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?
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