Buy-to-let panel blasts Labour’s rental pledge
The panel at Paragon’s Great Buy-To-Let Debate included David Whittaker, managing director of Mortgages for Business, and Paragon’s managing director John Heron.
Labour has pledged to ‘make rent increases more predictable’ by changing the law so three year tenancies are the norm, while the party also wants to place an ‘upper ceiling on any rent increase’ every year.
But Whittaker said: “It’s totally the wrong solution. It ignores the fact there is a direct linkage between the capital value of the property and the rental value.
“It interferes with certain geographical areas and landlords will not take kindly to it.
“They will vote with their feet and sell up, therefore exacerbating the very problem the legislation hopes to address.”
He added: “The landlord will have a higher starting point for their rent to cover what they won’t get over the next three years, so in two fell swoops you have exacerbated the very problem you seek to address at the point of entry.”
Heron also disagreed with Labour’s three-year term policy but did think the industry could do more to cater for tenants looking for longer terms.
He said: “I don’t think the Labour Party’s policies are a solution – the three year term doesn’t make much sense. But as an industry we are not doing as much as we should be doing to improve matters.
“Too many mortgage lenders prohibit longer-term tenancies.”
And he added: “This is one of those situations where politics does get in the way. More people have to rely on the private rental sector throughout their lives. That does mean we see more families with young children.
“That means we have joint responsibility to find a way of accommodating the needs of those people – I don’t think the industry so far has a great record on this.”
The panel also discussed Labour’s proposal to ban lettings’ agency fees on tenants and ensure landlord fees are transparent.
Michael Ball, professor of urban and property and economics at Henley Business School, University of Reading, said: “I don’t agree with the Labour Party in terms of banning them but there needs to be a way of making it so consumers know what they are paying.”
Heron added: “The Association of Residential Lettings Agents does a great job, and there are plenty of good agents that are perfectly transparent but they are not the problem.
“The problem is it is all too easy for rogue agents to set up shop and fleece landlords and tenants.
“I’m afraid too few landlords and tenants know how to avoid that. Without some simple compulsion on letting agents to segregate funds to impose client money protection this is going to keep happening.
“I don’t think we need a heavy regulatory structure but we do need a way of making sure letting agents adopt a professional approach.”