Housing costs eat up a large chunk of every family’s budget. While homeowner’s with fixed-rate mortgages keep that cost stable, tenants are at the mercy of someone else: their landlord. And, in some cases, that means moving a lot.
Your home is supposed to provide stability; it’s a place you can return to day after day to escape the rest of the world. But not everyone gets to enjoy this comfort long-term. Tenants see rent prices rise regularly, and may even have to manage an unexpected move.
A possible solution to the constantly shifting rental market is more government regulation. And some new regulations may be on the table.
Potential Points of Legislation
Short letting periods mean that contracts are renegotiated more frequently. For example, a six-month letting period means that the price of rent can change at each renewal. That means some end up seeing a cost increase twice a year. And those price increases are set at the landlord’s discretion.
That leaves tenants with a high level of uncertainty. They can’t plan for their expenses long-term, as there is no guarantee what their rent will be. In some cases, the increase can make the property unaffordable, which necessitates a move for the tenants.
And moving isn’t cheap. Moving requires deposits on the new property, agents’ fees, as well as the costs of the move itself.
To help provide tenants with more stability, regulations are under consideration that would extend the minimum length of the letting agreement, controlling the maximum amount that can be charged for rent, and limiting the increase allowed when a contract is renegotiated.
Support for New Regulations
It may be a surprise, but many people are in favor of more regulations. In a recent survey, as reported by the BBC, 76 percent of the survey respondents support government intervention regarding terms of lettings. 74 percent even favor maximum caps on private rent prices. Other areas that received majority support included restrictions regarding how much rent prices can rise when a contract is renewed and changing the standard minimum letting period to 12 months (currently, it’s six months).
The support correlates to the fact that many people direct over one-third of their disposable income towards rent. And, if rental prices increase faster than wages, this statistic can get worse.
Risks of Increased Government Intervention
One concern is that an increase in government regulation will lead to some landlords leaving the market. And, once the property sells, it may become a family home instead of a rental. The Residential Landlords Association believe the answer is in enforcing current regulations more thoroughly while encouraging current and potential landlords to invest in the market.
If rent prices are restricted based on approved maximums, it may make being a landlord less appealing.
Government Housing Efforts
The government designated £3.7 billion in England for housing projects. This includes infrastructure improvements and the building of new housing. £1.4 billion is allocated to affordable housing specifically. Local authorities can bid for funds under three approved schemes, one being affordable rent.
The impact of these developments won’t be known until they are in place, and it takes time to build new housing. Additionally, just because new regulations are under discussion doesn’t mean they will be enacted.
In the meantime, tenants need to prepare for the chance of having to move, a feat that is often easier said than done.