Furious reaction to Labour’s political package for the private rented sector continues to pour out from agents.
Belvoir yesterday forecast that the party’s “anti-landlord” rental policies could result in up to a million tenants losing their homes if Labour is elected.
Dorian Gonsalves, Belvoir’s director of commercial and franchising, said: “I am shocked at Ed Miliband’s proposals and his decision to ignore industry experts who have issued warnings about the suffering that his party’s policies are likely to cause to tenants.
“Under a Labour Government, landlords will be forced to commit to three-year tenancies and banned from raising rents above inflation. You don’t have to be a mathematician or property expert to work out how deeply flawed these policies are.
“There are currently 11m people renting property in the UK, which amounts to about 20% of the population and includes 1.5m families with children.
“There are around 4m rental properties available and if just 10-15% of landlords decide to withdraw from the rental market because they are uncomfortable with Labour’s proposals and feel unable to manage their risks – particularly when mortgage rates rise – these homes will no longer be available.
“I would like to know where Ed Miliband suggests these tenants should live. These tenants will either become homeless or have to move in with family.
“We should not forget that it was the Labour Government’s incompetence that contributed to the financial crisis of 2007 and 2008, which resulted in a credit crunch that has left millions of people unable to obtain mortgages or save for a deposit to buy their own home.
“It is therefore short-sighted and irresponsible of Labour to introduce policies that will drastically reduce the number of available rental properties.
“Landlords are tired of being made to look like criminals who are constantly looking to rip off tenants and provide low-quality housing. In our experience, 99.9% of landlords are decent people that provide decent housing.
“Belvoir’s rental index confirms that in most parts of the country there have not been the major rental increases that Ed Miliband speaks of.
“However, if we look back over the past five to ten years and apply Labour’s proposed inflation rule for rental increases to many parts of the UK, then tenants would indeed be paying much higher rents than they are today.
“Labour’s proposals are full of loopholes and merely put forward as a way to attract votes.
“Labour’s policies will not raise standards or increase tenant security. They are likely to cause a housing crisis that will result in millions of people left with nowhere to call home.”
Adrian Gill, director of Your Move and Reeds Rains, said: “Whatever the outcome of the general election, the private rented sector doesn’t need more intervention. Rent rises look to be settling into an affordable rhythm by their own accord.
“Any artificial regulation – be it rent caps, mandatory longer-term tenancies or banning charging fees to tenants – could derail this course. In Scotland we saw the abolition of tenancy fees in 2012 cause an unnatural spike in rent growth and the market has only just recovered from this hiccup.
“A lot of UK landlords are not career landlords – and excessive red tape and legislation may put potential investors off considering buy-to-let as an alternative nest egg for retirement or way to supplement to their salary.
“If investment washes up, ultimately it is only the nation’s tenants that will be left high and dry.”
Chestertons joined in the clamour of warnings, saying that Labour’s proposed reforms – shared by other parties – could shorten supply and push up rents.
Chief executive Robert Bartlett said: “Labour, the Lib-Dems and the Greens all propose major reform to the private rental market, including national landlord registration schemes, minimum terms for tenancies and rent reviews and, in some cases, direct rent controls.
“If a lot of new legislation is imposed on landlords quickly and without proper consultation, there is a real danger that properties may be withdrawn from the market, which will only serve to exacerbate the very problems the new laws seek to address.”
The most furious reaction came from upmarket London agent Trevor Abrahmsohn of Glentree Estates.
He said that the decision to impose rent controls “could dump an unprecedented amount of properties on the market at one time, exacerbated by the Mansion Tax”.
He went on: “Before you know it we could have a full blown property recession, an illiquid market and a ‘truck load’ of negative equity.”
He said of Ed Miliband: “What else is this lunatic going to dig up from the dusty trunks in the attic of the left wing policy house?”
We are currently on the edge of a cliff starring oblivion square in the face.
Someone, anyone, with some influence in our industry needs to step up to the plate, get in front of the cameras and explain the disaster now facing us if these policies are implemented.
Anyone?
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Relax Paul, it won’t happen the UK population are not Goldfish and can remember our economy being stuck on a credit card to keep us artificially out of two world recessions once Gordon Brown had finished flogging off the Gold reserves to his mates in the city.
Ed Milliband isn’t an idiot and if asked to form a government would have to question whether someone who rather dubiously failed to protect £35,000,000,000 of pre 2007 deposit ought to have any place in a not economy and county destroying labour adminsitration.
If re-elected Clive Betts would have a few questions to answer too.
You have to trust me, if the worse happens a solution has already been built.
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You are right Paul, but there is no-one with that much clout who would get any reaction other than ‘they would say that, wouldn’t they.’ It’s also too late as Labour have nailed their colours to the mast. All we can do at this point is to spread the message to consumers as best we can.
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I am not so sure Eric, I have to say that I can think of a someone who has the charisma, track record and possibly the desire to go belly to belly with politicians on this matter and when kept on subject talks with experience and common sense ( No offence intended). Good TV looking fella, a lot to say, not afraid of saying it! Lives in Spain!
Even if they did say “ you would say that” it would make brilliant television, compulsive viewing!
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“Good TV looking fella…”
Reckon?
The perfect face for radio, more like… ;o)
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That is just churlish Peebee! and even you would enjoy the clash of cultures. I really don’t think Simon would have any trouble of reminding the world ahead of the election just how cosy the relationship between Robb and Milliband is.
Just use that system I gave you and type in Ed Milliband, Campbell Robb and order a Pizza to keep you sustained during the research.
Simon has come a long way since Christmas and posted eloquently and well yesterday picking up quite applause and respect.
It was Paul H who said there was a job to be done and with no-one else in the frame what has the industry or the country got to lose?
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please insert ‘a bit of’
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You can always rely on Mr S bringing out the churl in me, Robert! ;o)
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Can you imagine then how he could provoke a Glaswegian with an anti England, anti Agent chip on his shoulder the size of the Stone of Scone?
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An excellent article Dorian and one we at Northwood absolutely endorse. I urge everyone to share the reality of flawed policies and the effects the will have with every landlord and tenant. It’s not about party politics, its about policies and the effects of buying votes rather than addressing the real issue of supply.
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My argument would be that this is at least a tacit realization that the market is broken. Supply is far too highly restricted and as a result rents are spiraling and tenants are punished. Higher prices do not seem to encourage building or new tenancies as the supply shortage is so severe, so I’d argue protecting tenants from this imperfect market is completely fair.
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A good piece, quite simply Labour are “tinkering without thinking” and they are in the running to lead the country………?
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What if a Landlord cannot commit to a three year tenancy because they will need to move back in before the end of that period – will they no longer be able to let their property?
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You would think that before a political party made suggestions of sweeping changes to an industry they are likely to know very little about, they would at the very least consult some industry experts. I wonder who the “experts” were that advised them that any of these proposals were a good idea?!
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Labour want to introduce standard 3 year tenancies and limit the amount you are able to increase rent by…..
They do know we are on a historic low interest rate of just 0.5%? And that the only reason a number of these properties are let is because of this making it affordable to do so?
What happens when interest rates shoot up to 5% (which they will) and mortgages increase as such rent no longer cover the mortgage.
Cant sell and cant increase rent either!
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This is called investment risk. Landlords have had it one way for a while. This is a risk similar to one you would see with a share or stock.
Any landlord taking out a BTL seeing it as a one-way bet was almost certainly naive.
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Yes BTL is a risk.
However policies should be thought through and have reason behind it not just a good soundbite to win votes.
It helps nobody with further repossessions, the tenants are always the last to know as well they will return from work to find the bank have taken the property and locks changed. I have seen it many times in the past.
All Labour are doing is helping hike rents and put more home owners renters at risk without thinking through policy.
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I suspect, RealAgent, that the only “experts” consulted were from Shelter. The whole thing beggars belief…
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Why would anyone think that the Labour party should consult with industry experts??? its not about ‘healing’ the PRS for them, if it was they would have had consultations by now. This is about harnessing votes from the voters amongst the 11m tenants in the UK; get enough of them onside and that could decide the election. Once they are in they won’t care whether tenants lose their homes, that will be blamed on greedy landlords, or the Tories for allowing the PRS to flourish, or anyone else rather than blaming their own poorly thought out policies.
I agree its a shame that our own industry bodies are hiding their heads in the sand, now is the time for them to put aside their differences and work together to protect the industry. Perhaps a wake up call to remind them that if the PRS goes into decline so does their membership numbers and thus their income.
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If ever there were a time where organisations such as ARLA or NAEA could have actually shown they had ANY relevance as spokespersons for the industry it was now. Sadly, as usual they have fallen woefully short of expectation. Unless of course you include Mark Haywoods ludicrous endorsement of Labours stamp duty proposal!
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Well said, could not have put it better!
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I am a landlord and have had time to consider this; let’s suppose the worse does happen, Ed Milliband plus Mr and Mrs Balls running the country with Campbell Robb tugging their strings like a possessed puppeteer.
What is likely to happen to the 400,000 -600,000 properties? Suddenly there are 1,000,000 tenants desperate for somewhere to live ie significantly increased demand, very good reason to be a landlord and very good reason to increase the size of the portfolio.
As a landlord I decide really don’t like Labours proposals what happens? Do I decide to sell, pay off the mortgage, pay whatever CGT is due and invest the balance to get a yield about 1/25th of the lettings yield. Suddenly I am out of the market, other landlords are snapping up properties because the 1,000,000 tenants still need somewhere to live, prices are reduced because of the 4- 600,000 properties suddenly flooding the market, I have no capital growth and am forced to receive no interest at all or trust it with investors who will no doubt be using my cash to facilitate corporate investment in the still booming but slightly more restricted PRS.
On balance I don’t think I or 200,000 other landlords would or give up all they have presently on a harebrained system that will last less time and be less popular than HIPS. I would sit tight and legally work around the system as I do now. (I don’t take deposits, it is far too expensive to protect a deposit for the security it affords and adjudications are too heavily weighted in favour of the tenant)
The economic reality is Ed Milliband has you almost literally by the married shadow cabinet ministers. What will happen is the three year tenancy renewals will see rents hopping (giant leap) up at compound 7% every 3 years ie 22.5%. to cater for the trend line demand push on rents being out of step with inflation. Obviously if the allowed inflation increase is X the balancing increase will be a compound of 7% -X.
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Your arguments are reasonable in respect of landlords who are free to choose but what do landlords do who have buy-to-let mortgages which stipulate AST agreements with a maximum term of 12 months at a time? Are all the lenders suddenly going to relax their restrictions (which are solely designed to protect their own security) in order to allow 3 year tenancies to be created? If so, what are these lenders going to do when interest rates double or treble as a result of Labour’s policies and their borrowers start to default because rents can’t be increased quickly enough? I imagine they will repossess their assets and sell them, leaving tenants potentially homeless and causing house prices to fall. This might persuade even those with no mortgages to sell as they try capitalise their asset at the top of the market… I am not an economist, but I believe this is one possible outcome if these deluded policies are pursued.
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Good point Robin and a question someone ought to be asking Mr Milliband.
We were promised interest rate rises when un employment fell below 7%, that was a fairly firm and certain promise by the Governor BOE, it never happened.
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If the mortgage is BTL and not a residential mortgage, then the bank has to abide by the conditions of the let and will effectively become the landlord.
If the banks have been compelled to accept 3 year tenancies as the norm (probably through legislation) then this proposal will actually protect tenants when interests rates and repossessions inevitably rise since the bank will also be prevented from ending the tenancies before three years are up.
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If, as a landlord, you knew that you would be entering into a 3 year tenancy agreement would you not be extremely picky about who you choose to rent to?
Would you not edge your bets even more and keep the property on the market even once a holding deposit has been received, meaning some properties receiving multiple holding deposits from more than one applicant?
From what I can see this policy will make it even more difficult for those at the bottom end of the ladder to find a property especially if there will be less properties to choose from and landlords will be more picky over who they allow into their property.
then once you’ve
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Exactly right Paul
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apart from you wont be allowed to take a holding deposit………or any fee from a tenant.
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Taking more than one holding deposit would be fraud and misrepresentation.
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What i’m talking about is landlords either themselves or by instructing more than one agent then accepting multiple offers from a number of agents with a view to securing the best possible tenant/deal for them knowing that they are entering into a more long term comitement.
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Not often i agree with Paul but have to here.
Surely if you are going to have a tenant for 3 years you will want to make them jump through hoops, Heck i would probably want to give them a formal interview (and yes i would discriminate if i did not like the look of them!)
You will find the people that need housing the most will be at the back of the line
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“You will find the people that need housing the most will be at the back of the line”…Oh the irony of this policy!!
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Just a thought but if demand for rental property is high then how long before a landlord charges a premium….or to keep it simple just charges an astronomical rent?
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Also if a tenant fails referencing now the landlord takes a view on if they want a tenant knowing that 6 months they can review the tenancy.
If they are locked in for 3 years you will find landlords no longer take a view, you will either pass or fail.
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Labour’s policy is anti-tenant, how ironic is that, and tenants do not even know it. We all know it is done to bribe tenants to vote for them, lets face it, it’s a popular mantra but, if Labour get in, THEY WILL BITE THE HAND THAT FED IT.
I reckon, assuming Labour do get in, at the end of the next parliament, the housing minister will leave a note – Sorry, there is no housing stock left!
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An another thing – Fine if one is a buy to let landlord, but what about all those accidental landlords or those that plan to relocate for a while, how will three year tenancies work with them.
Oh, and one last point – Average tenancies are less than three years and from my experience the vast , vast majority of tenancies finishing is as a result of tenants, not landlords, giving notice; and not for rent increase reasons, buying, job change/relocation and relationship changes being primary reasons.
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Dude, maybe Ed’s looking for a father figure. Someone to lock him in his room, tell him he’s fat and occasionally leave him in a store. He aint interesting, I passed like a dozen of him on the way down here so what gives? Rhetoric? Millions scratched off the value of UK homebuilders and a rental & BTL market running zig zag has got him in the conversation. Actual governance is game of inches. Could be he just buried his reputation for stupid in a real shallow grave? Yikes this ones a doozy.
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Welcome back, Tuf Luv!
Almost thought you’d ‘done one’, our street-speaking ami… ;o)
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To be fair I am familiar with The Steve Millar Band. I guess that EdMillerBand has some similar qualities; The Joker! ‘Abracadabra’ and the lettings industry is in tatters.
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I did email Ed Miliband about his generalisation of letting agents and his ‘rip-off’ language which I find extremely offensive. If he thinks that we letting agents are all the same then by that standard does he accept that all politicians – including him are the same – corrupt??? I also pointed out the flaws in his ridiculous plans and totally agree with the arguments above. Needless to say I have not had a reply!
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Landlords in England & Wales should be aware that the Scottish Government is proposing what is effectively unlimited term after and initial period (be this 6 or 12 months), with reoccupation only through application to a Tribunal based on a number of mandatory and discretionary grounds. The campaign groups behind this change will no doubt use this success to roll south of the border.
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