cap rents so they cannot rise by more than the rate of inflation (CPI) during secure three-year tenancies.

The British Property Federation (BPF) warned that rent controls could deter investment in housing. It said that an overly-prescriptive approach to rent increases could deter much-needed investment in the housing sector.

The organisation also highlighted how the policy could lead to uneven rent rises for tenants who live in a property for several years, when the rent returns to market after three years.

Melanie Leech, chief executive of the British Property Federation, said: "Ultimately what will help tenants best is more investment in housing. Pension funds and other institutions have billions to invest in this market – developing places that would provide a new generation of high-quality homes that offer greater choice to renters, including the option to sign longer tenancies.

"This additional investment will be vital to tackle the housing crisis, and we would urge the next government to do all it can to encourage it, rather than chase it away with an overly-proscriptive approach to rent setting.

"In places like London, tenants will find this policy on rents may make their budgeting harder, rather than easier. Their rent will tick along at CPI for a couple of years and then they will face a potential sharp rise in year three when the rent returns to market."

Meanwhile the Residential Landlords Association (RLA) reminded Labour that their last Government warned of the dangers of rent controls.
In a consultation on investment in private rented housing published in February 2010, the Treasury argued that when rent controls were previously in place they “reduced investment in the sector, contributing to…lower maintenance standards in the stock that remained.”

The conclusions of this document echo the concerns of Labour’s Communities Minister in Wales, Lesley Griffiths who in February this year told the Welsh Assembly that rent controls, “reduce the incentive for landlords to invest and can then lead to a reduction in quality housing.”

RLA chairman Alan Ward said: “Labour’s plans would take use back to the dark days of the seventies and the eighties which caused a shortage of decent homes to rent.

“Whilst they talk the talk on boosting supply, they continue to want to clobber landlords to secure cheap political points rather than pursuing serious economics.

“It speaks volumes that no Labour spokesperson has so far denied that their rent control plans would choke off investment in much needed new homes to rent.”



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    Totally agree Peter...

    We will not be increasing our portfolio and all ready thinking of giving it up. This will definitely happen should Labour get into power as there proposals are just farcical. My X will defo not be hitting a Labour, SNP or Green Party box, that is for sure. The book on renting is already in favour of the tenant, and with the proposals as I have seen them this in balance just gets worse and as normal its for the "RICH" landlord to pick up the pieces. Please do remember if you rent out a property, somehow you become RICH... hmmmm

    • 29 April 2015 17:33 PM
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    (excuse any typos etc; smart pbone, small buttons, fat fingers)
    No, it doesn't mean that (in answer to your first question). What it does mean is that the landlord, in practice, will not be able to 'see how it goes,' as per the existing and typical initial six month AST (assured shorthold tenancy.) It also means that the tenant who in effective will be a damned nuisance has both local and central government backing to be so. This would not be the intention of any government but it is a sure fire inevitability. The current difficulty in getting rogue tenants out would remain in place but the landlord would have a significantly more bureaucratic process to go through. local councils would act as free lawyers for all tenants, as they do currently for 'erroneous' DSS tenants.
    Labour has steadfastly ducked the not insubstantial question that rent caps, previous rent accountability and 36 month AST's would suppress available properties for rent due to, for exampke, existing landords holdng fire on increasing their portfolio or (and particularly when of a certain age) deciding this is the touch paper which causes a landlord to 'sell up, give up.'
    It is crucial that Labour's well intentioned, hopelessly naive policies dont get the wrong side of the black door of Down Street.
    They are in typical denial that their pre IOUs attempt was damaged by saying that this us a different tac. It is actually near identical.
    I have many properties throughout Cambridgeshire. I have already this week stopped myself offering on a property since the electoral campaign began and Labour's mandate became clearer; apart from those recently remortgaged, I think this would be for me the final push to leave the game and retire to warmer times (and possibly rent exclusively in Spain and Portugal.)
    Please, folks (both tenants and landords) if you are going to vote, be very very mindful where you out your 'x.'

    Pete bee
    Member NLA (accredited)

    • 28 April 2015 16:48 PM
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    Would the proposal mean that tenants would have to stay in the property for 3 years. How would this be enforced. Many tenants only want a short tenancy whilst they save for a deposit or for other reasons. Is the 3 year term only replace the to the landlord. What happens if the tenant falls behind with rent is the landlord able to get his property back or would he have to wait until the 3 years were up.

    • 28 April 2015 09:32 AM
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