The Labour Party has today issued a range of proposed changes to the UK rental market which have certainly caught the headlines. This is not the first time that Ed Miliband has attempted to drive a wedge between UK landlords and their tenants amid accusations of excessive charges and ever-increasing rents. While this fits perfectly with the left-wing strategy of attacking the “rich”, the proposed changes are already falling apart before the ink is even wet.
While there is no doubt that the UK rental market is very buoyant, and some private landlords are taking advantage of ever-growing demand, there are already an array of regulations in place to protect tenants. However, it seems that the Labour Party in its “attack on the ever-growing cost of living” is determined to bring down private landlords although there could be long-term implications for this.
New three-year tenancy agreements
The proposed new three-year tenancy agreements would have a six-month probationary period during which tenants could be evicted if they breach the contract. If after the six-month probationary period there are no issues then there will be a further 2 1/2 year term to the tenancy agreement which could be terminated by the tenant with notice of one month. However, under the new proposals, landlords would not be able to terminate the contract unless the tenant was in arrears or there had been some kind of antisocial behaviour. Even then the landlord would be forced to give notice of 2 months to the tenant.
Quote from PropertyForum.com : “The UK property market is in effect two very separate markets with London and the rest of the UK often showing different levels of performance. We would be very interested to learn your opinion of the UK market at the moment and the prospects for the medium to long term.”
Resisting excessive rent rises
The Labour Party is also looking to control rent rises across the UK in tandem with the Royal Institute of Chartered Surveyors which is looking to put together some kind of benchmark. The likely benchmark will include inflation, average wages and other everyday factors to limit the allowable increases in rent year by year. This all sounds very good on paper but the reality is that controlling rents in a “free market” will limit the attractions for long-term investors and thereby reduce the options available for those looking to rent.
Letting agent fees
Whether or not you agree with the charges imposed by letting agents across the UK the fact is they do have a very important role to play in the UK rental market. They do require some form of deposit, there are fees to take into account and there are costs which they will incur on an ongoing basis. The Labour Party believes that the landlord should pay the initial letting agent fees although this is something that will not go down very well with UK private property owners and landlords.
There may be trouble ahead
The simple fact is that by controlling rents, transferring various costs to landlords and basically interfering in what is effectively a free market, the long-term attractions of being a landlord in the UK will diminish significantly. If there are fewer people willing to enter the market then this will reduce the number of properties available for rent and will likely push up rents even further on those properties available to the wider public.
There are many who believe this is just the latest in a long line of public relation stunts by the Labour Party which has been struggling on the economic front. Attempting to drive a wedge between UK landlords and tenants does not bode well for the future and attacking the “rich” who invest in UK property could well have the exact opposite effect that the Labour Party is looking for.