Miliband's rental proposals will do nothing but accelerate housing shortage
The Labour party needs to urgently review its planned rental limits and fees charged to private housing tenants - or risk making the shortage of housing worse.
I've been talking in the media in recent weeks as part of my quest to explain just why Ed Miliband should drop his ideas for three-year rental terms and consider the impact his well-intentioned' plans would have on the landlords who rent out properties.
I am concerned that, should Mr Miliband win 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 recently been defeated in the Commons when it tried to ban letting agents 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 next year's General Election.
Labour leader Mr Miliband also made the cost of living crisis' one of the key battlegrounds in his recent European Parliament and council elections.
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.
This is a well-intentioned policy, I can see that. 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.
Ed Miliband should refine his plan to ensure his system treats everyone - landlord and tenant - fairly.
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 its distance and let the market take care of itself.
*Andy Lloyd is Regional Investment Executive at Worcestershire-based letting agency, Premier Places
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Comments
Always treating the symptoms. The cause is overpopulation, mostly caused by various British Governments enthusiasm for the unelected EU and its immigration policies, and refusal by any of them to implement 'allowed' (well, thank you EU we are ever so grateful) strategies to limit incomers. We need fewer folk here and 100% utilisation of empty , languishing, abandoned, investment and second home properties.