Shelter’s ‘reforms’ would ruin private rented sector, says RLA

Longer tenancies would “fatally undermine” the private rented sector, says a new report published this morning.

Professor Michael Ball says the proposals, from Shelter, are poorly thought out. He also criticises calls to link rent rises to inflation, saying tenants would be worse off.

Ball, who is Professor of Urban and Property Economics at Reading University, was commissioned by the Residential Landlords Association to undertake an independent assessment of proposals by Shelter for a new standard five-year contract with annual rent increases linked to inflation.

Under the Shelter model, five-year contracts would be the norm. Landlords would have to seek permission from their local authority where tenants, such as students, might want a short tenancy.

The report says such applications in cities with high numbers of students would end up swamping local authorities already facing severe staffing problems.

Shelter also wants all tenants to have the opportunity to leave the property at any point in a five-year tenancy giving two months’ notice, without the same power for regaining possession being granted to landlords.

Professor Ball says that under this model, “landlords would face higher risks and lower returns; while the beneficiaries amongst tenants would be few and the losers many”.

He warns that accommodation shortages would worsen, especially hitting the most vulnerable tenants on low incomes.

The report also uses official ONS data to show that in each of the last eight years, private rented sector rents have risen by less than inflation. Ball concludes that linking rents to inflation would therefore leave tenants worse off.

As the Government begins work on seeking to introduce ‘family friendly’ tenancies, the RLA has proposed its own model agreement.

Under the RLA model, tenants would have a right to renew their existing tenancies based on the current shorthold tenancy agreement. Where a disagreement ensued about renewal, the landlord or tenant could take the matter to arbitration. Unlike proposals for a five-year tenancy agreement, this model would require no new legislation.

Alan Ward, chairman of the Residential Landlords Association, said: “Landlords do not want to see a well-behaved, rent-paying tenant leave their property. That’s why only 9% of tenancies are ended by a landlord.

“Tenants also seek security, but crucially, each also has different needs, requiring the flexibility that the sector brings to meet these.

“The reality is that the existing system already provides for those tenants who want to, the opportunity to stay in their homes for longer periods, many of whom enjoy discounts on their rents as a result.

“Not only would rigid five-year tenancies straitjacket the sector, but would, as Professor Ball has noted, lead to untold damage at just the time that we need more, not fewer, homes, and leave tenants worse off.”

Ball’s full report can be found here:
http://www.longertermtenancies.com/long-term-tenancies-ball-report-october-2013.pdf

The RLA’s tenancy reform proposal can be found at:
http://www.rla.org.uk/landlord/lobbying/docs/Longer_Tenancies_Consultation.pdf

Article courtesy of Letting Agent Today

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