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.

 

More on This Story

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    -6

    Comment number 479.

    It requires more than capping where I live - it requires landlords being forced to keep rents to sensible local levels. A one bedroom flat in Brighton costs something in the region of £850. Two years ago it was something like £750. I'd like to see landlords paying full or double council tax on homes they own but don't live in, their income tax more assiduously checked etc.

  • 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
    +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
    +43

    Comment number 435.

    Whenever politicians try and control something unintended consequences usually make the problem worse and then more legislation is required and then more.

    This won't be any different.

  • rate this
    +59

    Comment number 37.

    Well meaning but previous periods of rent control have simply lead to fewer properties being rented out. That is simple fact not opinion. The same has happened in other countries with rent control. It would make more sense to increase the supply of social housing and through tax & benefit breaks bring more under and unoccupied property onto the market. However, that needs more than posturing.

 

Comments 5 of 7

 

More UK Politics stories

RSS

Features

  • Prince Harry, Duke and Duchess of CambridgeIn pictures

    Duke and Duchess of Cambridge and Prince Harry enjoy Games


  • Gin drinkerMother's ruin

    The time when a single drink of gin could kill


  • SyedTanks not toys

    Lyse Doucet on the plight of children in Syria and Gaza


  • Storm at sea, near site of Costa Concordia sinkingSudden strike

    What happens when lightning hits the sea?


Elsewhere on the BBC

  • StuntmanStuntman to the stars

    Driving dangerously and falling off buildings are all part of the day job for Bobby Holland Hanton

Programmes

  • The smartphones of shoppers being tracked in a storeClick Watch

    How free wi-fi can enable businesses to track our movements and learn more about us

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.