RLA comes out against Shelter’s newest reform plan

Red tapeShelter's model for lettings in the UK has come under fire from a report commissioned by the Residential Landlord's Association, which states that the proposals outlined would only serve to 'fatally undermine' the private rented sector.

It's not the first time that Shelter has been criticized by the industry, with recent legislation in Scotland (instigated by Shelter) being seen by many as having a corrosive effect for both tenants and landlords north of the border by adding bureaucracy and leading to increased rents.

This time, Shelter's model for lettings includes:

  1. 5 year contracts as standard, with local authorities dictating whether shorter leases are granted for special cases (such as student lets).
  2. The ability for tenants to leave a property at any point during the 5 year term with a minimum of 2 months' notice. Landlords would not have the same powers to regain possession of their property.
  3. Annual rent increases linked to inflation.

The RLA's report, written by Alan Ball - Reading University's Professor of Urban and Property Economics - has clear reservations about the potential impact of such reform. In particular, the provision and standardisation of 5 year contracts was criticized for failing to take the large numbers of student-centric cities into account.

The amount of pressure that local authorities would be under in such cities was highlighted as a potential problem with the reforms, especially as local authorities are facing severe staffing shortages in student areas.

Furthermore, Ball raised concerns about the impact of allowing tenants to end tenancies with 2 months' notice but not extending the same privilege to landlords, saying that "landlords would face higher risks and lower returns [under the plan]; while the beneficiaries amongst tenants would be few and the losers many". He also stated that this may worsen an already grim picture in terms of supply and demand in lettings nationwide, particularly for vulnerable low income tenants.

When it comes to the call to link rent rises to inflation, the report uses the Office of National Statistics data to show rents rising at a rate slower than inflation for the past 8 years, using this as proof that Shelter's reforms would once again leave tenants worse off.

As well as critiquing the proposals put forward by Shelter, the RLA also put forward an alternative model that would require no new legislation to be passed. Under their model, tenancies could be renewed by tenants at the end of the standard lease term. Any disagreement over renewal would be sent to arbitration.

The chairman of the RLA, Alan Ward, raised the lack of evictions and need for flexibility in his own riposte: "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."

Read the full report here: http://www.rla.org.uk/ball/ball_report.shtml

Share |

Post a comment

Comments closed