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Damning Independent Assessment of Shelter’s Proposals

October 29, 2013 | Company News   Landlord News  

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Michael Ball, a Professor of Urban and Property Economics at Reading University, was commissioned by the Residential Landlords Association to conduct an independent assessment of Shelter’s five-year tenancy proposals. He said that under the Shelter model, “landlords would face higher risks and lower returns; while the beneficiaries amongst tenants would be few and the losers many”.

Under the Shelter model, five-year contracts would be standard. If a tenant wanted a short-term contract, the landlord would have to seek permission from their local authority. The report warns that in student dense cities, like Leeds, local authorities would be swamped.

Tax incentives to encourage the “stable rent contract” proposed by Shelter would also penalise young professionals and students who want short-term contracts, as they would ultimately have to shoulder the cost of increased tax on the landlord, as the landlord’s expenses are reflected in the rents they set.

The Shelter proposal also includes rent increases tied with inflation to ensure landlords do not unfairly jack up their rents. However, this would leave tenants worse off, as average market rents have increased far below the rate of inflation over the last eight years. Rent controls would also deter investors, resulting in an even greater shortage of accommodation.

Alan Ward, chairman of the RLA, said, “Not only would rigid five-year tenancies straitjacket the sector, but would, as Professor Ball has noted, lead to untold damage at just the time that we need more, not fewer, homes, and leave tenants worse off.”

 

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