Labour Party report calls for rent caps

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The Labour Party-commissioned ‘Land for the Many’ report has recommended for a cap on rent increases and more protection for tenants.

It said that landlords should lose their power to evict a tenant who has not broken the terms of the tenancy agreement for the first three years of the tenancy agreement, and should have to provide grounds for eviction after that point.

The report said: “We propose that buy-to-let mortgages should be more firmly regulated and restricted… at a minimum we recommend a cap on annual permissible rent increases within tenancies, at no more than the rate of wage inflation or consumer price inflation (whichever is lower).

“Mutually agreed rent increases would be permitted under such a cap: for example, to cover the costs of refurbishments beyond those required under law, and landlords would still be able to set the rent at any level when advertising the property for rent to new tenants.

“A cap on rent increases, when rents are already unaffordable in many areas, may sound of modest help to tenants, but in combination with the removal tenants’ liability of council tax, it should result in an overall reduction in housing costs for most private renters.”

The report added: “Measures to end the insecurity and exploitation experienced by private renters make sense on their own terms, as the constant threat of rent hikes and evictions is affecting the health, relationships and life chances of millions of people.

“They have the additional benefit of dampening demand from buy-to-let buyers, and therefore removing one of the key drivers of residential land price inflation.”

The report praised the scrapping of Section 21 ‘no-fault’ eviction but said this won’t be fully effective without caps on rent because landlords will be able to use unaffordable rent hikes as an effective alternative to retaliatory eviction.

Jeff List, head of buy-to-let at Brightstar, said: “There has to be a reason why the agreement can be broken, but I agree there should be protection for the tenant.

“I don’t think the power should be removed to evict a tenant because there could be good reason, for example a change in circumstance for the landlord or the landlord wanting to sell.

“There should be protection and governance for both the landlord and tenant. Professionalising is key because buy-to-let is ultimately a business.

“But, the timing’s terrible. I wouldn’t want to see the changes now because lenders, landlords and the market itself are still adapting to changes now and any further change would crush the market.”

Payam Azadi, director of Niche Advice, agreed that some recommendations are helpful but the timing is not.

He added: “I believe there should be safeguards for tenants, but landlords have been under attack for years with changes in legalisation so rather than putting more pressure on landlords, I believe the market should dictate what happens.

“Before more changes are introduced, I think some time should be given to feel the effect of changes. I think some type of reflection is needed.”

Jonathan Burridge, development director at JLM Mortgage Services, said that there are some areas in tenancy legislation that could do with the review and there should be the ability for longer-term agreements.

He said: “Homeowners and tenants both want security. I think in this area of the report there are some comments and suggestions worthy of debate. I think all of this is potentially up for discussion.”

Labour will consider the report’s recommendations ahead of the next general election.

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Written by: Houseladder