A fairer deal for renters
City Hall wants a fairer deal for private renters. The 'London Model' is a proposal aiming to significantly improve security for renters by balancing the relationship between renters and landlords.
The 'London Model' would include the following:
• open-ended tenancies, where tenants can give an appropriate amount of notice to leave the property at any time
• end Section 21 ‘no-fault’ evictions, meaning landlords may only regain their properties under designated possession grounds; and
• ensure landlords can regain possession when they have a legitimate reason and have confidence in their ability to do so effectively.
Do you think these measures would help Londoners? What other measures would help to improve trust between landlords and tenants, and create better experiences of renting in London?
102 Comments
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The question about what most challenging about private renting needs a comment field. I would say that it is a combination of all of the mentioned answers that make private renting challenging. The upfront fees and deposit is untenable with high rents and termination of contract or refusal to renew contract after less than a year. How people on lower incomes manage to save up is beyond me!
The stress of one year contracts and a competitive rental market means you are less likely to complain to your landlord from a fear of not having your contract renewed or having your rent hiked up so you are forced to move out. There is no incentive to make the flat feel like home because you don't know if you have to move again soon.
The other thing to add on that list is a yearly cap on rent increases - say 5% to account for inflation and a bit extra. The biggest problem in London is what you have to pay for a place to live, and how incredibly little you often get for it.
Being a private landlord should be a legitimate business with a long-term view of recuperating costs, not a free for all.
There is nothing wrong with renting long-term. As a Swede I can attest to the benefits of living in long-term secure rentals, there is less responsibility and potential financial strain than owning your own property. If something breaks the landlord fixes it, or replaces it for you. Obviously if you break it you buy it, but generally there is all the security with less of the responsibility. For a single-mom working as a nurse, with limited ability to save up a buffert, it was preferable to rent than buy.
Very encouraging that the GLA is finally starting to tackle this issue! More and faster please.
A thoughtful reply.
As a landlord, I have been happy to provide accommodation for many people, some staying over 7 years.
Rents are high for renters but the cost of the property is equally relevant plus the increasing costs of managing and ensuring compliance with the many regulations (many very important) that govern us all.
My typical ”return" of rents on capital is only around 2.5% per annum after costs and before tax. That ignores the increases in the capital values which have been good until recently but equally reduce the % return!
. And this is keeping the properties going with tough decisions on capital costs - for example a major refurbishment would eat up a whole year’s rental or more and is not all tax deductible any more.
Now with property values in decline and with a bleak outlook, the economic case to hold property to rent may disappear.
The point is that if renting becomes more difficult or less profitable, then people such as me will simply sell up and take the capital to earn more elsewhere with less stress and higher liquidity.
In terms of rent increase, what is often overlooked is that landlords hate empty properties. They incur costs without any income.
As Madeleine suggests, I keep rent increases to a nominal amount, usually less than inflation, as I like to keep tenants. The downside of this is that unless tenants do change and you can move back up to a market level, the rent slowly falls in real terms while costs tend to do the reverse.
I have experience of many types of tenant. The EU tenants have been the most proactive. They tell me when there is a problem and they help to fix it. My favourite lets me know and call the repair man herself for a convenient time; I refund her by return.
Last, so far at least all tenants have only left when their circumstances changed- new job, family etc. . . .
A thoughful response in return Bushbaby.
I don't believe all private landlords are out to make as much money as possible to the cost of renters. I commend your commitment to your tenants. However, landlords like you are not always the norm. There are rogue landlords out there and with meagre protections for renters there is a power imbalace which greatly affects the most vulnerable in our society. People like me can afford a one bed with my partner, and asked friends and family for help if we need to move on short notice. Not all people are in that situation.
I actually think the concept and reality of profiting from a human right such as housing is fundamentally wrong. However, I recognise that we live in the UK and this is a capitalist society. I have chosen to live here so I will accept that this is the case. That said, I will continue to advocate for the most vulnerable in society and commend landlords who do the right thing.
I agree with the general sense of a cap on rent increases, but that can only function in the case of "open ended" tenancies, which is perhaps the best argument for such tenancies. However percentages set at one point in time are not the best solution thereafter. A better solution would be to establish market valuations of rental property and "fair rents" which landlords would be required to establish periodically using an independent and qualified valuer. On the basis of this, increases in rent could be tied be tied to an established acceptable return which landlords make on the market value of their property. Any system based on measures of consumer price inflation or for that matter an index of private rents would be far less objective.
Perfect summary of the problems renters face.
I'm sorry to say, but this is absolutely not solving any of the problems with renting in London.
The prices are way too high. There is high demand to live here, however the supply is not here. People have to go further and further out to afford living here.
Plus, the properties are most of the time worn out, dated, etc.. and landlords most of the time gets away with it because there is no regulations and because people want to live here.
Also, there is now access to ownership seeing the price of the properties here.
More than half the new buildings built are empty because bought by rich people abroad for speculation. it shouldn't be like that!
Something needs to be done & the open end thing is not a solution
Agree absolutely. Government claims to require developers to include a proportion of social (affordable) housing in their new developments, but there are multiple ways in which commitments at the time of applying for planning permission can be revised to reduce or exclude the social housing, with little or no penalty to the developer. That is why the vast majority of new build in London is out of reach of ordinary working people.
There should be no such thing as private landlords only renting from councils but unfortunately we are a long way from that. So the least a council/the mayor can do is establish the fair rent for a property and then cap rates and rate increases with the long term aim of eliminating privately rented properties.
"eliminating privately rented properties" So that even more people have trouble finding somewhere to live! Local authorities would do better to encourage and assist people into ownership of their own homes.
Not allowing landlords to evict tenants FOR ANY REASON after the agreed notice period ends is a terrible idea, and will send London back to the dark ages of real estate
Take a look at San Francisco or Bombay (Mumbai) to see what happens once the landlords lose discretionary rights over eviction. That said, by no means should any landlord be allowed to force a tenant out sooner than the agreed notice period, even if it is as long as 3-6 months.
That is not what the survey is suggesting at all. It will end NO-FAULT evictions but will keep protections for landlords who want their property back for legitimate reasons.
3-6 months isn't long. People on average London wages will hardly be able to save up for a new deposit and agency fees is evicted at no fault after 3 months.
If "legitimate" is defined by anyone other than the owner of a property, then that is totally unfair to the owner of the property. Again, it belongs to them - they should be entitled to do whatver they want with it, provided they honor the terms of their rental agreement. That's the point of having an agreement.
I believe 6 months is plenty of time for a London resident to move apartments, should the landlord decide to terminate the tenancy agreement. Again, this is meant to be negotiated between both parties.
I'm a tenant myself - I own no property anywhere but hope to some day. I would hate to think that I would be limited in any way in addressing the needs of my asset(s) on a discretionary basis because of overbearing legislation.
If an agreement is for a year say then the landlord should be able to get it back after a year. This will prevent that. It makes a nonsense of the agreement.
Rent controls, Rent controls, Rent controls.
Other suggestions here are positive, but ultimately without rent controls are just tinkering around the edges.
Very disappointing to see that even in a survey the Mayor's office won't include them!
The first thing that happens with rent controls is that landlords sell up, the next is rents go up because of the shortage of property, rent controls have never worked just look at Dublin since they were introduced a few years ago rental properties have been sold and rents are trough the roof.
Rent control is urgently needed. I've seen a room which can't even fit in a single mattress asking for £400 a month. There's no furniture apart from a light bulb from the ceiling. The size of the room is barely bigger than a desk. How ridiculous London's rent has risen.
That's pretty half hearted.
Why don't you start by looking at a country where most people rent - Germany.
In Germany there is no Government engineered shortage of properties to keep prices rising to attract investment purchases from rich foreigners who feel insecure in their own counties and want a bolt-hole and a nest egg in London . . .
In Germany a good tenant raises the value of a rental property. In the UK we are seen as vermin by rich capitalists.
In Germany, you can stay in a rented property as long as you want ( excepting a few reasons )
In Germany they don't have near-zero interest rates - as Government policy - which allow property owners to re-morgage in the faked rising market - housing supply being throttled as Government policy - to fund deposit for new properies and out-price first time buyers
In Germany there is no faked housing market providing a return which is much higher than from running real a wealth creating business, so the German market doesn't attract more than its share of investment - pushing prces even higher. Instead the Germans run a real economy with real welth creation . .
The problems in Britain are ALL caused by British Politicians.
These tweaks by city hall are just more opiate for the masses.
A real fix - buy up all the old Victorian Terrace houses in London and build a million nice large flats - a large order will command a cheap price.
8 large flats instead of one old house should be saleable at a profit - even for a politician.
Instead we will get "affordable" housing - affordable at the prices of a faked-up housing market - so being a dog-kennel size property unsaleable in a normal supply and demand housing market ( like in Germany ) - thereby breaking London housing for ever . . .
We need a "none of these candidates" option on all ballot papers so we don't have Hobsons choice all the time
... and what happens when these million nice flats fill up which, BTW, will be sooner than you think!
Everyones quality of life will be worse because they lived like caged hens, and developers/government will be wringing their hands with glee at all the money they will make.
Supply is insatiable and driven by jobs and foreign investment. Direct those away from London and prices (house and rent) will fall with demand. Wouldn't you like to work in Birmingham?
As a current landlord and a former tenant I think the current short tenancies serve no purpose to either party. As a landlord a long open-ended tenancy should give me security of long-term income from the property. Landlords should exist to provide long-term decent accommodation - that is the service we are in the business of providing. Short tenancies add to both landlord and tenant costs and uncertainties.
I understand that a good proportion of MPs have homes they rent out and yet they vote on legislation which affects renters (I've seen figures such as 'one third of all MPs: I don't know how true this is). I know they register their interest. However I think this is a confict of interest that is not managed well in our parliamentary system and leads to a balance in favour of the landlord in most cases. Therefore anything that the London Mayor and his team can do to counteract this is to be welcomed. I feel very sorry for all types of renters and find people like me (own home, no mortgage) who seek personal gain by becoming renters quite difficult to deal with.
I'm German and let out porperty in Germany, which has a imbalanced protection for tenants, and although I am a strong supporter of open-ended tenancies with agreed notice period, e.g. 3 months, which are flexible and facilitate that the rental market accommundates working people, I am against the creation of the imbalance against landlords, who should have the same right to end the contract as their tenant. I agree that properties for rent in London often would not be considered inhabiltable in other European countries, but this should be regulated by health and safety requirements for landlords. If a landlord cannot give notice to a tenant they will always "force" the tenant to leave by for e.g. blocking facilities, starting noisy and dirty constrution work or neglecting the property just to get tenants to leave.
Please allow a balanced contract execution and termination, so that people can bargain their business / needs on equal terms.
Very reasonable - I am sure Oxyhaemoglobin (above) would agree with you. I don't know Germany, but from experience of renting in Paris there is a clear professional framework where the landlord is the undoubted boss, but there are clear sets of rules on respective rights and responsibilities which people get on with, and it works. Property rental should be a rational and balanced business. It is a pity that abuse has become far too frequent among both for landlords and tenants in the UK, which leads to unhelpful "them and us" emotional attitudes to the problem.
This is not really an issue that should be being touted in this manner, it is a lot more complex and country wide NOT a London problem. 'Good for tenants' and 'Good for landlords' simplistically as these questions is not the answer. Landlords are reluctant to agree long term lets due to the Tenants having more power when it comes to getting the property back when in dispute, I know many landlords who have lost 10's of thousands in rent whilst getting tenants out who are not paying their rent, until courts back landlords like any other business owed money landlords will not allow long term and flexible lets of the type proposed. Rent rise capping is an important proposal that needs implementing immediately, along with maximum rental rates based upon location accross the country. These items and requirement for landlords to be registered so that the unscrupulous ones can be banned or sanctioned if properties are not up to standards required.
The way rents are raised and charged is unfair because the rent is not simply for the building it is also based on site values. In fact most of the rent comes from that of the value of the site. Yet these sites are natural resources which value is mostly due to the degree of infrastructure and population density in that region.
Adam Smith (“Wealth of Nations”, 1776) says that land is one of the 3 factors of production (the other 2 being labor and durable capital goods). The usefulness of land is in the price that tenants pay as rent, for access rights to the particular site in question. Land is often considered as being a form of capital, since it is traded similarly to other durable capital goods items. However it is not actually man-made, so rightly it does not fall within this category. But its site-value greatly depends on location and is related to the community density in that region, as well as the natural resources. Consequently, most of the land value is created by man within his society and therefore its advantage should logically and ethically be returned to the community for its general use.
Regarding taxation and local community spending, municipal taxes are partly used for improving the infrastructure. This means that the land becomes more valuable without the landlord doing anything. This also applies when the status of unused land is upgraded and it becomes fit for community development. When this news is leaked, speculation in land values is rife. There are many advantages if the land values were taxed instead of the other kinds of production-based activities such as earnings, purchases, capital gains, home investments, etc. The only people due to lose from this are those who exploit the growing values of the land, when “mere” land ownership confers a financial benefit, without the owner doing a scrap of work. Consequently, for a truly socially just kind of taxation to apply there can only be one method Land-Value Taxation.
I'm afraid you have no clue as to how rents are set, it has nothing to do with site value, it is done on the basis of how much people are willing to pay which is set by the open market
People with no connection to this country buy such a large number of properies! This drives housing prices up more than anything!
I can understand temporarily going elsewhere and letting your house, or buying property as an investment for your retirement, but investing in London property when you are a rich person from Saudi Arabia, Nigeria, Russia or China, only makes things worse for everyone here, as you are never physically here, are not part of the community, and only care about pushing the rents up!
Homes are more than a balance sheet on your portfolio!
These proposals will kill off the supply of accommodation available to rent, thus preventing the young and the poor from luiving in London at all. That is what happened under the Rent Acts of the 1970's.
Completely correct.
It's more likely that landlords who are unwilling to abide by these proposals will either give the properties to a relative to live in or sell to a more serious landlord or buy-to-live.
Not a very well structured questionnaire - looks like you already know what you want to do and are just looking for some justification. The only long term solution to London housing (owned and rented) is to set up incentives to encourage a lot more building - relax planning constraints, build on parts of the green-belt, tax unbuilt development land, let local authorities borrow more at current low interest rates to fund public or public/private developments... It would also be a good idea to increase taxes on usage (council tax) but cut transaction taxes which discourage mobility (stamp duty).
The proposals discussed in the survey are a good start, but they do nothing to address the problem of letting fees (which should be abolished entirely), of high deposits (which should be capped at 3 weeks' rent) and of the general powerlessness of tenants vis a vis landlords.
Also, can we start an awareness campaign on the regulations on housing standards aimed at tenants and landlords alike - so that both parties know the landlord MUST ACT (and must act FAST) when, say, the boiler breaks down, there is one bathroom for 11 housemates and mice start a colony in your attic?
More importantly, can we give greater and swifter intervention powers to Council when subnormal housing conditions are reported by desperate tenants? Box rooms (closet-sized rooms, often with no window) for rent are tecnichally against the law, yet box room ads proliferate on Gumtree.
And finally, let us start considering capping rent. If a single room in Canning Town at a 20-minute walk away from the Tube can now go for £500 a month, then there really is no value for money anymore.
P.S. can we also make it mandatory for landlords of HMOs to provide wi-fi to their tenants (who can they pay the internet bills) and to be responsible for its continuous availability? Just a thought, but it is 2019 after all...
You are a bit late tenants fees have already been banned and deposits capped at 5 weeks.
This issue is not covered in the proposed changes - the shortage of property available to rent works against the renter. Selling local authority housing to existing tenants reduces the available stock to rent (the assumption that new houses would be built to replace those sold has never been achieved).
Some controls on rent increases would be good but should not penalise the landlord.
A major problem is "amateur" landlords - people with one property who may or may not want to return or sell on at a profit. These people need regulating. We had to move four time in five years when property prices began to rise - all with the excuse that the landlord wanted to sell. This should be stopped as an excuse to get rid of tenants.
These latest proposals are rubbish and do nothing for long-term renters and families who deserve security in return for buying the landord's house/flat for him via sky-high rentals.I am paying way more than a mortgage would be on my house - but because I can't get a deposit together I am stuck.
London has become the rip-off capital of the world.
Then why not move somewhere cheaper for a few years and save up? Almost everyone I know just moved further out so they could afford to get somewhere with more space (esp for children). Everybody would love to live a couple zones closer to zone 1 too!
R4949, I agree. I think we need to have more social housing for people who need stability, e.g. families on low incomes. Also, I think we need measures to limit demand for London's housing, in order to limit the increase in prices. Sadly, our Mayor has overlooked the benefits of Brexit for the housing supply, choosing instead to lobby for high immigration, free movement policies, which severely damage the availability of housing for Londoners.
Chuddy, I agree that housing in Zone 6 is generally larger, cheaper and more practical for families than housing in Zone 1. However, I don't think that solves the problem of instability in the private rental sector, nor the need for better regulation, nor the overall problem of excessive rents. Although the housing in Zone 6 is the cheapest, people have to spend a lot money on their travel to and from work. Longer travel times also lead to longer hours of childcare, which can be very costly for parents.
Thanks everyone for taking part in this discussion.
What is your experience of living in the private rented sector?
Do you feel comfortable making complaints to your landlord about repairs or other issues?
Have you ever experienced being evicted because you made a complaint to your landlord or were you asked to pay a higher rent that you could not afford?
Talk London
is there anyone renting in London who hasn't been evicted due to a crazy hike in rent?
Our rental property was managed by Dexters. One year, they raised the rent by 33% (£500 per month) and, when we asked to negotiate a lower figure issued us an eviction notice under section 21. When we asked for an extension on the grounds that my mother was in the house and was gravely ill, they refused. They consistently demanded to show the house, even though this was catastrophic for my mother. We went direct to our landlord, who had no knowledge we had been evicted. We were able to negotiate the rent increase down by 50%, which was still huge for us. It was so stressful for my mother that she died. I still hold Dexters responsible for the chaos they caused and the callous way they handled the situation which shortened my mother's life by about 6-9 months and made her last days so awful.
We have an awful experience with KFH and landlord where we had three weeks without hot water during the winter months, only because the landlord wanted to use his own handyman. We made several complaints without any action. When it came to renewing the lease KFH wanted to raise the rent by approx 12% because we were living in proximity to Canada Water (1.5 km awy) and rents were rising. Looking at actual statistics this wasn't entirely true. We negotiated it down to 7% for six months with an extra 2% hike after that. After six months we actually decided to terminate the contract because we didn't want to spend another winter in the house.
This is where it really went bad. The landlord had had virtually the same tenants for 5 years who had done a lot of repairs themselves. Yet when we moved out he starting claiming all kinds of damages that were unrelated to the tenancy or simply wear and tear. Thankfully we had the check-in inventory to prove that his claims were all mostly false and the deposit scheme sided with us. On top of this, KFH transferred the wrong amount to the TDS which meant that us tenants had to pay the £150 the TDS rewarded to the landlord (which we obviously did), then KFH tried to blame the TDS for the mistake!
Having rented in Sweden, Paris and Australia I find the UK rental system such a joke.
Being unable to afford my rent is the story of my life.
I don't have such extreme horror stories as some other commenters, but I also find that I am vulnerable to excessive charges, insecurity and fear of eviction. It's particularly difficult to start a new tenancy because you are required to pay 6 months' rent up front, unless you earn so much that your rent takes up no more than 40% of your monthly income, after tax. I've had to borrow money to pay the upfront costs of this. The longer the period before your landlord can evict you under Section 21, the longer the period you have to pay rent upfront.
In addition, there are excessive letting agents' fees, not just at the start of the tenancy, but also every time you try to renew the contract.
If you find that a lot of the maintenance goes wrong in the property, the landlord might decide to evict you to make way for the builders to come in and renovate the place. Privately rented accommodation is fundamentally unstable.
Whilst as a landlord (with just one very new property in excellent condition - ask my tenants!) I support the principle of longer tenancies, this has to be done in a way that is equitable from both the tenant's and the landlord's perspective.
The problem is that if you enforce a very one-sided open-ended tenancy, it starts to make rental much less attractive from a private landlord's perspective.
Once the current sales market stabilises (which it will do within the next couple of years - history tells us this) and if this proposal goes ahead on this timescale (which it can only do if it has government support too - I guess that would only happen if Labour was in power), then there would be a significant proportion of private landlords who would look to sell their properties - it just wouldn't be worth their while to rent them out anymore.
If that happens, there would be an even bigger shortfall of private rented properties on the market, forcing up rental rates substantially (which would already be heading upwards due to the increased cost of doing business incurred by the remaining private landlords, thanks to all the changes) - how could this be good for tenants?
Regarding rent controls, this has been clearly shown to be a disaster in most markets where it has been tried (Germany is probably an exception here, but the demographics there are very, very different to the UK).
Market forces should dictate rents, with strong regulation in relation to property suitability (condition) for rental - this side of things is frankly pathetic at the moment.
With strong rent controls, most landlords that had bought their properties in, say, the last five years would no longer be able to cover their costs and would be forced to leave the market (i.e. sell their properties) - so how exactly would this help anyone looking for somewhere to rent?
Rent controls were introduced in Vancouver for a short time and this meant that Vancouverites were able to continue living in the city of their birth. When these controls were removed, rents shot up and it is no longer possible for a Vancouverite to rent (or buy for that matter) in Vancouver, which has become a city where only the wealthy can afford to live. To put this perspective, it costs $3000 per month for a 2-bed apartment - which is similar to the cost of a new build flat to rent in central London. Again, only affordable for the wealthy. If only the rich can live in your town it has lost its soul.
Every property should be inspected on the first day of the tenancy, for cleaning and condition, mine has just been done, the bloke who did it wrote a cracking good report covering all the damage and maintenance issues, I now have an independent Inventory Report, so no argument at the end of the tenancy about cleaning or damages the cost is split 50/50 with the landlord so both are covered if there is a dispute, worth every penny.
Im also a landlord and have always gone the extra mile to make my tenants happy.I love having happy tenants and a good relationship with them and they often renew their contracts for many years.There is a great deal of trust needed and mostly I have had good experiences,but there have been occasions when my my property has been ruined by dishonest renters subletting etc.Im well aware that it isn't easy to get a deposit together,but as a landlord I simply wouldnt want to hand over my keys if there were no deposit.Costs for compliance for landlords is high,plus ground rent,building insurance etc( and the cost to buy a property in the first place and kitting it out) its not simply a case of sit back and see the money rolling in as some might believe and the goal posts for landlords are constantly being moved.I think so many more landlords would sell up if they couldn't even decide when they would like their property back or to have to justify their decision to a third party.Im sure that no landlord wants a void period when their property is empty and if they want it back for whatever reason that should be their own decision.This in turn would mean even less property available to rent if more landlords sell up which is already an issue with the recent changes.Re the issue of deposits,Perhaps banks and insurers could look into the possibility of starting a scheme with government to help renters with a deposit loan at a very low interest rate for those that are unable to save one that goes directly to the deposit protection scheme?They've come up with help first time buyers deposits so why not do something for renters?
Facilitate more properties being built.
The open ended rental agreements are one thing. What also needs sorting is the extortionate fees from agents.
These proposals are window dressing, short sighted and in essence an attempt to use a plaster to stem the flow from a major tauma. Short tenancies? Er, great. A woeful idea that will bring about a renaissance of the slums.
What the London Assembly have completely failed to grasp is the very elementary and glaringly obvious issue that renters have absolutely no rights what so ever, no right of reply and no ombudsman/organisation to intervene on their behalf. How about actual access to legal assistance regarding unsrupulous landlords, and dont even go there with suggestions about Citizens Advice Bureau, they are a joke. The scenario in this city is truly laudable, why do we not have an independent authority whom police and regulate land lords? Thereby landlords act in a cavalier fashion and run roughshod, "just move out" is always the go to solution. Canadian local authorities distribute licenses to landlords, if rent is hiked up unjustifiably, neceassary repairs not carried out, or they act in a bullying, harrasing manner, you as a renter indeed have rights and can challenge them. To truly enagage with generation rent, radical reassessment is required to deal with this serious issue, after all a lot of us are paying three to four times the amount of your average post war or baby boomers mortgage. The short comings and myopic nature of this pointless survey reveals how truly disengaged the contributors are in how many number of committees this draft went through prior to being published.
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