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Labour Government - London

How Would a Labour Government Impact the Housing Market?

The Labour Party is now ahead in the polls; if it were to win a general election, what policies would it implement in the private rental sector and how would it be affected?

If there were a general election in the coming days, the polls suggest that the Labour Party would easily defeat the Conservatives by a considerable margin, the greatest advantage recorded between the two parties by more than two decades. What it would entail for the private rental sector (PRS) in the UK is discussed below.

What is the new renters’ charter that has been promised?

A renters’ charter outlines Labour’s proposed changes to the private rental market. After taking office, the party plans to speak with business groups and produce a white paper detailing its plans to stabilise rent hikes. After a victory in a general election, Labour said that the proposals set out in the charter must go to a referendum within 100 days. Clearly, Labour places high priority on the proposed renters’ charter and plans to get moving on it as quickly as possible if they take power in the next general election.

Lisa Nandy, the Shadow Secretary of State for Levelling Up, has said, “For private renters we will tilt the balance of power back to you through a powerful new renters’ charter and a new decent homes standard – written into law.”

What would Labour’s renters’ charter include?

The Renters’ Reform Bill provisions are echoed in the proposed renters’ charter, which expresses support for measures to eliminate section 21 “no fault” evictions, create a legally enforceable Decent Homes Standard, and create a national landlord registration system that is similar to the proposal for a Property Portal.

But Labour’s proposed renters’ charter does not stop at this. The charter is likely to include both new ideas and changes to the ones that are already there:

  • “Automatic evictions for rent arrears” are something the charter intends to put a stop to. (This provision in particular is causing concern for many in the PRS).
  • Landlords would be required to give tenants four months’ notice.
  • Furthermore, tenants would be allowed to keep pets and make “reasonable” improvements to the rental unit.
  • Additionally, plans to make security deposits “more portable” will be explored. (The rationale for this is that many private tenants are currently in a difficult financial position, and in order to secure their next rental, they must pay a large security deposit up front).
  • Give tenants the right to have pets.
  • Allow tenants to make “reasonable alterations to a property.”

The chief executive of the National Residential Landlords Association, Ben Beadle, has said, “The combined effects of what Labour is proposing, in particular essentially making rent payments an optional extra, will seriously damage confidence and with it, the supply of homes to rent when demand is already high. Tenants will suffer in the long run.”

A focus on the importance of social housing and home ownership

Lisa Nandy, confirmed Labour’s support for social housing, stating that Labour will “be the first government in a generation to restore social housing to the second largest form of tenure,” therefore demoting the private leased sector to third place, where it was in previous years.

Keir Starmer, the Labour party leader, has also stated that as much as 70% of the population should be able to buy their own home. He has vowed that Labour will become “the party of home ownership in Britain today.”

Labour Government - London

To do this, Labour proposes a new mortgage guarantee programme for first-time buyers and revisions to planning that would assist localities in getting “shovels in the ground” for construction.

As Keir Starmer points out, however, this might be to the detriment of landlords in the PRS since “no more buy-to-let landlords or second homeowners getting in first,” firing a warning shot across the bow of the PRS.

Encouragement of rent regulation or rent freezing

Furthermore, adding to these fresh Labour plans, Sadiq Khan, the Mayor of London, has already voiced Labour’s support for establishing rent controls. Mayor Khan said, “I am writing ahead of the Queen’s speech to urge you to take immediate action to ease the cost of living crisis for 2.4 million Londoners by devolving the powers to me to introduce rent control in London.

“If we do not act urgently to protect renters, spiralling rents could soon translate into a devastating homelessness crisis. I have repeatedly asked for the powers to design and implement a system of rent control for London which would help to reduce the financial pressure on renters, without choking off supply.”

The current Conservative government has rejected rent ceilings in the A Fairer Private Rented Sector Renters’ Reform Bill white paper, but a future Labour government may be more open to the idea, as shown by Labour statements.

In addition to Mayor Khan, another Labour MP has voiced strong support for rent controls that should be part of a package to help tackle the cost of living crisis. Birkenhead MP Nick Whitley said that rent controls would help prevent a “moral and economic collapse.” In his letter to the government, Whitley stated that, “In recognition of the severity of the current crisis and the dire forecasts being projected by the Bank of England, a comprehensive system of price controls on one basic essentials, including food and rent should be introduced.”

Nandy has also disclosed that she is considering empowering local councils to implement rent freezes in the wake of Scotland’s declaration of a rent freeze lasting until at least the end of March 2023. “Local mayors and council leaders should be able to make decisions to freeze rent increases in their local areas over the winter,” Nandy explains.

Reaction to Labour’s proposals

The National Residential Landlords Association has reacted to Labour’s proposed renters’ charter with dismay, saying it is “a charter for rent dodgers and nightmare tenants.”

The NRLA was reacting to potential changes that might be made to tenants’ rights under a Labour government.

According to the Landlord Association, Nandy and the Labour Party want to limit the private leased sector so that the social rented sector becomes the second largest housing tenure in the country.

The National Residential Landlords Association said that Labour’s plan to stop forced repossessions for rent arrears would send a hazardous signal that paying rent was somehow optional.

The NRLA went on to ask: “For example, would mortgage lenders no longer be able to regain possession of properties if homeowners can’t pay their mortgages? Labour should be focused instead on preventing rent arrears in the first place by unfreezing housing benefit rates and addressing the supply crisis in the private rented sector which is the biggest driver of rents.”

With regards to the proposal in the charter that will grant rights to tenants to have pets living with them, the NRLA said that landlords should therefore have the right to require tenants to hold adequate insurance to cover the increased risk of damage to the property that comes with having pets.

Concern was also expressed by the NRLA in regard to the charter’s proposals for a four-month notice period for repossessions, which would effectively mean the charter is encouragement “for anti-social tenants causing misery for fellow tenants and neighbours alike, knowing that they could stay put for four months, as well as those purposefully not paying their rent in the knowledge that they have a four-month period in which nothing can happen.”

Ben Beadle, CEO of the National Residential Landlords Association, has said: “It is depressing that the Labour Party is once again demonising all landlords. The vast majority do a good job, providing a fifth of all housing in the country. That is why private tenants are more likely to be satisfied with their accommodation than those in the social rented sector.

“The combined effects of what Labour is proposing, in particular essentially making rent payments an optional extra, will seriously damage confidence and, with it, the supply of homes to rent when demand is already high.”

Mr. Beadle went on to emphasise that Labour’s proposals will not help tenants in the long run and that Labour’s proposals are in fact short-sighted. “The reality is that promises of new social housing at some distant point in the future will do nothing to help renters struggling today,” he noted.

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