Quite an exciting week politically, what do we have for you on the housing front?
Labour is planning ‘right to buy’ for the PRS
This came up in an interview with John McDonnel with the FT.
I haven’t read the interview as I don’t subscribe to the FT but apparently, Labour have a plan to introduce a right to buy for private tenants to allow them to purchase their rented property from their landlords.
Presumably at a discount (an article in Property Industry Eye suggestions a 20% discount).
As a plan to discourage all landlords from ever voting Labour and to kill the private rented sector dead – it could be really successful.
But is that what Labour really want and where are they going to house all the people who can’t afford to buy? My advice to Labour would be to build up social housing first if they are determined on this.
Not that they are going to listen to me of course. Maybe they will listen to David Smith, policy director for the RLA? Who said:
Labour’s proposal would effectively kill off a large part of the private rented sector denying a home to many thousands of people.
If there was to be any chance of this becoming law, there would be a mass sell-off of properties in advance.
The RLA is all in favour of landlords selling to sitting tenants but it must be entirely voluntary. Anything else amounts to a form of compulsory purchase.
Speaking to the Negotiator, Mark Homer, co-founder of investment firm and developer Progressive Property said
if the proposal is to pay landlords less than the market value of the property then legal challenges are likely to follow from a significant number of the UK’s 2.5 million Buy To Let landlords.
Clearly there are also further difficulties. What happens to properties which are mortgaged to a level beyond the right to buy purchase price? “How will tenants be able to purchase a room in a house of multiple occupation and which mortgage lenders are likely to support them in doing this?
Clearly aimed at garnering favour with a subset of the electorate, proposals like this are much easier mooted than enacted
Mind you, an Eye article points out that it may not be very popular with MPs, as according to FactCheck in July 2017 – 123 of them are landlords. They sit on both sides of the Commons and include Labour’s Emily Thornberry and Keith Vaz.
There is an interesting analysis of the proposal (if you want to read more about it) in This is Money.
‘I told you so’ rent increase reports
Various articles are reporting an increase in rents as a result of the tenant fees ban. For example in this Eye post Linley & Simpson CEO Will Linley said
Agents like us warned the Government long and hard about the unintended consequences of its approach, yet our voice and our suggested alternatives were ignored.
Our fears are now being borne out with tenants facing higher rents almost overnight.
And with rising demand and a shortage of new buy-to-let activity – another far-reaching result of the ban – the upward trend in monthly rents is only going to accelerate.
Mind you, this is an obvious response to the ban. A lot of work needs to be done at the start of a tenancy and if this is being done by letting agents, someone has to pay for their work. If they are going to be charging landlords rather than tenants, then landlords are bound to increase their rents to compensate.
But agents should never have been allowed to charge fees to tenants in the first place so this is just the market correcting itself.
Another obvious result of the ban, which seems to be causing surprise, is an increase in rent for tenants with pets.
Pets can cause damage. Some pets can cause a lot of damage. This also has to be paid for.
The tenant fees ban prevents landlords from charging a sufficient deposit and prevents them from charging an up front pet fee to cover potential damage. The only thing left for them to do was increase the rent. Why are people surprised that this is happening?
The sad result though is that more people will be unable to afford a pet. As the Guardian reports
One landlord in Bicester in Oxfordshire is asking £40 per pet in monthly rent in a two-bedroom home that already costs £995 a month for the human occupants. It means a family with a dog and two cats would face a yearly animal rent of over £1,400. Another in Cheltenham is asking £50 a month for “four-legged friends” with exemptions for fish or hamsters. Several landlords are seeking pet rent only for “clawed” pets.
The Law Commission confirms electronic signatures are legally valid
A welcome report from the Law Commission, reported here in the Law Society Gazette confirms that electronic signatures are valid:
Overall it states that an electronic signature is capable in law of executing a document (including a deed) provided that the person signing intends to do so and that any further required formalities, such as a witness, are satisfied.
However, the Commission recommends further work including setting up an industry working group, to consider practical and technical issues, and a future review of the law of deeds.
They also suggest that the government may want to consider codifying the law on electronic signatures to make it more accessible.
- The Chancellor fails to mention housing in his spending round speech
- A lesson for the UK government as New Zealand scraps homes target
- Welsh Government’s own guidance on tenancy fees ban contains ‘serious errors’
- Give your feedback in Fixflo’s lettings survey
- Birmingham takes action against HMO landlord in first civil penalty case
Newsround will be back next week.