Luke Gidney, managing director of Let-Leeds.com, gives us the benefit of his post-election analysis.
“We should all be pleased that Labour’s election call for inflation-proof, lengthy contracts for tenants will not become reality.
“Ed Miliband wanted three-year contracts that would prevent landlords increasing rents by more than the rate of inflation. It turned out to be an unsuccessful grab for the votes of those renting their homes. But we still feel it is worth examining the issue, as calls for such a plan may be made in future. And we believe such a measure is not only unnecessary – it could cause its own problems.
“For a start, the rental industry is competitive so if any landlord tries to hike up rents by an unreasonable amount they are likely to end up with an empty property. Landlords know that a sensitive approach on rent increases is important if they are to attract and retain tenants.
“Secondly, renting a property is an arrangement that can suit both the landlord and tenant. Renting is a long-term option for lots of young people and people will also rent when they move into an area or start a new job or relationship. In these cases, it’s unlikely that such people would want the lengthy commitment of a three-year contract. It takes away their flexibility and could mean they are stuck in a rental property long after they want to be in the area. And for many landlords who have entered the lettings market accidentally, renting their property for a three-year period is too long a period to be tied into.
“If we look at the majority of rental agreements, they involve tenants and landlords signing a six month or one-year contract with the option of renewing it. Such arrangements give both sides flexibility: the tenant can move on if they don’t like the property or no longer want to live in the area and the landlord can decide whether to allow tenants to stay, find new ones or sell the property. Such options are impossible with a three-year contract.
“Ironically, if the plans for three-year, inflation-proof contracts had become reality they may have had the effect of driving landlords out of the rental sector. This would mean a smaller supply of rented property which could, in turn, see rents increase. At present, our experience and the findings of recent surveys indicate that private rents are not shooting up. Tenants are, by and large, happy with the accommodation and the service they receive for their money and landlords are putting the wish to keep decent tenants ahead of any greedy drive to push up rents.
“As letting agents, we initiate discussions with landlords and tenants months before a tenancy agreement ends. This way, a landlord can notify all parties in advance of any likely rent increase – and the reasons for it– and tenants can indicate if they are looking to stay or move out.
“It is a simple system that works well for all concerned. And we should be relieved that, for now, the politicians will not be tinkering with it.”