The alert has come from Andy Lloyd, Regional Investment Executive at West Midlands property experts Premier Places, who believes Ed Miliband must consider the impact his ‘well-intentioned’ plans would have on the landlords who rent out properties – urging him to drop his ideas for three-year rental terms.
Mr Lloyd said he is concerned that, should Mr Miliband wins the key to Number 10 and force through his plans, it will deter property owners from renting them out, meaning cuts in the supply of homes and rocketing rents for properties.
Labour has already been defeated in the Commons when it tried to ban landlords charging up-front fees to tenants, arguing that the costs should be borne by landlords. But it is likely to come in if Labour wins the 2015 General Election.
As the country gears up for European Parliament and council elections on May 22, Labour leader Mr Miliband has made the ‘cost of living crisis’ one of the key battlegrounds.
He argues that the government must ‘deal with the terrible insecurity of Britain’s private rental market’ and has pledged that Labour would legislate to bring in three year tenancies to give people ‘certainty’. He also wants to set a strict limit on the amount rent can increase over the three years.
Mr Lloyd believes that this is a 'well-intentioned policy' and it’s absolutely right that Ed Miliband recognises housing supply as a vital issue facing the country.
“The problem with his idea is that it means a Labour government would effectively set the prices in the rental market. That’s a big step towards a national system of rent control which, time and again, has been shown to distort the housing market. It can push up rents as a result and have the exact opposite effect to what he wants, which is to make housing cheaper.
If he legislates to create three-year terms, all it will see is landlords factoring in those costs at the outset, meaning higher rents.
If he bans letting agents from charging administration fees to tenants, it doesn’t mean those costs will disappear. They’ll have to be recouped from the landlords which would act as another deterrent to them entering the market, again meaning higher rents.”
Mr Lloyd said Ed Miliband should refine his plan to ensure his system treats everyone – landlord and tenant – fairly.
He said “It’s a symbiotic relationship,”
Landlords need tenants. Tenants need landlords. Labour’s plans in their current form do nothing to tackle the real issue in the housing market, which is that demand has outstripped supply for decades.
If Ed Miliband wants to see rents come down he needs to ensure a future Labour Government removes the barriers to building new homes. More supply means more choice for tenants, which gives them the bargaining power to negotiate a better deal on rent.
The Government, whichever party wins the election, should then just keep distant and let the market take care of itself.”
