Protecting private renters
Labour's plan contains two suggested actions to protect private renters. The first is to cap rents linked to inflation, with options for cities to cap them further. However, given the long-term nature of the housing market, attempts to link rental increases to indexing may result in greater increases than if the sector is allowed to retain flexibility.
The other suggested action is to introduce open-ended tenancies. Under current legislation, assured shorthold tenancies can be offered for up to seven years with a deed, though technically there is no maximum term length. Despite this, the most common tenancy length is 12 months.
RICS supports longer tenancies but we do not believe open-ended tenancies will be of benefit to the market overall. In the PRS, there must be a careful balance between the priorities of landlords and tenants, and this proposal will disadvantage landlords. This is likely to result in more landlords leaving the market and therefore in a reduction of rental supply.
There is also a risk that open-ended tenancies will create a two-tier system, where landlords let to tenants with more stable, higher incomes due to term uncertainty, making it harder for those who are on lower incomes or in precarious employment to find properties.
While Labour concludes that open-ended tenancies will end 'no-fault' evictions, they give no direction on how landlords will be able to remove tenants for reasons that currently fall under section 8 or section 21. Landlords must be able to evict tenants who are not paying rent or breaking the lease conditions, or if they wish to take back possession of the property.
There is a risk that any attempt to control rent increases or create uncertainty for landlords will intensify disruption within the PRS, with the possible leakage of stock into sale, which will make existing affordability issues worse.