Landlords attack Labour's rent control plan

Landlords went on the attack on Sunday against Labour plans to ban above inflation rent rises if they win the election.

Ed Miliband, the party leader, has given further details of measures he first proposed in 2014 as part of a number of housing market policies intended to address the supply crisis and pressures on the private rented sector.

Labour says it would legislate to make three-year tenancies the standard, up from the current six months, although the landlord or tenant would have the option of ending the agreement after six months before signing up for a further two and a half years.

Rents would be capped over the three-year period so they could not rise more than consumer price inflation.

The party said people deserved to know "the kind of rents they'll be paying when they start a new tenancy and not to be taken for a ride by landlords who [make] huge rent hikes."

But landlords said the proposals showed a lack of understanding of the economics of the rental market. Richard Lambert, chief executive of the National Landlords Association, said the plan would exacerbate the housing crisis.

"Capping annual price rises to inflation sounds like a great consumer protection initiative, but wherever these formulas have been introduced, it's proved to be counterproductive because it leads to a culture and expectation of regular increases by whatever is allowed," he said.

David Whittaker, managing director of buy-to-let broker Mortgages for Business, said landlords would start new tenancies with higher rent "to make up for the amount they wouldn't be able to charge during the rest of the tenancy".

Business groups expressed concern that the measure would deter investors.

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Mr Miliband defended the policy on Sunday with reference to Ireland, where rents can be reviewed only once a year and cannot exceed the market rate.

After a six-month probationary period, Irish landlords cannot end a tenancy, except for certain specified reasons, until four years have passed.

"In 2004 they introduced this system and it has worked. There are more people renting in the private sector in Ireland than there were 11 years ago. This is the right policy," Mr Miliband said.

A report by the London School of Economics has looked at Germany, where initial rents are limited with reference to market rates in the area, as an example of "good practice". It found the country had lower levels of housebuilding and that "it has become extremely difficult to find private rented accommodation" there.

In March, German legislators passed new measures to cap rents in areas deemed to have housing shortages. Some 60 per cent of Germany's housing stock is in the private rented sector, against 17 per cent for the UK and 10 per cent in Ireland.

Matt Hutchinson, director of the flat-share site SpareRoom.co.uk, said the fundamental housing problem in the UK was one of supply.

<>"With rents having risen faster than salaries over recent years, the real damage has already been done. Until government gets to grips with the acute supply and demand crisis, housing will always be too expensive," he said.

Under Labour's plans, landlords would have to tell prospective tenants how much they charged the previous occupants, with a view to helping new tenants when negotiating rents. Meanwhile, so-called "rogue landlords" whose properties fall below basic standards would face tax relief cuts.

Britain's rental market is growing, with figures from the English Housing Survey for 2012/13 showing for the first time that more were renting privately than in social housing.

The problem of "Generation Rent" - those who cannot afford to buy a house but do not qualify for social housing - has been highlighted by the Resolution Foundation think-tank, which found that 1.3m tenants of a total 4m in the private rented sector now spend more than 35 per cent of their disposable income on rent.

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