Will Ed Milliband lose 1 million landlords votes over this?

by Mark Alexander

10:46 AM, 1st May 2014
About 6 years ago

Will Ed Milliband lose 1 million landlords votes over this?

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Will Ed Milliband lose 1 million landlords votes over this?

Ed-Miliband

Ed Milliband has stated that if he is elected at the next election the labour government will make residential tenancies a minimum of three years and a cap will also be imposed on rent increases.

Given that there are over 1 million private landlords in the UK I suspect that could provide a very good reason for them not to vote for him!

It has been leaked that at the launch of Labour’s local and European election campaign in Redbridge later today Milliband will say …

“We need to deal with the terrible insecurity of Britain’s private rental market as well. 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.

“The next Labour government will legislate to make three-year tenancies the standard in the British private rented sector to 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.”

Obviously Ed Milliband hasn’t heard about our Deed of Assurance, or maybe he simply doesn’t understand it or chooses not to as it doesn’t fit his political agenda? Back in June 2013 The Mortgage Works (the specialist BTL lending arm of Nationwide Building Society) announced that it would accept three year tenancies. The take up has been remarkably low. The announcement inspired a huge debate over the issues surrounding longer term tenancy agreements here at Property118 – link to the thread HERE.

NLA Chief Executive Officer Richard Lambert has commented ….

“The proposal for a three-year default tenancy is unnecessary, poorly thought through and likely to be completely unworkable.

“Private individuals put in the region of £20bn into providing housing for rent last year.  Fundamentally changing the structure of tenancies will create uncertainty amongst these landlords and the lenders which provide the finances underpinning housing in the UK. Were these proposals to become government policy it would strike a devastating blow to investment in housing of all tenures and further constrain supply at a time of real housing crisis.

“We are concerned that the proposals will actually increase the insecurity of tenure for renters.  The experience of Ireland, where a similar system of six month introductory tenancies has been running for some years, is that landlords, concerned about the danger of being unable to end a problem tenancy, look to move tenants on after six months rather than find themselves forced into inflexible restrictive tenancies.

“This does nothing to create a fair and balanced rented sector that works for landlords, tenants and agents.  Frankly, I’m surprised that, after the effort Labour front-benchers put into consulting on how to make the private rented sector work better, Ed Milliband announces a change which risks putting landlords in a position of conflict with their tenants and leaves future housing provision on a knife-edge.”


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Comments

Neil Woodhead

10:51 AM, 1st May 2014
About 6 years ago

They may lose a million Landlords but gain 3+ million tenants?

The Seasoned Female Investor

11:08 AM, 1st May 2014
About 6 years ago

Quote

“Some are told to accept huge rent rises or face eviction."

If memory serves me correctly, some landlords holding BTL mortgages have been systematically selected at West Bromwich Building society and told

"Accept a large increase in your mortgage payments or will will call in the mortgage"

Did not see Milliband jumping up and down then did we

Michael Barnes

11:14 AM, 1st May 2014
About 6 years ago

His heart's in the right place, bless him, but his head . . . ok dear!!!

Mandy Thomson

11:14 AM, 1st May 2014
About 6 years ago

@Neil - too right! Although it seems boroughs such as Enfield are finding that their Housing Department is so short of work, they've set up their own work creation scheme to ensure they get lots and lots of lovely tenants, of all income brackets, applying to their housing register - their staff will be so pleased!!

Ian Ringrose

11:19 AM, 1st May 2014
About 6 years ago

What if the BTL lenders refuse to change their T&C and just call in all BTL mortgages due to the landlord granting a tenancy over 6 months long?

PS.

I don’t think he had a million landlords’ votes to lose, as he is yet to convince me that he is able to do anything apart from create sound bites. But he does have lot of tenant votes to gain, so maybe we should not be publicizing this.

Neil Patterson

11:22 AM, 1st May 2014
About 6 years ago

Reply to the comment left by "Mandy Thomson" at "01/05/2014 - 11:14":

What happens when the tenant decides they want to move before the 3 years is up?

If tenants are contractually bound to pay the landlords rent for 3 years that could be a good thing for landlords.

However in practice it will probably be all to easy for tenants to walk away in a "have your cake and eat it scenario".

Annette Stone

11:39 AM, 1st May 2014
About 6 years ago

I was just writing a blog about this Mark!!! I think the Labour Party are wonderful at shooting themselves in the foot. Absolutely, everytime any of them speaks he alienates another section of society with a silly soundbite The majority of buy to let landlords are not multi millionaires; they are people who have invested for their future in property which they willingly let to people who may be looking for accommodation. Rentals are a contract between two willing parties and if Mr. Milliband really wanted to help he and his party would have done something over the last 20 years when they were in power for most of the time to do something about the critical lack of social housing.

Mr. Milliband has not taken into account that there is a very big difference in the rental market for houses and the one for flats.

With houses where renters are often families who settle in an area and want security of tenure for a reasonably long period, the market can accommodate them as Mark has suggested.

The suggestion that rent rises will be very restricted is a bit short sighted because what will happen is that every landlord will price his property from Day 1 to take account of the lack of opportunity to increase the rents. This will have the effect of raising rents

With regard to the market for flat rentals a large proportion of the market seems to be with people who need/want flexibility and tying them into a three year contract makes no sense.

As far as I can see this proposal will do the following:

1. Push up rents
2 Further restrict the number of properties available to social housing tenants as fewer landlords will want to risk being stuck with a tenant they cannot move on.

One final question how is this going to work? Does every current tenant have to be offered a three year tenancy whether they want it or not?

I doubt that the three million renters will be impressed with this.

I also notice Mr. Milliband does not seem to have any solution to the problem of how to deal with problem tenants with a three year tenancy. How are they going to be evicted?

Also what happens if a landlord's circumstances change and they want to sell the property? Having a tenant in situ for up to three years will surely reduce the value of a property substantially.

Back to the drawing board Mr. Milliband.

Mark Alexander

12:08 PM, 1st May 2014
About 6 years ago

Reply to the comment left by "Annette Stone" at "01/05/2014 - 11:39":

Some excellent points Annette. My tenants are very happy for me to make a financially backaked promise to them not to evict them unless they are in default. However, if they were to realise that Mr Milliband will be insisting they sign up to staying in my properties for another 3 years I doubt very much they will be voting for him either!
.

Mandy Thomson

12:18 PM, 1st May 2014
About 6 years ago

Reply to the comment left by "Neil Patterson" at "01/05/2014 - 11:22":

@Neil - according to the report in The Guardian, tenants could still give one month's notice after the initial 6 month probationary period.

It then goes on to say that landlords would retain their existing rights to serve notice under section 8, or if they had good reason to need to sell or move into the property themselves. Full article: http://www.theguardian.com/politics/2014/apr/30/ed-miliband-labour-rental-market-reforms-property#footer-nav

It might even have brought him some credibility from the PRS community if he'd conceded on reforming the eviction process, but now I'm just being naive...

NewYorkie

12:21 PM, 1st May 2014
About 6 years ago

Here we go again with Labour 'power to the people' politics. Surely, 3 terms in power culminating in our worst recession in living memory, would have taught them something about housing economics.

Most landlords are fair and reasonable, and look after their tenants. We would all welcome good tenants who want to stay for 3 years, but I've only ever had one. In return, my rent increases at kept at the average for the area, because it saves me time a money. Also, this policy takes no account of regional differences.

It's the bad landlords which cause the headlines, so focus on hitting them hard and quickly.

Baby and bath water!

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