Politics don’t usually light my fire, but, when I was asked by a customer to write an article on the Labour Party’s plans for the British Private Rented Accommodation I was genuinely gobsmacked by the stupidity of what they are suggesting.
House prices in the UK have now reached a level where owning your home is becoming impossible for many, with the average house price in the country now edging up to £200,000. Far from Margaret Thatcher’s dream of everyone owning their own home, Britain now has around 20% of its population living in rented accommodation.
You’d have thought, then, that the party of the downtrodden ordinary man, the Labour Party, would be being doing all it could to encourage more landlords to put their property on the rental market to cater for this huge demand.
Instead of stimulating the growth of the rented property market, the Labour Party has announced that it will introduce policies that any school kid in his first year of economics could work out will stifle the supply of rented properties and increase rents.
The main thrust of the Labour Party’s policies is to make three year tenancy agreements the norm and also to impose rent caps so that rents cannot be increased above the rate of inflation in those three years.
The first thing that Ed Miliband and his gang seem to have forgotten is that many landlords are not huge property companies, they are private individuals and the imposition of any red tape is going to make them invest their money elsewhere.
Also, three year tenancies are a ridiculous idea anyway because most tenants stay in rented accommodation for an average of only seventeen months.
As for the rent increase cap; what would you do if you were a landlord? The first thing that I would do is to charge more rent to start with, because I know I won’t be able to increase it later! What’s more, Landlords who would not have otherwise increased rent, will probably simply automatically increase rents by the rate of inflation every year. In other words, it won’t be a rent cap; it will become a standard annual rental increase.
Another of the Labour Party’s proposals is to ban letting agents from charging fees to the tenants on the grounds that will save people living in rented accommodation money and eliminate the charging if unfair fees. Of course it won’t, you plonkers! The letting agents will charge the landlords instead who, in turn, will increase the rents to cover it.
So, as far as I can see, the Labour Party’s policies on rented accommodation will do the following:
A. Rent increases
Both the rent cap and the ban on letting agent’s fees will artificially increase rents. Get real guys, not all landlords and agents are money grabbing bustards but, they do have to make a living and cover their costs.
B. The stock of properties available for rent will fall
With more red tape, more government regulation and, control over what you can charge your tenants, potential landlords will be deterred from entering the market and existing ones will be looking to get out of it. That means diminishing supply and, as any economics student will tell you, that will lead to increases in rent.
As I said, I don’t normally take a lot of notice of British Party Politics but, at least Ed Milibands daft proposals have re-engaged one member of the apathetic voting public!
Anyway, instead of meddling with the private sector, why don’t you just invest more money in social housing projects?