Will Ed Milliband lose 1 million landlords votes over this?

Will Ed Milliband lose 1 million landlords votes over this?

10:46 AM, 1st May 2014, About 8 years ago 70

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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.”



Comments

Glenn Ackroyd

11:43 AM, 3rd May 2014, About 8 years ago

Am I the only one who thinks that this is good news? I agree it's shortsighted thinking, on labour, but the net result will benefit landlords. Here's why;

1) We are the only letting agent that I'm aware of in England that's made it free for tenants to apply. The net result is more tenant enquiries, so the house goes quicker and the landlord has a larger pool to select the best tenant.

2) As a result of this and good vetting - tenants stay on average 48 months - against industry average of 21 - so this is a BIG gain to a landlord in terms of less voids, refurb losses etc

Okay - sorry if this sounds like a sales pitch - but here's the other 'unintended consequence' of this - The 1977 Rent Act and all it's previous versions made it difficult for a landlord to get possession.

This meant supply was considerable reduced. It was not until the Housing Act 1998 and the introduction of 6 month AST's in 1996 (along with Paragon providing BTL mortgages) that BTL boomed. This in turn matched the massive withdrawal by the state from social housing provision. Councils did not re-invest the right to buy monies received and stopped building.

But for BTL landlords, this country would have a chronic housing issue.

So to the main benefit...

This will substantially stifle new landlord entrants into the market and lender appetite. So supply will begin to fall considerably as existing landlords also decide to cash in their chips.

The result of restricted supply, increasing demand is that rents will start to shoot up - just as they do in London - people will share houses/rooms etc - and for those landlords in the game, they'll earn great rewards. Tenants will lose.

Labour think tankers will know this isn't joined up thinking - but that misses the point. It can take 10-15 years for the effects of this bad policy to hit public consciousness.. And all a politician is concerned with is themselves, their lust for power and winning the next election - sod the future - another politician can clear up that mess.

Mandy Thomson

11:59 AM, 3rd May 2014, About 8 years ago

Reply to the comment left by "Glenn Ackroyd" at "03/05/2014 - 11:43":

I see where you're coming from, Glenn, but a mass withdrawal of landlords from the BTL market is surely likely to result in a concurrent mass withdrawal of available specialised finance products - mortgages, insurance etc vital to BTL landlords, and those that remain becoming more expensive and harder to obtain.

In addition, the tenant market would reduce, as there would be more property available to buy, resulting in lower house prices. Those that couldn't afford to buy would must likely end up renting rooms, or buying jointly with friends or family.

Chris Hunt

17:57 PM, 3rd May 2014, About 8 years ago

As is the case now, it will be very difficult to get tenants out in the fixed term if they are trouble. Thus three years of trouble instead of just six months.

Samantha Alderman

9:18 AM, 4th May 2014, About 8 years ago

If the rationale behind Ed Milliband's 3 year fixed term tenancy agreements is to prevent unfair rent increases, then surely it's better to legislate for a maximum yearly rent increase allowed in the tenancy agreement? I think some tenancy agreements provide this safeguard anyway?

matchmade

11:40 AM, 4th May 2014, About 8 years ago

Reply to the comment left by "Glenn Ackroyd" at "03/05/2014 - 11:43":

Of course the zealots on HousePriceCrash will say that if BTL landlords are forced to leave the market due to rent controls, this is excellent news because it increases the supply of property for sale and will cause house prices to fall. They see a strict one-for-one equivalence between landlords and a young person who is unable to buy due to inflated prices, so if the rental supply drops, the purchase supply will rise, and there's no overall loss to the market.

Yvette Newbury

22:02 PM, 4th May 2014, About 8 years ago

This is nonsense, over the last 20 years I have not had a single tenant in any of my properties that wanted a term of any longer than a year. Some decided to stay for a further term, but most wanted the FLEXIBILITY of renting, not to be tied down to the property for more than a year! The main problem that tenant's fail to understand is that if they wish a long tenancy they need to rent from a landlord who views his rental as a business and not from a landlord who may return anytime and will want that property for their own home. I have a few friends recently caught out by this and they are realising now that the choice of a longer term rental is in their hands - they just need to rent from an appropriate landlord who can offer them the term they need. In addition, what about the mortgage terms that do not allow tenancies of more than 12 months?

Mandy Thomson

9:30 AM, 5th May 2014, About 8 years ago

There is another factor that Ed Miliband has also most likely failed to consider or to simply ignore - Section 21 notices are often used for expediency, typically where a Section 8 should be used but the landlord simply wants their property back as quickly as possible from a rogue tenant - this will of course serve to make it seem that more landlords take their properties back "on a whim". Of course there are retaliatory evictions too by rogue landlords, but these kind of people will easily get around the proposed legislation - or ignore it altogether.

Gareth

8:22 AM, 7th May 2014, About 8 years ago

Labour should not be interfering (again)! If they want to have us provide three year terms then start with the BTL mortgage companies T&Cs, then give us the OPTION to offer three year terms BUT we MUST retain the ability to use Section 21 notices.

Peter Hindley

10:34 AM, 7th May 2014, About 8 years ago

The problem with all of these policy announcements (regardless of political party) is that the devil is in the detail whereas the "soundbite" announcement sounds fantastic.

There are ill thought out policies in every aspect of our lives. I think Civil Servants must go to some special training camp as they don't seem to run what-if scenarios on their policy proposals.

Jeremy996

13:26 PM, 7th May 2014, About 8 years ago

I cannot see three year rental contracts as helpful to anyone. For those who want to live there for life, it's not long enough! For those who want to flit from area to area it's too long!
If Labour want to improve housing for the poorest in society, then they need to re-invest in social housing on a scale similar to "Homes fit for Heroes" in the inter-war years. (When I worked for a district council, these were the most popular with the Right to Buy tenants, as they were well, conventionally built on generous plots).
In many areas, there is no effective choice other than the private landlord, good or bad, so the best way to raise the standard would be to offer a realistic alternative.
All governments since the Right to Buy scheme seem to have made a complete hash of mass housing and relying on the "market" is naive in the extreme.

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