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Written by Emma Lunn

Ed Miliband has announced plans for longer tenancy agreements and rent increase cap if the Labour Party wins the General Election next year.

In a policy designed to be one of the most eye-catching elements in his campaign to tackle the "cost of living crisis", the Labour leader has pledged to make it more difficult for landlords to evict tenants or raise rents.

Miliband’s policy has three main points:

1. There will be three-year tenancy agreements beginning with a six-month probationary period allowing landlords to evict a tenant if they are in breach of their contract. This would then be followed by a two-and-a half-year term in which tenants would be able, as they are now, to terminate contracts after the first six months with one month's notice.

2. There will be a ban on what Miliband will today call "excessive rental increases". Labour says it will be guided by the Royal Institute of Chartered Surveyors, which is examining options for a new rent benchmark. This could be linked to average rent rises or inflation or a combination of the two.

3. Labour will ban letting agents from charging tenants fees for low level services, such as simply signing a tenancy agreement. They will instead have to ask landlords for fees.

The announcement met with a mixed reaction. The Association of Residential Letting Agents (ARLA) said Labour’s ‘rent pledge’ will increase rent prices and reduce the quality of properties across the UK.

ARLA managing director Ian Potter, said: “I am deeply concerned that Labour has today announced a series of ill-thought through proposals which will have an adverse effect on tenants in the private rental sector. The proposals show a real lack of understanding of the rental market. Under their pledge, people struggling with the cost of living will be under even greater pressure.

“The challenge we have today is an unregulated market and a worrying lack of supply. By pledging to transfer fees to landlords and by introducing three-year tenancies, which will require a legal presence, rents will increase as landlords and agents seek to achieve returns. Fees are not arbitrary or unnecessary; they represent a business cost that Labour has failed to recognise.”

Despite Miliband claiming the Royal Institute of Chartered Surveyors (RICS) was involved in developing a new rent benchmark, RICS also criticised the proposals.

Jeremy Blackburn, head of policy and parliamentary affairs at RICS, said: “It is always important to consider all options which could potentially expand the supply of private rented homes, and to explore any that might make a positive impact on the sector and drive up property standards.

“However, RICS is not developing proposals on rent benchmarks for the private rented sector, and we do not recommend that a government introduce a ceiling on rent increases.

“Labour is right to talk about 'generation rent', but arbitrary caps are not a solution.” 

Graham Kinnear, managing director at Landlord Assist, said the planned proposal will be counter-productive and lead to an increased shortage of quality accommodation.

“Capping rent increases will only prove to disincentivise people from investing in buy to let property and renovating tired properties,” he said. “This will ultimately lead to a reduction of available quality accommodation at a time when the market is already experiencing a substantial shortage and will simply undermine any attempts that have been made to create a more professional sector as tenants will be paying more for poor standards of accommodation.”

However, Alex Hilton, director of Generation Rent, backed the plans. He said: “Short tenancies and eviction-on-demand give landlords a brutal grip over their tenants’ lives. Renters will finally be able to make the building they live in their home and the street they live in their community, which will radically change how it feels to rent privately. Tenants will also, for the first time in generations, be able to assert their rights over repairs and maintenance without fear of eviction.

“The banning of letting agent fees to tenants is a long overdue measure. Millions of pounds a year are chiselled out of renters’ pockets by an industry that has so far shown no limits to its willingness to exploit people.”


 

Comments

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    Another well meaning politician who doesn't understand the first thing about the subject he is commenting upon.

    • 06 May 2014 14:05 PM
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    Milliband has either, just killed his chances of being elected, or will simply destroy the letting industry within months of implementing any of this tripe. He should read Labour party history on this. In late 60s they introduced rent and tenancy control and found within a short time the complete collapse of the rented sector. hence they had to build ever greater numbers of Council homes, with council tax increases, to pay for it.

    instead of focusing on the real issue of to many immigrants chasing to little housing, thus creating problems for those already here, along with a policy of high property prices to attract foreign currency. they choose to shoot the messenger (Landlord).

    Politicians, they never change.

    • 02 May 2014 17:34 PM
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    Ed Milliband comes out with one hair-brained idea after another.

    Does anyone actually still listen to that dummy?

    Only one thing to do here. Don't vote LibDem in the next election.

    • 02 May 2014 11:39 AM
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    In that case I'll sell my rental properties and do holiday lets instead. There are just no positive aspects to being a landlord -. It is hard enough already to evict difficult tenants without further mad cap ideas instigated by a load of nitwits in Westminster who quite frankly do not have a clue .

    • 02 May 2014 11:27 AM
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    Thank goodness Millipede has no chance of getting in then. What a plonker! So tenants can give 1 months notice or as usual just disappear but a landlord who is trying to supplement his retirement planning so that he won't be a burden on the state has to stick to a 3 year contract. These 'soundbites' have been poorly thought through by a desperate man!

    • 02 May 2014 11:22 AM
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    'Short tenancies and eviction-on-demand give landlords a brutal grip over their tenants’ lives.'

    As far as I understand it, this is not possible.

    Adrian

    • 02 May 2014 09:25 AM
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    the leases on our properties do not permit an agreement of over 12 months, so what happens then?

    • 02 May 2014 08:39 AM
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