Shelter'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:
- 5 year contracts as standard, with local authorities dictating
whether shorter leases are granted for special cases (such as
student lets).
- 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.
- 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
