Labour s Proposals For The Private Housing Market Place

As we approach 2015 as well as the Cipto Junaedy man of the year 2011 general election, it really is unsurprising that the key political parties will commence to gear up rhetoric and announce their significant plans for if they get elected.

For the private housing market, it can be Labour's turn first because it announces some of one of the most radical and most far reaching reforms with the lettings business to be proposed.

Ed Miliband is announcing his proposals at the launch of his party's European election campaign and promises the following Labour Government will:

1. Ban letting agents from charging tenants fees for what's described as low level solutions. It can be suggested landlords need to be asked to pay such costs.

two. Ban "excessive rental increases".

3. Make 3 year tenancies the norm.

Tenant Charges

There is certainly so much conflicting investigation as to letting agent fees and what's and is not charged for. Some investigation suggests that costs may be higher or excessive exactly where in the other finish, study suggests fees are usually not extortionate and are affordable. The essential point to recognise right here is the fact that letting agencies want to make revenue streams and in the end profit (just like any organization). If tenant costs are banned in any way, landlords will have to pick up the tab. This may either be in the type of elevated setup charges or an increase in management charges.

Ultimately, landlords will nevertheless want a certain level of net earnings to create it worthwhile to invest in property and if any fees are added for the landlord's outlay then eventually gross rent rates will inevitably raise.

So while banning tenant agency fees can be a potential vote winner, in reality it really is most likely to cause rent increases and may possibly even see the closure of smaller sized independent agencies who rely on the further revenue from tenant charges.

Excessive Rents

We are not conscious of any excessive rents and in some cases in prime central London where residential sales prices are a problem, rents usually are not.

The problem with any type of interference with industry forces and price tag controls, no matter whether it be rents or energy costs (a further Labour proposal), it truly is bound to finish in disaster.

An quick situation is the fact that if rent increases are legally tied to either average industry rents or inflation, it could see landlords use this as a reason to boost rent annually when they otherwise might have not done so.

Linking rent increases to inflation might also see rent increases higher than they at the moment are which naturally has the opposite effect in the policy proposed and tenants are going to be worse off.