The Labour party will push for a cap to be introduced in the private rental sector which would see an upper threshold introduced for how much any landlord can raise their tenants rent costs in a year.
Labour leader Ed Miliband has argued that the move will give UK tenants a ëfairer dealí from their landlords and will bring an end to ëexcessiveí rent hikes that have caused a number of people to either leave their area or move away in recent times.
Under the proposed cap, an ëupper limití would be introduced on how much a landlord can raise their tenants rent over the span of a year, with the composition of this cap being based on market rates at the time.
Mr Miliband has also called for the end of estate agent letting charges, which can often be as high as £500, and has promised to bring about an era of extended and stable tenancies.
However, members of the Conservative party have criticised Labourís proposals, arguing that evidence from other nations that have opted to artificially control the rental sector has illustrated that it leads to “poorer quality accommodation, fewer homes being rented and ultimately higher rents”.
The move is likely part of the Labour partyís agenda to address the ëcost of living crisisí in the UK at present, which opposition politicians have argued has caused workers wages to be ësqueezed to the limití by the reality that the rate of inflation has outstripped the growth in wages for 6 years.
The European and local elections will go the poll on the 22nd of May, with the disclosure on their proposed plans for the rental sector part of an expected four week campaign to gather local support.
‘Fairer dealí for ëgeneration rentí
The staggering rise in house prices over the past 12 months has led to many low and middle income workers, particularly those aged between 16 and 24, being unable to enter onto the property ladder.
The reality of this situation has enhanced the importance of making the rental sector more affordable for lower income workers, though recent data released by Department for Work and Pensions suggests that the costs for tenants are going in an upward direction at present.
The data indicated that the amount spent on privately rented properties through the housing benefit would rise to £10.8 billion by 2018/2019, up from the £9.5 billon expected this year.
And lobby organisation, Generation Rent, have argued that this housing benefit is encouraging a number of people to become landlords and ëbuy to letí, which is artificially pushing up the prices of renting in the private sector.
ìThe £9bn taxpayers shower on private landlords every year looks set to balloon,” said Generation Rent’s director Alex Hilton.
“Because landlords know the taxpayer can pay off their mortgage, this cash perversely fuels the housing bubble, which
drives up rents, forcing more people to seek housing benef
Mr Miliband argued that a generation of young workers have now been rendered from buying a house, and as such he will look to address the needs of long-term renters in order to ensure universal housing stability across the UK.
“‘Generation rent’ is a generation that has been ignored for too long,” he said.
“Nine million people are living in rented homes today – over a million families. That is why a Labour government will take action to deliver a fairer deal for them too.”
Mr Miliband argued that at present, a far to high number of people are being forced to leave their rented homes at extremely short notice due to the nature of existing tenancy regulations, which enables a landlord to evict a tenant if they reject a sudden price hike.
He highlighted recent statistics that indicated that the costs of renting in the private sector have increased by 13% on average in the past four years, equating to a further £1,020 being added onto the average tenantís yearly bill.
The Labour leader pledged to give tenants a larger degree of protection from their landlords, and reform the sector so that they are more aware of how much they will need to spend on their rent each month.
Under the new proposals, both tenants and landlords would collectively determine an annual cost of renting that would be in accordance to ëmarket valueí. Following this agreed price, the landlord will only be entitled to review the price a single further time, though they could implement further hikes if the ëmarket valueí rises as well.
Nevertheless, an upper limit would be introduced that would prevent the price hikes being too steep, in order to protect the financial interests of tenants in the UK.
The upper limit would be determined by using the industry benchmark average rent increases. The Royal Institute of Chartered Surveyors currently working to determine what shape this figure will take.
End of letting fees
Alongside the proposed reforms to the amount landlord can raise their tenants rent, Labour have also identified that they will push to end the charging of letting fees, that are applied by estate agents on top of the tenants initial deposit and first month of rent.
Although the costs of these charges are wide ranging, Labour have argued that the average fee is around £355, which is a substantial sum for someone to pay when they have just forked out deposit costs to rent a new property.
They have also said that they will push to change the regulations on tenancy arrangements, which would give them more stability and lower their risk of being asked to move out if a landlord decides to change the original terms of their tenancy agreement.
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 has brandished the proposals a “short-term gimmick” and has propagated that Labour are guilty of ëpolitical 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.”