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Are rent controls the solution to Britain's housing crisis?

View profile for Joanne Ellis
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Ed Miliband intends to place a cap on rent rises and introduce three year tenancies as part of proposed housing reforms in the private sector if Labour is elected at the next general election in 2015.

Mr Miliband has cited housing costs as one of the biggest causes of the cost of living crisis. With approximately nine million people living in rented accommodation, which includes over a million families and over 2 million children, Mr Miliband has promised that ‘a Labour government will take action to deliver a fairer deal for them’.

At present, under Section 21 of the Housing Act 1988 a private landlord is able to issue a tenant with a Section 21 notice at the end of an Assured Shorthold Tenancy, which is the most common type of tenancy with private landlords. Tenants can be easily evicted with just two month’s notice which has to be issued correctly by the landlord depending on whether the tenant has a fixed term or periodic tenancy. As a result, tenants face the risk of being thrown out of their properties for no reason.

Under these new proposals, tenants would be guaranteed a 3 years tenancy as long as they pay their rent on time and do not commit any act of anti-social behaviour during the first six months of their probationary period. Landlords would only be able to serve tenants with 2 months notice to leave their property if the tenant was in rent arrears, breached their tenancy agreement, were guilty of anti-social behaviour or if their landlord wanted to sell, refurbish or live in the property themselves. Tenants, however, would be able to terminate their contract with one month’s notice.

Letting fees would also be abolished as part of the proposals.

It is proposed that rent rises would be limited to an average market rate guided by the Royal Institute of Chartered Surveyors and landlords would only be able to set the rent at the start of the agreement.

The changes are designed to prevent landlords from evicting tenants by increasing their rent and offer tenants, particularly families, stability and have been welcomed by anti-homeless campaigners as vital protection to some of the most vulnerable people in society at a time of a serious housing shortage.

However, these proposals have faced opposition and the Conservative Party Chairman, Grant Shapps has stated that ‘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’. Mr Shapps maintains that the only way to improve living standards is to grow the economy by creating new jobs.

I’m sure that I’m not alone in expressing concerns that private landlords may be deterred from renting out their properties if they don’t bring in an income that makes their investment financially viable. This means that tenants could face shortages in the market resulting in people becoming homeless.

Another concern is that landlords may be discouraged from maintaining their rented accommodation particularly if they are unable to raise rents to cover their costs. Tenants may therefore be left in dilapidated properties and be forced to leave their property because of such conditions. With this in mind it appears that these reforms need to go further to implement safeguarding measures for tenants whereby landlords are prevented from being able to let them live in poor conditions. It must also be made clear to landlord’s of their legal obligations to carry out remedial works when reported by tenants.

At least one assurance for tenants is that under the proposed three year tenancies, landlords cannot simply evict them for bringing a claim of disrepair if such a claim is brought during that three year period. At present, it is common for landlords to evict their tenants if faced with a disrepair claim and for this reason tenants may be reluctant to raise any such issues.

Whilst these reforms on the face of it seem to be a genuine attempt to protect tenants from losing their accommodation as easily, in reality it appears that they may in fact exacerbate the existing problem of a lack of supply in the housing market.

If your landlord is threatening to start possession proceedings against you or has already done so, or if you have received a Section 21 notice you should seek expert legal advice from a member of our housing law team.

By Ria Stevens, trainee solicitor in the housing law team