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Tenant Charter Could be "Counterproductive"

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United Kingdom  Eric Pickles  Landlord Assist  Graham Kinnear  Tenants Charter 

Tenant Charter Could be "Counterproductive"

By - Wednesday 16 October 2013

The tenants charter proposed by the government to improve the rental market could be counterproductive, according to one industry expert. Landlord Assist explained to Property Wire that the reforms could cause the market to destabilise by working against landlords and forcing rents upwards. What's more, there is fear that the charter could drive the quality of accommodation down.

The changes are designed to give tenants the ability to request longer tenancies, which will provide stability for families and enable renters to avoid hidden fees. Communities secretary Eric Pickles said: "The private rented market is a vital asset to this country, and plays an important role providing flexible accommodation for those who do not want to buy, or are saving up for a deposit. The last thing we want to do is hurt hard-working tenants by increasing costs and strangling the sector with red tape. But families deserve stability for their children, and all tenants deserve a good and transparent service from their landlords and lettings agents."

Yet Graham Kinnear, managing director at Landlord Assist, claims landlords are now fearful that they will face significant barriers under the proposals and could have to deal with greater rental arrears. This may lead to increased costs and difficulty obtaining possession if a tenant defaults on payments, Property Wire reported. Mr Kinnear said landlords will largely have little choice but to pass on rising costs to tenants through rents.

There are also legal implications to the reforms, with some potentially defaulting on their buy-to-let mortgages as many lenders only permit a six or 12-month tenancy. Longer tenancy agreements could impact a bank's security, especially if property is repossessed and needs to be sold. Consequently, lending will become more constrained - the exact opposite of what the government is trying to achieve. This has the ability impact supply levels. Having enough rental properties in the market to meet demand will be integral to ensure the UK can manage its housing shortage.

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