The Government's think tank, Civitas, wants the government to introduce rules that private rent rises should only be increased in line with inflation. They also want legislation passed so that tenants are allowed to stay in their homes for as long as they wish.

Civitas is calling for new legislation for the private rented sector as they argue that it should have tighter regulatory controls. Their reasoning is that this will stop landlords from "exploiting" the current home shortage and will make considerable savings for the government's coffers.

It is predicted that by 2032, one in three homes will be rented out to tenants, it has already been reported that 40% of tenant's income pays for their rented home.

With the government having to subsidise increasing numbers of renters, the "Future of Private Renting" report states that higher rents will rocket the housing benefit's bill. This explanation is skewed because numbers being given housing benefit have more than doubled in the past ten years, as it now stands at 1.7 million, whereas in 2003-04 it was 722,000.

 

Predictions estimate that between 2018 -19 the number of tenant's receiving contributions will rise to 1.85 million. The report stated that housing benefit rent contributions/subsidies in the private rented sector had more than doubled in economic terms due to inflation and lower wage expectancies in the past decade. Between 2003 and 2004, contributions for housing was £3.9 billion, between 2013 and 2014 it had risen to £9.5 million. By 2018-19 it is expected to exceed £10billion.

The housing contributions are a necessity for households that are at the receiving end of low wages. These households are unable to mortgage a home and have no other recourse than to rent homes from PRS (Private Rented Sector). The think tank claims that large numbers of tenants are inflating rents within areas of high demand.

Higher rents are encouraged by the levels of the  local housing allowance according to the report. It also supported the idea that the PRS should offer indefinite tenancies across the board. Daniel Bentley, the report's author, also called for rents that once agreed upon, should be index-linked for any increases.

Daniel Bentley said: “As private renting grows it is important to ensure that it offers a fair deal to those who have little choice but to rely on it.

“Unfortunately the housing benefit system, which effectively props up purchasing power at the lower end of the market, militates against fair prices by subsidising landlords’ rent demands.

 

“This vicious circle will only worsen as the private rented sector comes to represent an ever-larger proportion of the housing market and more and more tenants have to fall back on housing benefit.”

Civitas said that those properties which had been most definitely improved, would be exempt from any rent cap legislation.

 

PIMS Published RELATED story in May 2014 - Labour's "rent capping and restriction on S21" is unacceptable  As reported previously, Miliband announced Labour's rent pledge at his party's launch of their European and local election campaign. Not only does he plan to introduce rent capping and regulation of letting agents' fees,  the pledge also includes other reforms. It plans to introduce long-term three year tenancies that would start with a six month probation period and when finished landlords would have the option to "evict" tenants if they fail to adhere to their tenancy agreement  Read More