Labour’s Tenants Promises Reviewed

READING, U.K. - May 1, 2014 - PRLog -- EdMiliband has pledged that if Labour wins the next election that they will cap rents and introduce three year tenancies. But how realistic is this?

We talk to Ann-Marie Read of Commercial Mortgages Direct to find out more about the implications for both landlords and tenants.

Unfortunately Labour seems to forget that many landlords provide good quality accommodation and that rents reflect the local market. After all you very rarely get a landlord increasing rents out of line with the market as the tenants will simple leave.

With so many people investing in the buy to let market many believe that this has had an adverse effect for tenants however it has had the opposite. It's made the market highly competitive as landlords now have to keep rents competitive and forces them to maintain their properties to a high standard.

Offering protection for both landlords and tenants is a good idea as long term lets are common in Europe.

However there are several aspects that need to be considered.

1. What protection will these new long terms let’s provide to the landlord if the tenant stops paying the rent? On average it can take up to 6 months to evict none paying tenant. This puts the landlord in a very difficult position as they still have to pay the mortgage.

2. This will also cause the rents to increase initially. If a tenant is about to embark on a long term let with no reviews then the landlord will have to take into account potential increases in costs that may occur over the 3 year period therefore increasing the rent. At the moment with the current 6/12 month AST's in place if the landlords costs don't increase then the rent is unlikely to. By keeping to a 3 year rental agreement the tenants costs will increase from day one.
3. Labour also want to impose restrictions on the charges made by letting agents. However, what they fail to understand is letting agent, like any other business have costs which have to be meet so if there are restrictions on fee's then these costs will be passed on elsewhere in the process. Letting agents also offer protection to tenants as we've all heard stories of rouge landlords taking money from tenants for properties they don't even own!

It's important to protect tenants AND landlords but looking at the bigger picture will offer long term security for all parties concerned.