Labour’s three year tenancy proposals will deplete rental housing stock

Labour’s three year tenancy proposals will deplete rental housing stock

  • Three quarters of ARLA letting agents concerned Labour’s three-year tenancy proposal will see landlords exit the market and reduce supply
  • Over a third of ARLA agents agree the Conservatives’ pledge to build 200,000 new starter homes will benefit the private rental sector the most
  • Demand for rental accommodation down in March, whilst supply rises, according to ARLA March PRS Report

Almost three quarters (72%) of ARLA letting agents believe that Labour’s proposed three-year tenancies, with a cap on rents will see landlords pull out the market, and lead to a decrease in the supply of rental property, according to the Association of Residential Letting Agents (ARLA) monthly Private Rental Sector (PRS) Report for March.

The monthly PRS report found that landlords in the North West and East Midlands would be most likely to pull out the market, with 84% of ARLA agents in these regions expressing concern.

As well as seeing a reduction in landlords and therefore supply of rental housing, three quarters of ARLA members (74%) believe the proposed three-year tenancy agreements with rent controls and strict rules to make it more difficult to evict tenants will not actually benefit tenants at all, up from 69% in February.

Almost two fifths (37%) of ARLA agents agree that the Conservatives’ pledge to build 200,000 new starter homes offered at 20% discount to first-time-buyers would be best for the private rented sector. This will enable a segment of the current British renting population to get on the housing market, freeing up more properties for renting, helping to ease supply and demand.


The upcoming election is having an effect on the current levels of supply and demand for the PRS, as people hold out to see the outcome. Demand is down by 10% in March with just 36 house-hunters recorded, down from 40 in February. Supply is heading in the other direction, with a rise in the number of properties managed per branch; 192 properties in March, up from 184 the previous month. Rents continue to increase for some, as three in ten ARLA agents (32%) said that rents increased between February and March (the same increase as the previous month, 31%).

David Cox, Managing Director of ARLA comments: “The third ARLA Private Rental Sector Report identifies what those at the heart of the sector are most concerned with – and excited by – in regard to the upcoming General Election. A vast majority of ARLA letting agents are worried that Labour’s proposed three year tenancies with strict caps on rents will only cause the gap between supply and demand to widen. Flexible tenancies are what makes the sector work, if this changes, some landlords will be forced to exit the market and tenants are likely to automatically incur rent hikes and feel driven to stay in agreements for longer before getting on the housing ladder; thus not freeing up rental properties for other tenants.

“The proposals are aimed at reducing opportunities for landlords to raise rents and to create stability for tenants, as Ed Miliband outlined yesterday. However, Labour’s proposals aren’t necessarily the solution. If you put a cap on rent increases above inflation, tenants are likely to experience automatic annual hikes. Whereas, in reality, landlords appreciate good tenants and would avoid raising rents to retain them. Our March report shows that the average time tenants stayed in a property is 17 months and a third (31%) of agents reported that they had successfully negotiated a rent reduction for tenants. So, if this law comes into play, instead of tenants getting a potential reduction, they may be more vulnerable to automatic increases.

“It will be interesting to see what happens on May 7th. We need more homes and while house prices are still sky high with no signs of these dropping any time soon; getting onto the property ladder is a difficult feat. Therefore, renting a property is the only option for many. However, we are concerned that current government policy on housing cannot deliver what is required.”

For more information and the full report, please visit the ARLA website:

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