Labour to cap landlords rent on buy to let homes

Labour to cap landlords rent on buy to let homes

Ed Miliband will announce today that a future Labour Government would cap annual rent increases in the private rented sector and scrap letting fees to estate agents – echoing the 1960s and ’70s rent controls that are widely blamed for damaging the property sector.

In a bid to end “excessive” rent rises and give a “fairer deal” to tenants, an “upper limit” on rises would be put in place based on average market rates.

The Labour leader will also call for longer, securer tenancies and rental charges of up to £500 to be axed.

Rules on tenancy agreements would also be changed to give more certainty to tenants wanting to remain in their properties for an extended period.

The Conservatives have said that the policy has been tried unsuccessfully by Socialist governments in Venezuela and Vietnam, and would result in low quality accommodation and fewer homes being rented out.

A Labour source said:

“This is not about rent controls, this is a rule to stop people being ripped off by rogue landlords.”

In Milibands speech he will say :

“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.

“So today I can announce, the next Labour government will legislate to make three-year tenancies the standard in the British private rented sector, 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.”

Mr Miliband will add:

“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.”

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.”

These plans could affect tens of thousands of buy-to-let investors and other property owners.

Landlord Referencing Services has predicted rent caps being on the cards for the last three and a half years. Over and over again we were told that it would never happen, but the fact is that is has to happen if the Government wants to keep on target at keeping the welfare bill down.

We even asked Grant Shapps “Can you categorically rule out a national rent cap?” back in July 2012 – here was his reply :

And in June 2013 The Royal Institute of Chartered Surveyors even published a report which stated :

All political parties should make a commitment not to introduce rent controls in the private rented sector, as this would reduce the level of supply in the rented housing market at a time when the country is becoming more dependent upon the sector.

So the question we would like to ask today is:
Instead of capping rents why don’t the government cap interest rates instead?


With four million private rented households in the country (18% of all households) compared with 3.7 million social rented households (17%) Landlord Referencing Services completely agree that no-one should be paying to live in poorly maintained accommodation in this day and age. However a recent report has shown us that the majority (67%) of private rented accommodation across the country is up to the standard that it should be.

The LRS Forum member who bought this news to our attention had this to say on the matter :

“Once again, another gimic from our good old *friends*, Labour!! If these proposals actually became statute, there are so many negative implications here.

The ones which spring to mind are:-

“A glut of houses being repossessed or sold by LLs as clever tenants play the system, don’t pay and rely upon a three year tenancy for protection of eviction. It is an absolute nightmare to evict on a Section 8, and a lot of tenants know this.

As the PRS make up around 17% of the market, and ever increasing, there will become a shortage of homes when landlords sell to get out of the market or have their hands forced with repossession. I’m all for long-term tenants living in my houses, it’s what we all aspire to. However, as we all know, the law is heavily weighted in the tenants’ favour, and evicting them for failure to pay rent, breaching the AST is nigh on impossible under a Section 8. 

If this ridiculous proposal/gimic ever became statute, LLs would need the law changing in order to evict tenants immediately. However, as with all Labour policies, it would be more weighted in favour of the tenants and there would be a glut of LLs leaving the industry and investing elsewhere. I for one would do so if this ever became statute.

What about insurance products which cover loss of rent, premiums would rocket, and perhaps this side of the industy would just collapse because of the costs and risks involved.

What about the mortgagees? They wouldn’t allow three year tenancies under the current legislation. It is just too risky for them. They would call in their loans and stop lending to LLs.

Sat here, blood boiling over, need a coffee, any thoughts guys …?”
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Author: News @ Tenant Referencing

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