The Labour Party has changed its approach to the rental sector, from previously promising mandatory tenancies of three years and rent controls, to going even further and committing to delivering indefinite tenancies. These plans follow the German example for residential PRS (private rented sector) tenancies in England.
John Healey, Labour’s Shadow Housing Secretary, has pledged that if Labour was elected, it would provide extra protection for private tenants in England against eviction, by offering indefinite tenancies, which would be legally binding.
According to Mr Healey, the new tenancies would be based on the rules which operate in Germany currently, where tenancies, on average, last 11 years, compared to the average tenancy length of 4 years in England. In an official statement, Labour explained that its proposed changes would revolutionise the PRS sector, with rent increases also limited, as many landlords use a tenancy changeover as an excuse to raise rents.
However, tenants will still be able to decide to leave a property after fulfilling a notice period.
Labour alleges that in England, landlords decide to end around 18 per cent of tenancies. This is a figure which is disputed by many industry experts, who state that the actual number of tenancies which are ended by landlords is under 10 per cent, with the most frequent reason for terminating tenancies given as rent arrears.
Labour explains that currently, a tenant can be evicted with no reason provided, despite the fact that no wrongful action has taken place. Under a German-style system, tenancies are open-ended, with tenants only evicted on defined grounds, such as committing criminal behaviour in the rental home or not paying rent.
Mr Healey has further stated that the power imbalance and insecurity at the centre of the housing market means that tenants are scared to report issues for fear of eviction, and families are forced to vacate properties at short notice. He also claims that the current government is allowing bad landlords to take advantage of good tenants.
However, Labour has failed to state how it would effectively and efficiently deal with evictions, while avoiding driving private landlords from the sector. Currently, our cumbersome and slow county court system means that it can take some landlords up to a year to evict tenants who fail to pay rent, leaving them thousands of pounds worse off.
The German system of tenancy also varies significantly from Wales and England, and responsibilities for tenants are far more onerous in Germany. German tenure may provide more security, but there are more legally binding duties concerning maintenance and the property’s condition for the tenant. This makes the system similar to English commercial insuring and repairing leases, where the tenant becomes legally obliged to ensure the property remains properly maintained and in a good condition to avoid facing hefty bills.
In Germany, almost 50 per cent of households choose to privately rent. However, most tenants must have significant investments in the property, such as through equipment, kitchen and bathroom furniture, which makes the tenant feel more at home, but also adds to moving costs.
Rent increases in Germany are also linked to specific indices, and initial rent prices can be arranged at up to 50 per cent higher than comparable rental prices in the same area.
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