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Labour rent move 'defies economic logic'

A leading free market thinktank claims Ed Miliband's pledge to cap rent rises in the private sector "defy economic logic" and will end up harming the poor.

Mark Littlewood, director general of the Institute of Economic Affairs, said the proposal to make tenancies three years long might "lead to landlords being uncooperative in the hope that tenants leave early".

He claimed the "key factor" in high rents was a shortage of housing and called on politicians to reform "draconian planning laws" to boost supply.

Read: Miliband pledges cap on private rent rises

Private sector rent controls: Key facts and stats

  • Rent controls first introduced by the 1915 Increase of Rent and Mortgage Interest (War Restrictions) Act
  • Between the 1945 and 1991 the private rented sector declined to 7 per cent of the market
  • 1988 Housing Act deregulated rents on new lettings
  • By 2013 the private rented sector made up 16.5 per cent of all 3.8 million households in England.
  • More than 1 in 7 renters who used a letting agency paid £500 or more in fees
  • More than 9 million people rent from a private landlord in England
  • Proportion of households living in private rented sector has risen by 80 per cent since 2000

(Figures provided by Shelter and the House of Commons library)

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Tories call Labour rent policy 'short-term gimmick'

The Conservatives have attacked Labour's proposal to cap private sector rent rises a "short-term gimmick".

Tory chairman Grant Shapps also claimed the policy was inspired by the leader the Unite trade union, Len McCluskey.

“Evidence from Britain and around the world conclusively demonstrates that rent controls lead to poorer quality accommodation, fewer homes being rented and ultimately higher rents – hurting those most in need," Mr Shapps said.

"And it’s yet another Labour policy bought by Ed Miliband’s union boss, Len McCluskey.

Miliband makes pledge to 'Generation Rent'

Ed Miliband will set out a series of proposed reforms to the private rented sector, declaring that "Generation Rent" has been ignored.

Labour's proposals include:

  • Landlords restricted to one rent review a year and required by law to keep it below a set level.
  • Charges imposed on tenants by up to 94 percent of agents - reaching as much as £500 - would be banned.
  • Tenants would get a three-year deal so long as they paid the rent on time and were not guilty of anti-social behaviour in the first six months.
  • Landlords could only serve tenants with two months' notice to leave with "good reason".

Labour promise house rent reforms

Labour would cap private sector rent rises, ban letting agents charging tenants fees and introduce three-year tenancies, Ed Miliband will promise as he launches the party's campaign for the European and local elections.

Labour plan to cap rent rises and ban tenants fees. Credit: PA

The Opposition leader will warn that increasing numbers of renters face "terrible insecurity" at the hands of unscrupulous landlords.

"Nine million people are living in rented homes today, over a million families, and over two million children. That is why a Labour government will take action to deliver fairer deal for them," Miliband will say.

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Britain 'on edge of a serious housing crisis'

The Citizens Advice Bureau has warned that the UK is "on the edge of a serious housing crisis" after releasing data on the increase in cases it has dealt with relating to rent arrears and threatened homelessness.

There are simply not enough homes to meet need and the result is yet more pressure on household budgets.

...The emerging trend of increasing social housing arrears is extremely worrying.

Cases of arrears are up across every region of England, with the Midlands and parts of the North showing the starkest deterioration.

Prices which far outstrip incomes and the damaging impact of high food and energy bills make paying rent simply impossible for many people.

– Gillian Guy, Citizens Advice Bureau Chief Executive,

The charity said that the impact of welfare reform is "crucial" and said that recent reforms that have been "rushed in without a proper safety net in place".

Figures on increase in social housing rent arrears

In the second quarter of this year, Citizens Advice Bureau gave advice on:

  • 22,412 issues about social housing rent arrears - a 13 per cent increase on the same period last year
  • 2,840 issues about possessions claims due to rent arrears in the social housing sector - a 38 per cent increase on the same period last year
  • 2,736 issues about threatened homelessness in social housing - a 12 per cent increase on the same period last year
  • 3,307 issues about Discretionary Housing Payments - a 110 per cent increase on the same period last year.

Of all the charity's clients advised about debt issues:

  • 45 per cent are social tenants
  • 31 per cent are private tenants
  • 20 per cent are buying their home
  • 5 per cent own their home outright.

Homelessness threat 'rising for social tenants'

Social housing tenants are facing an increased threat of homelessness, the Citizen's Advice Bureau has warned, after cases of rent arrears cases reported to the charity rose 13 per cent from July to September this year.

Social housing rent arrears cases reported from July to September increased by 13 per cent since the same period last year. Credit: PA

Citizens Advice warned that despite growing confidence in the UK's economic recovery, households are not yet feeling the benefit of the improved economic outlook.

It suggested that the impact of the Under-Occupancy Penalty, combined with changes to Council Tax support, has contributed heavily to rent arrears problems

Instances of Citizens Advice Bureaux advising clients about Discretionary Housing Payments, to help people pay their rent, have more than doubled in the six months since April this year when the charge for under-occupancy was introduced.

'Shortage of houses' behind rent hike

Higher rents in almost every region show that, despite Government schemes, buying a first home is still a difficult aspiration.

This is not only down to low salary growth, but also a general shortage of supply - which is the underlying reason why homes are getting more expensive.

– David Newnes, director of LSL Property Services
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