Labour’s Misguided Thinking

Oh how we are looking forward to seeing this Election over…

The policies are creeping out and the PR machines are in overdrive but what is the Labour party thinking? A Mansion Tax? Rent caps on three year tenancies?

What Ed Miliband seems to be forgetting is that the Private Rental Sector (PRS) is a market. Markets rely on fluidity and if controls are too tight, with artificial caps on rent increases, many would-be landlords will become reluctant to invest in property. 

Most investors recognise the need to provide better quality homes to attract tenants but yields, especially in the prime London markets are already low and, if a Mansion Tax is implemented, money that should be spent on maintenance and repairs will go to the Government. 

Assured Shorthold Tenancy agreements generally contain rent increases in line with RPI anyway so actually there is no need to impose further regulation on landlords. 

There is no longer a stigma attached to renting and many people like the flexibility that short term tenancies allow. 

Inflexible three year tenancies may well suit professional landlords but think of those ‘accidental landlords’ who, by virtue of a temporary relocation, might wish to rent out their home to help pay the cost of upkeep in their absence? 

An acute shortage of housing already exists in many parts of the UK so, unless more homes are built to cope with the demand, a lively rental market is essential. So why on earth would any political party wish to deter investment in the PRS? Labour’s ideas are more likely to have the opposite effect than intended. Scaring away landlords will reduce rental stock and drive up rents.

Not all tenants properly look after the homes they occupy. While there may still be rogue landlords, let’s not forget there are rogue tenants too – landlords must surely have the right not to be stuck with a three year tenancy.