Ed Miliband will introduce a 1970's form of capping on rent increases if his party gets into power.

 

The Labour leader and his party will pass new legislation in their attempt to "help tenants" with rogue landlords and to make housing more affordable. If this does happen then it will affect many tens of thousands of buy-to-let investors.

The Conservatives accused Labour of wanting to introduce rent increase caps which had seriously damaged the property market during the 1960's and '70's.

Mr.Miliband's "promise" for the buy-to-let market  follows his pledges to cap train fares and energy price rises.

His latest pledge will include legislation that make landlords provide three year tenancies and cap the amount that rents could be raised. His party will also make it tougher for BTL landlords to give two months' notice to terminate a rental contract.

A Labour spokesperson said:  “This is not about rent controls. This is a rule to stop people being ripped off by rogue landlords.”

One of the main strategies that Labour hopes will win them next year's election centres on how living standards are being eroded by rising rents, however this is being countered by the last few months of increased consumer spending that is turning around the economy.

Announcing the rents campaign in North East London, Mr Miliband accused some buy-to-let landlords of “breeding instability” through the act of raising rents.

He said: “Many tenancies last just six months, with families at risk of being thrown out after that with just two months’ notice with no reason,

“Some are told to accept huge rent rises or face eviction. It breeds instability and that is bad for tenants, bad for families, bad for landlords, and bad for our society.

“So today I can announce, the next Labour government will legislate to make three-year tenancies the standard in the British private rented sector, giving people who rent the certainty they need. These new longer-term tenancies will limit the amount that rents can rise by each year too – so landlords know what they can expect each year and tenants can’t be surprised by rents that go through the roof.”

Mr Miliband  also said: “This is Labour’s fair deal for rented housing in Britain – long-term tenancies and stable rents so that people can settle down, know where the kids will go to school, know their home will still be there for them tomorrow.”

Labour will introduce an "upper ceiling" on rental increases and letting agents would also be stopped from charging fees of up to £500 for new tenants.

During the First World War rent controls were introduced and it was not until 1988 that they were brought to an end under Margaret Thatcher in the Housing Act.

 

Grant Shapps, the Tory Party chairman, said: “Evidence from Britain and around the world conclusively demonstrates that rent controls lead to poorer quality accommodation, fewer homes being rented and ultimately higher rents – hurting those most in need.”

Alex Hilton, of the campaign group Generation Rent, said: “Short tenancies and eviction-on-demand give landlords a brutal grip over their tenants’ lives.”

Economists in favour of a free-market have criticised the Labour plan.

Sam Bowman of the Adam Smith Institute said: "Rent control is a stunningly bad idea that could devastate Britain’s cities and clobber renters. To paraphrase the socialist economist Assar Lindbeck: the only thing worse for cities than rent control is bombing them."

Simon Walker, Director General of the Institute of Directors, said: "Basic economics tells us that if you artificially hold down the price of something, you get less of it in the market. This is as true for housing as it is for anything else. At a time when we appreciate there is a housing shortage, this policy is particularly short-sighted."

 

It is very easy to dismiss this story as hogwash but sadly there are many influential parties who support such legislation [Tenant votes significantly outweigh landlords]. Shelter has been lobbying for years to increase the minimum term of tenure [from 6 months]. Three years tenancies would contravene most buy to let mortgages and capping rents would undermine rental income cover for buy to let mortgages. Over time we shall see more regulation and imposition of rent caps already exists with LHA allowances.

Instead of pointing fingers at landlords and trying to win favour with more voters [tenants] maybe think of policies that will encourage investment of private wealth not stigmatise a sector of society who chose to invest in society by providing housing because government policies have repeatedly failed to address the needs of a growing population.