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Labour would force UK landlords to offer indefinite tenancies

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Since I haven't seen this posted yet.   A move in the right direction.....

 

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https://www.theguardian.com/society/2019/mar/09/labour-would-force-uk-landlords-to-offer-indefinite-tenancies

Labour would force UK landlords to offer indefinite tenancies

Plan will address ‘power imbalance’ and insecurity of rentals, says shadow minister

A Labour government would oblige private landlords to offer tenancies of indefinite length, based on the German system, in an attempt to give renters more security.

The plan, announced by the shadow housing secretary, John Healey, would seek to protect tenants from arbitrary eviction without having to give a reason. In contrast in Germany, landlords are only allowed to evict tenants for reasons such as failure to pay rent or committing an offence in the property.

Tenants would still be able to leave the property if they gave a period of notice.

The proposal is a change from Labour’s pledge at the 2017 election, when it committed to making private tenancies three years by default.

Labour says the indefinite system brings more security for renters, with private tenancies in Germany lasting an average of 11 years, compared with about four in England. This would, the party says, particularly help the 1.6m households with dependant children in private rented accommodation.

The scheme is also intended to reduce the extent of rent increases. Labour says UK landlords use tenancy changeovers as an opportunity to increase prices. Currently, tenants can be evicted with notice without any reason being given.

According to a survey of private landlords in England in 2018, in 18% of cases where a tenancy was ended in the previous two years, it was the result of a decision of the landlord or their agent.

Healey said: “People shouldn’t be living in fear of losing their homes. The insecurity of renting is a power imbalance at the heart of our broken housing market, where tenants are afraid to report problems in case they are evicted, and families with children are forced to move at short notice.

“Many landlords provide decent homes that tenants are happy with, but the government is allowing rogue landlords to take advantage of good tenants. Renters deserve better.”

The plan was welcomed by the housing charity Shelter, which said the current system meant “an alarming number of people are at the mercy of no-fault evictions”.

Greg Beales, Shelter’s campaign director, said: “Private rents are already expensive, so when you add short-term contracts into the mix, the situation for renters is pretty tough. Right now a family can be turfed out for no reason at any time, and saddled with not only the cost of moving but the huge burden of uprooting their lives.

“It doesn’t have to be this way. We look forward to seeing what the government brings to the table on longer tenancies, and hope they will give renters the security and stability they deserve.”

Government statistics show there are around 11 million people in England, in more than 4.5m households, who rent their home from a private landlord – double the number from 14 years ago.

 

 

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It is the simplest solution and also the best. No "no fault" evictions whatsoever, tenant gets the right to stay as long as they want so long as pay rent and behave reasonably, and can give a couple of months notice at any time. It's not rocket science but the landlords will hate it.

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54 minutes ago, Bruce Banner said:

I wonder what the lenders will have to say about that.

If legislation for longer tenancies reduces the propensity of banks to lend to BTLers that's even better.

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This is of course a good policy but it's sad that it has taken 20 years of my generation being priced out of homeownership for politicians to recognise that they should at least make the backup tenure (private renting) liveable.

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1 hour ago, Bruce Banner said:

I wonder what the lenders will have to say about that.

Give me the  money back.

Again, as Ive said from my first times posting here - regulated banks should not be classifying and charging LL mortgages are cheaper than resi mortgages,. They are much more risky.

This is just another a risk thats emerging.

And regulated banks should not be touching any form of IO loan - well, only in very exceptional and expensive cases.

 

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According to a survey of private landlords in England in 2018, in 18% of cases where a tenancy was ended in the previous two years, it was the result of a decision of the landlord or their agent.

This seems rather low. Speaking as a scumbag I'd be fine with it as long as the agreement include inflation-linked increases. I believe they also have blacklists of bad tenants in Germany, which is a good idea since not many people would enjoy the prospect of having rotten renters next door for 15 years. 

This brochure's rather interesting https://www.tenlaw.uni-bremen.de/Brochures/GermanyBrochure_09052014.pdf

A few choice excerpts:

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In Germany, it is common practice that the parties agree on a security deposit for the performance of the tenant’s duties. It may amount at most to three months’ rent excluding operating costs.

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Smoking, not in an excessive way, belongs also to the contractual use of residential space. Therefore, it is principally not possible for the landlord to terminate the tenancy due to the fact that the tenant smokes inside the dwelling.

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Is the landlord allowed to keep a set of keys to the rented apartment? The landlord is obliged to hand all keys over to the tenant in order to enable him to use the rented dwelling without any disturbance. Especially, he may not withhold a key for no apparent reason. If the landlord enters the dwelling by means of an own key, the tenant can terminate the tenancy without notice.

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If the tenancy is entered into for an indefinite period of time, the tenant can give ordinary notice. The notice period amounts to three months and is allowed at the latest on the third working day of a calendar month to the end of the second month thereafter.

 

Smoking inside is a right, apparently. :D 

 

 

 

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25 minutes ago, PeanutButter said:

This seems rather low. Speaking as a scumbag I'd be fine with it as long as the agreement include inflation-linked increases.

I'd agree if by inflation you mean a local rental index. If the local rental index was to fall then the rents of existing tenancies should decrease.

I don't see why landlords should get pay increases linked to the price of tomatoes and electricity which have nothing to do with their asset. If landlords want their income to track the wider economy they should invest in a broad range of assets, not go all in on residential property.

Edited by Dorkins

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4 minutes ago, Dorkins said:

I'd agree if by inflation you mean a local rental index. If the local rental index was to fall then the rents of existing tenancies should decrease.

I don't see why landlords should get pay increases linked to the price of tomatoes and electricity which have nothing to do with their asset. If landlords want their income to track the wider economy they should invest in a broad range of assets, not go all in on residential property.

:D some landlords do both. 

So if this local index goes up 20% it's fair to increase rent that much? And who compiles the index - our honest friends the estate agents?

If someone wants to live in a tomato they're more than welcome to but I'd find it too slimy personally. 

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Just now, PeanutButter said:

So if this local index goes up 20% it's fair to increase rent that much? And who compiles the index - our honest friends the estate agents?

Yes, if the rental index was to go up by 20% then the rents on existing tenancies would go up by 20%.

The local rental index would be compiled by the government. It already tracks local rents in order to set housing benefit rates.

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2 minutes ago, Dorkins said:

Yes, if the rental index was to go up by 20% then the rents on existing tenancies would go up by 20%.

The local rental index would be compiled by the government. It already tracks local rents in order to set housing benefit rates.

Sounds like you've got it all sorted ;) 

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2 hours ago, Bruce Banner said:

I wonder what the lenders will have to say about that.

They'll be thrilled. Security of tenure is surely a good thing - fewer voids means the bank is more likely to get their loan paid back.

 

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10 minutes ago, mrtickle said:

They'll be thrilled. Security of tenure is surely a good thing - fewer voids means the bank is more likely to get their loan paid back.

 

Isn't it the lenders that insist on one year tenancies when BTL mortgages are involved?

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3 minutes ago, Bruce Banner said:

Isn't it the lenders that insist on one year tenancies when BTL mortgages are involved?

Not sure, but if the government of the day changes the Law, they can "insist" all they like :). The new Law will over-ride a LL's contract with the bank.

 

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2 minutes ago, mrtickle said:

Not sure, but if the government of the day changes the Law, they can "insist" all they like :). The new Law will over-ride a LL's contract with the bank.

 

It might not be that easy, the lenders could challenge the government in court. Personally, I'd like to see longer tenancies but it might not be as easy as Corbyn thinks and his first hurdle is winning a GE.

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Lets be honest a lot of landlords are not really landlords in the old sense.  As in renting out property as a rental business.

I am always amazed when i am outbid on a nice family home requiring renovation for 350-400k..... to later find its up for rent like this one.

https://www.rightmove.co.uk/property-to-rent/property-60172899.html

£995 per month for a house that cost £425,000 a wonderful 2.8% return?

The house has a large garden....who wants that hassle if your renting.

no pets or smoking....

Thats the quandary at 900£ a month its a hard sell but 420K no problem.

So this fussy owner is too attached to his nest egg and really wants to hold it and then sell it later for more money.  The tenants simply help cover part of the mortgage and clean and tend to it.

Any change the the law like the one on this thread at a stroke will kill off all buyers like this.

When you rent out a property it will be deadly serious and you can forget about flipping it.

It will cause a house price crash immediately as you will have no liquidity at all and many are subsidising family homes in the hope of capital appreciation,   

 

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54 minutes ago, Bruce Banner said:

It might not be that easy, the lenders could challenge the government in court. 

They could, in the same way that s.24 was challenged: if they want to get laughed out of court. It is axiomatic in our system that the courts do not have the power to strike down an Act of Parliament. Even if they found it defective in some way, Parliament would merely remedy the defect.

As my old Politics tutor used to say, political parties can be very effective in getting their policies through without winning elections: they just have to come up with policies that the others feel like stealing (Disraeli described Sir Robert Peel as having come across the Whigs bathing, and stolen all their clothes). Both parties seem to have realised that renters are a constituency worth courting and are reacting accordingly; so expect the Tories to come up with a counter-proposal in due course.

The howls of self-entitled outrage that you can hear from landlords is due to their bewilderment at both parties having finally realised that there are more potential votes from renters than landlords.

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10 minutes ago, Man of Kent said:

The howls of self-entitled outrage that you can hear from landlords is due to their bewilderment at both parties having finally realised that there are more potential votes from renters than landlords.

Given that there are something like 7 privately renting households for every private landlord it's surprising that politicians didn't do this calculation sooner. Lots of those private renter households will look very swing-votery these days: two late 20-early 40something adults in full time work, raising kids. Can't buy their votes the usual ways with benefits (earn too much) or house price inflation (don't own a house). So what are politicians going to offer them?

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They did do the calculation earlier: they calculated that renters fell largely into categories that were unlikely to vote. Too poor, too young. What has changed was that renters have included more people who are more likely to vote, and there is some evidence that Corbyn's better-than-expected showing in 2017 was at least partly down to renters.

So far as a retail offer to renters is concerned, well take your pick: repeal s.21, lifetime tenancies, abolish fees, fitness for human habitation, statutory right to keep pets, whatever you like really. You will observe that the government has already legislated for some of these, which will come in handy for the targeted Facebook ads come the next election.

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1 minute ago, Man of Kent said:

They did do the calculation earlier: they calculated that renters fell largely into categories that were unlikely to vote. Too poor, too young. What has changed was that renters have included more people who are more likely to vote, and there is some evidence that Corbyn's better-than-expected showing in 2017 was at least partly down to renters.

So far as a retail offer to renters is concerned, well take your pick: repeal s.21, lifetime tenancies, abolish fees, fitness for human habitation, statutory right to keep pets, whatever you like really. You will observe that the government has already legislated for some of these, which will come in handy for the targeted Facebook ads come the next election.

The elephant in the room in that list of retail offers is that it doesn't contain the one thing private renters always tell pollsters they want: homeownership. I suspect that these improvements to private renting, nice as they are and as humane as it is to improve this form of tenure, will not actually help either of the main parties to pick up many votes because private renters will see them as putting lipstick on a pig.

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52 minutes ago, Dorkins said:

The elephant in the room in that list of retail offers is that it doesn't contain the one thing private renters always tell pollsters they want: homeownership. I suspect that these improvements to private renting, nice as they are and as humane as it is to improve this form of tenure, will not actually help either of the main parties to pick up many votes because private renters will see them as putting lipstick on a pig.

Not ignoring it; just being realistic about what is possible to put in a manifesto. You can say you want to expand home ownership; but that's meaningless unless you can come up with some retail policies that are going to make that happen. Yes, you can say that you want every renter to become a homeowner, but specifically what are you going to put in your manifesto?

I suspect that these improvements to private renting will help the main parties to pick up votes because they address the real problems that renters face; there is some evidence that renters were more likely to vote Labour in 2017 because of the party's opposition to s.21. I've been evicted using s.21 as a revenge eviction, and protecting my family and millions like us from that kind of action cannot be described as putting lipstick on a pig by anyone with more than a passing relationship with the real world. S.21 hangs over renters like the Sword of Damocles. 

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