How would a Labour victory impact the PRS?

london nightIn just over a year’s time the General Election will take place, however political parties are already making their manifestos clear to the public. Naturally, one of the biggest talking points between all political parties is the state of the property market and the private rental sector due to the ongoing housing crisis. Recently, Labour leader Ed Miliband announced his plans for the private rental sector if Labour came to power next year, and here Just Landlords looks at what has been termed the ‘rent reforms’ in more detail:

“The Cost of Living Crisis”

In nearly every single speech that we have heard from Ed Miliband over the past few months one term has almost always been used – “the cost of living crisis”. The fact that many people across the UK are still struggling to cope with the cost of living even though the current coalition government, particularly Conservative Prime Minister David Cameron, are claiming that the UK’s economy has improved far greater than what was originally forecasted is something that the Labour government are focussing their manifesto heavily on. One of the biggest issues with the cost of living right now is that many households are struggling to afford high rent prices on top of other necessary outgoings, which is why Ed Miliband wants to see tighter restrictions placed on the private rental sector and more power to be given to tenants.

The Rent Reforms

In order to prevent landlords from increasing rent prices, Ed Miliband has claimed that under his rent reforms he would work closely with the Royal Institute of Chartered Surveyors (RICS) to place a ceiling on rent increases. Furthermore, Mr Miliband has claimed that he would ban letting agents from demanding fees from tenants as it makes it even more difficult for them to afford private rental accommodation. Instead, landlords would have to pay these fees on top of any other fees they already pay their letting agent, as well as other outgoings such as landlord insurance and maintenance costs. Under Labour’s rent reforms landlords would also have more restrictions placed on them when it comes to evictions and may even be required to offer longer term tenancies for all their properties.

How would this benefit Tenants?

As so many people in the UK now rely on private rented accommodation many groups have claimed that more power needs to be given to them in order to provide security. At the moment, tenants can be given as little as two months’ notice under current eviction laws, and with so many people struggling to find affordable, suitable private rental accommodation it is claimed that this is not enough time for tenants to find a new home. Furthermore, there have been concerns over young children being forced to leave their homes and even move to different areas and schools due to the fact that tenancy agreements can be as short as twelve months. The housing charity Shelter has also recently claimed that many families are facing homelessness across the country, with children in particular suffering from the issues surrounding the private rental sector.

What about Landlords?

Taking power away from landlords and giving it to tenants is unlikely to be a popular decision among landlords, and as such many may be discouraged from voting Labour in the next General Election. However, the fact of the matter is that the private rental sector needs to support both tenants and landlords, and if strong restrictions are placed on landlords many may cease to invest in new properties, ultimately exacerbating the housing crisis. Grant Shapps, the Tory chairman, has already voiced his opposition over Labour’s rent reforms, and said: “This is another short-term gimmick – political tampering from Ed Miliband. Evidence from Britain and around the world conclusively demonstrates that rent controls lead to poorer quality accommodation, fewer homes being rented and ultimately higher rents – hurting those most in need. And it’s yet another Labour policy bought by Ed Miliband’s union boss, Len McCluskey.”

Even though there are twelve months to go until the next General Election tensions are already running high, and it looks as though the issue of the private rental sector will cause some heated debates over the coming months. It will be difficult for any party to create a system that benefits both tenants and landlords, which is why radical reforms that benefit solely one group are usually frowned upon by those in the industry.

©2017 Just Landlords

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