Annual rent-increase cap is focus of Labour campaign launch

 

Mr Miliband said Labour would put a ceiling on excessive rent rises

A future Labour government would cap rent increases in the private sector and scrap letting fees to estate agents to give a "fairer deal" to tenants.

Ed Miliband pledged to end "excessive" rent rises when he launched his party's campaign for local council and European elections.

An "upper limit" on rises will be put in place based on average market rates.

The Labour leader also called for longer, securer tenancies and rental charges of up to £500 to be axed.

But the Conservatives said evidence from other countries suggested rent controls lead to "poorer quality accommodation, fewer homes being rented and ultimately higher rents".

Speaking in Redbridge in London, Mr Miliband said a "cost-of-living crisis" affecting millions of families would be at the centre of Labour's four-week campaign before the polls on 22 May.

Unveiling the party's new slogan, "Hardworking Britain better off", he set out a 10-point "cost-of-living contract" with voters, including the new policy on rent rises and previously announced pledges like the energy bill cap.

'Generation rent'

"People are working harder, for longer, for less, with a few at the top getting the big rewards, insecurity at work for the many. And the promise of Britain, that the next generation should do better than the last, being broken," he said. This was the "defining issue of our age", he added.

A generation has been unable to get on the housing ladder due to spiralling prices and yet the needs of long-term tenants have too often been neglected, he argued.

Analysis

Today's announcement is an attempt to tap into a sense that housing is increasingly unaffordable - whether it is renting or buying.

It is also part of the "rip-off Britain" theme that Ed Miliband has pursued - styling unscrupulous and greedy landlords as a manifestation of so-called predatory capitalism.

So what are the risks for him in pursuing the cost-of-living issue so single-mindedly?

First, the obvious one. Come next year and, with another year of economic growth under the country's belt, people might feel more optimistic than he thinks they will.

Second, his solutions - be they energy freezes or rent controls - make enemies of some powerful interests. Mr Miliband knows this and is attempting to make a virtue of it, but it risks being divisive.

His opponents will do all they can to portray this kind of interventionism as a return to an old-style, left-wing command economy philosophy - Red Ed in tooth and claw!

"Generation rent is a generation that has been left ignored for too long - not under a Labour government," he said.

"Nine million people are living in rented homes today - over a million families. They need a fairer deal."

Too many tenants, Mr Miliband argued, were vulnerable to being asked to leave their properties at short notice under current rules - sometimes because a landlord wanted to put the rent up.

Citing figures suggesting rents have risen by 13% on average since 2010, equivalent to £1,020 a year, Mr Miliband said tenants need greater protection and predictability regarding their monthly outgoings.

Under Labour's plans, landlords and tenants in England would agree initial rents based on "market value" and, thereafter, a review could only be conducted once a year.

While landlords would still be able to increase what they were charging following changes in market conditions, there would be an "upper ceiling" to prevent rent hikes out of step with the overall market.

The threshold would be based on an industry benchmark of average rent rises.

Labour said the Royal Institution of Chartered Surveyors (Rics) was "already examining" what an appropriate benchmark to use would be.

Rics denied that it was seeking to impose any specific benchmark on private-sector rent rises, and head of policy Jeremy Blackburn said: "We do not recommend that a government introduce a ceiling on rent increases."

However, the institution has recently consulted on a draft code of conduct for the private rental sector which aims to promote longer-term tenancies by suggesting landlords arrange with tenants that rent will increase at a rate linked to a measure of their choosing - such as inflation, earnings or average market rents.

Tenancy agreements

Estate agents would also no longer be able to charge a letting fee for renting out properties in addition to requiring a deposit and the first month's rent upfront.

Although fees vary widely at the moment, Labour said tenants were having to pay an average of £355 each time they moved into a new property.

Rules on tenancy agreements would also be changed to give more certainty to tenants wanting to remain in their properties for an extended period.

As now, a tenant would be able to terminate a tenancy after the first six months, with one month's notice.

Start Quote

Labour knows - I suspect - that the 9m people in England living in 3.8m rented homes will probably be hanging the bunting out (carefully, Blu-Tack only, nothing permanent etc) at the party's plans to make three-year tenancies the standard contract.”

End Quote

But a landlord could only do so with two months' notice and if certain conditions were met, such as the tenant failing to meet their rental payments, engaging in anti-social behaviour or breaching their contract in other ways.

After the six-month probationary period, contracts would automatically run for a further 29 months.

During this period, landlords could only ask tenants to leave for a breach of contract, or if they wanted to sell the property or needed it for their own use, not as a way of raising the rent.

Students and business people on flexible contracts would still be able to request shorter tenancies while existing contracts for buy-to-let properties agreed before the changes took place would be honoured.

Under current rules, tenants already have the right to challenge "excessive" charges and to be protected from "unfair eviction and unfair rent".

Conservative Party chairman Grant Shapps said the Labour plan was a "short-term gimmick" and accused the opposition of "political tampering".

"The only way to raise people's living standards is to grow the economy, cut people's taxes and create more jobs. We have a long-term economic plan to do that, Ed Miliband doesn't."

Speaking on BBC One's Question Time, Liberal Democrat party president Tim Farron said Labour in power had built fewer council houses than the Conservatives under Margaret Thatcher, adding: "That takes some doing."

He said of Mr Miliband's cap proposal: "In theory it seems like a great idea. In practice it will crush supply and put people out of homes they would have been in otherwise."

Housing charity Shelter welcomed any move towards more "modern, stable rental contracts" but the Institute of Economic Affairs said rent controls would distort the market and create "perverse incentives" for landlords in areas where market rents rise quickly.

On Europe, Mr Miliband claimed that Labour's priority will be to change the way the European Union works rather than seeking to leave.

Labour has promised an in-out referendum on the UK's membership of the EU if further powers are transferred from London to Brussels, but admits this is "unlikely" during the next Parliament.

 

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  • rate this
    +73

    Comment number 455.

    Like everything else, house prices and rents are governed by supply and demand. Like has been said many times, build much more 'social' and private housing. If it can be done in the Olympic village area of east London(which was a dump in every sense of the word) it can be done in all brownfield areas of the country. Why can't successive governments see this? It would be a political winner....

  • rate this
    +1

    Comment number 454.

    "5.Napoleon
    2 Hours ago
    This is excellent news, and long overdue..."
    So because of Ed's interference my landlord decides to sell, get out of renting and I lose my home of 17 years? And because I am a pensioner and with fewer rentals where do I live? Grubby council flat in a sink estate? I have paid my way all my life and I don't need some bloody Socialist telling ME how to live my life.

  • rate this
    0

    Comment number 453.

    449. Ehhh? Your point being?

  • rate this
    -1

    Comment number 452.

    Forbid buy ro rent and introduce long term rental agreements than you tackle the housing problem....

  • rate this
    +2

    Comment number 451.

    407 squirrel
    If you look at the the latest UK GDP growth numbers, good as they are, it's almost entirely attributable to population growth -OBR

    People have to live somewhere.

    It's really quite simple. More houses need to be built. A London borough has found a way to build council houses that will not confer right to buy, as This has been a big deterrent to building.

  • rate this
    +1

    Comment number 450.

    Sorry Ed you have got it wrong. 3 year contracts will result in no homes for rent. How do you remove a bad tenant. Why should a tenant be able to leave a 3 year contract after one months notice at 6 months!!!! There are bad tenants not just bad landlords

  • rate this
    -3

    Comment number 449.

    Putin's got nothing on Milliband. Watch out, Scotland - you will be invaded in you go independent and Labour gets in at the next general election

  • rate this
    +1

    Comment number 448.

    376 - Oracle "Labour didn't cause the crash the rich and their financial institutions did"

    You keep telling yourself that! So there's nothing Gordon, Ed and Ed could have done to put us in a better financial position to ride out a downturn? Gordon and Ed did nothing to encourage their reckless behaviours? Dream on pal, dream on

  • rate this
    -1

    Comment number 447.

    If they could find a way to reduce rent that would be great. Or better yet make it easier for first time buyers to get a mortgage. The amount I pay in rent I would be better off with a mortgage. My credit rating stops me

  • rate this
    +3

    Comment number 446.

    Excellent Ed! The private sector will never be suitable for people with children or the elderly if there is no security. 3 year tenancies is a great step forward and I do not believe landlords in London will pull out of the market because it is so profitable. Regulation is essential to improve the current situation and abuse.

  • rate this
    0

    Comment number 445.

    52. whambam
    "Just build a million council houses and DONT sell them off"

    ==

    "As well as" and not just "instead of" would be best.

    Regulating employment contracts so people can borrow to buy against their future prospects is another priority.

    No chance of that under Tories, or even more laissez-faire UKIP led policy though.

  • rate this
    0

    Comment number 444.

    To all you Blue Bloods, GET BENT!

    The rental market is out of control, BTL owners charge the maximum they can get from HB claimants, the houses are not affordable if you are LOW Wage worker, there is no way to afford £150 a week from a £250 gross wage.
    Low paid workers do not get Housing benefits.


    Fair Pay and Fair Rents, not a lot to ask for!

  • rate this
    -1

    Comment number 443.

    unusually there might be the germ of a good idea in here. There are definitely too many agents - totally unnecessary parasites - their power to charge fees to tenants is wrong and should be stopped. Also capping rent rises will slow demand for houses/cap price rises moderating house price rises. This must be fairer to younger people. Wierd.. a labour idea which might have merit

  • rate this
    +2

    Comment number 442.

    We're being charged £120 simply for saying we'll stay in the house another 6 months, how can this be right? You know the system's broken when someone can charge a customer for staying with them and giving them more money. With that said we shouldn't even have to rent, we both work and are some how expected to save up for a Mortgage deposit while paying these rediculous fee's on top of the bills.

  • rate this
    +2

    Comment number 441.

    "Mr Miliband said a "cost-of-living crisis" affecting millions of families would be at the centre of Labour's four-week campaign before the polls on 22 May" - is that the fabricated "crisis" concocted by Labour and the leftie media, lead by the BBC, which was show as a lie as wages outpace inflation due to proper fiscal prudence?

  • rate this
    +6

    Comment number 440.

    52. whambam

    "Just build a million council houses and DONT sell them off"

    ... and get British workers skilled up to do the job rather than importing more foreign workers?

    Win / WIn!

  • rate this
    +2

    Comment number 439.

    Capping rents like a cap on rail fares may be a good idea. However you have to question Millibands common sense announcing it now. These Landlords have now got wind of this & tenants can expect hefty rent rises Jan 2015 in case of a Lab win in 2015 he should have announced it just before the election. This guy is just not street wise who is advising him.

  • rate this
    +2

    Comment number 438.

    @218nugget
    Gime Gime Gime .......
    "The only entitled people are those that got onto the B2L market 15+yrs ago when credit was easy and houses were cheap"

    Or saved hard and put their savings into PEPs that did well. Aspiring is positive, MMR will keep it real.

  • rate this
    +14

    Comment number 437.

    I truly hope this subject gains momentum. For too long letting agencies have been charging extortionate amounts of money for very little work. A letting agent in NI charges £50.00 total, were as a letting agent in Hampshire charges £200.00+ per person living in the property. Hopefully new legislation would also put off a few buy to let investors opening the market up to more first time buyers...

  • rate this
    -3

    Comment number 436.

    Simply, rent controls should be restored. There need be no issue. We had them once and tenants could set money aside if they wanted to buy a place.

    It's a disgrace that people have to spend so much money simply to keep a roof over their heads, a basic of survival.

 

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