3 Feb 2015

Labour’s Generation Rent plan – the key questions

Labour sets out plans to shake up private renting, with letting fees banned, longer tenancies and an end to “excessive” rent increases.

What is Labour concerned about?

With rising property prices, there are many people – particularly the young – who cannot afford to buy a home.

More than a quarter of adults under 30 are still living in the family home, with almost three quarters of home owners aged 45 or over.

For many, private renting – rather than home ownership – has become the new normal, with 9 million people, including more than a million families with children, now renting their homes. Of the 9 million, half are under 35.

Labour believes these renters need more protection.

What are letting fees?

Labour says two thirds of renters use letting agents to help them find a home, with 94 per cent of agents imposing charges on top of a deposit and rent in advance.

Fees vary, but tenants pay an average of £350, according to the housing charity Shelter, with some charged as much as £500.

What action would Labour take on letting fees?

Labour would scrap these “rip-off” fees, saving the average tenant £624 over the next parliament.

It wants a level playing field between people who rent and those who buy

Ed Miliband says people selling a home pay estate agents’ fees, while buyers do not – “so why are people renting a home having to pay?”

What Labour does not say is that those selling a home are often buying one at the same time, so will have to pay fees.

Would rents rise as a result?

The Residential Landlords Association (RLA), which represents private landlords in England and Wales, says landlords would simply increase rents to make up for the shortfall.

But it favours more transparency, so that tenants know what they are paying in fees and where the money is going.

The housing charity Shelter says fees should be charged to the landlord, rather than the tenant, but adds: “If letting agencies do not absorb the costs they currently charge to tenants, landlords may be justified in increasing rents to reflect their additional costs.

“A small increase in rent spread across the tenancy is preferable for renters, who otherwise have to deal with sudden one-off costs to secure a tenancy.

Shelter says, ultimately, it “would expect overall costs to tenants to be lower than in the current market once letting agency fees are shifted to landlords”.

How would Labour change tenancy agreements?

Typical assured shorthold tenancies last six months or a year.

Labour would introduce “default” three-year tenancies to give renters added security and achieve a better balance between tenants’ and landlords’ rights.

It says that landlords can currently serve so-called “section 21” notices on tenants, giving them one or two months’ notice of intention to repossess a property – without having to explain why they are taking this action.

So a tenant complaining about mould on the wall could be kicked out for insisting that the landlord deals with the problem.

Under a Labour government, landlords would only be able to repossess if tenants were in rent arrears or behaving anti-socially.

Would Labour's plans help the young?

Ashley Seager, co-founder of the Intergenerational Foundation think tank, told Channel 4 News: "Anything that improves the position of young people in the private rented sector is to be welcomed, but these measures do little to address the long-term under-supply of housing or the tax subsidy given to buy-to-let."

Tenants would also have to leave if the landlord was moving into the property or selling it.

Renters would not have to commit to staying in a property for three years; they would be free to leave after giving two months’ notice.

Labour points out that only 56 per cent of private renters are registered to vote. It is reasonable to assume that people living in a property for several years would be more inclined to do so, so there could be an increase in political participation.

Would this make any difference?

The RLA says three-year tenancies would not achieve much – given that the average time spent in a private rented home is just under four years.

It favours a “right to renew” policy, which “would give tenants an automatic presumption in favour of renewing their tenancies under the existing system, unless the landlord had a reason not to”.

What would Labour do about rents?

Labour would also introduce rent ceilings to ensure that renters are protected from big increases in their monthly bills.

Ceilings would be based on inflation – in the housing market or the wider economy – so that tenants have a better idea what they will be paying in future.

Are rents rising?

The RLA says it is wrong to assume private sector rents are spiralling. It says figures from the English Housing Survey show that these rents have been falling in real terms (once inflation is taken into account) and that social housing rents have risen faster in percentage terms.

It says landlords do not usually increase rents when a tenant stays put and that long-term tenants tend to pay lower rents than those who have lived in their home for under a year.