Labour leader Ed Miliband recently announced proposals that would stop families that rent their home being “ripped off” by landlords and letting agents and that Labour would help them plan for their future.
He confirmed that this policy announcement will be at the centre of his party’s campaign to deal with the current “cost of living crisis”.
He revealed plans which according to him will shake-up the private rental sector, with longer tenancies and a cap on any rent rises, and additional controls on letting agents’ fees.
The Labour leader is pledging that three-year tenancy agreements deals will become the norm for the vast majority of tenants, with rent rises capped and further he has also committed to axing fees charged by letting agents to tenants which can be as much as £500. The proposal states that a letting agent would have to pass these tenancy agreement fees onto the landlord rather than the tenant.
Labour would like to see a six month probation period being followed by an automatic extension of two-and-a-half-years providing the probation period was satisfactory. The proposal also confirmed that a landlord would only be able to terminate the tenancy in certain circumstances, such as the tenant being in arrears, or if the tenant had breached the terms of the tenancy agreement.
The labour leader further stated “We urgently need to deal with the insecurity in the private rental market. Many tenants only have an agreement which lasts for just six months. This puts families at risk of being evicted with the landlord or his agent only obliged to give one or two months notice and with no reason for the end of the existing tenancy.
“Some families even have to accept large rent rises or move out. This, Ed Milliband felt, can only breed instability and has consequences for everyone including the landlord, the family or individual tenant and is bad for society as a whole.
The three major things being proposed are:
Introduce legislation to ensure that longer-term tenancies become the standard in the private rented sector. Currently many tenancy agreements are only for six months, although some landlords will grant a tenancy for up to a year.
However this would immediately run into problems with the mortgage lender as the majority of mortgage lenders currently restrict any landlord who has a buy-to-let mortgage from offering their tenants any thing longer than a contract for a maximum of 12 months.
Secondly Ed Miliband says that tenants “will not as currently face the shock of rents increasing through the roof” because Labour’s new legislation would include an upper ceiling on any rent increases above a certain level to prevent excessive rent hikes.
Thirdly letting agents’ fees for tenants would be banned. He confirmed that Landlords however would continue to pay charges, but that letting agents would be banned from charging tenants any agency fees.
This he maintained would save anyone entering into a new tenancy hundreds of pounds.
Labour says Britain’s renters “are really getting a bad deal”, and that far too many families are facing eviction from their home.
Currently there is only one mortgage lender The Mortgage Works, which is a subsidiary of the Nationwide group, declared in 2013 that it would allow it’s borrowers to offer their tenants the option of a longer-term contract which could be up to three years. However, since this date no other but to let mortgage lenders have followed this lead.
Labour says that since 2010 rents in the private sector have increased at more than twice the rate of wage increases. Surveys that examine rental properties have confirmed strong increases across the private rented sector.