LONDON May 16 A pledge to introduce rent
controls by Britain's opposition Labour party could dissuade
companies from investing in the construction of homes for rent,
two big landlords have warned.
Labour leader Ed Milliband said last month he would bring in
rent controls and longer tenancy agreements if he wins next
year's election, which he said would help the rising number of
Britons who rent rather than own their homes.
"People get very nervous when the words 'rent control' get
bandied around," said Andrew Cunningham, chief executive of
Grainger Plc, which owns and manages a 1 billion pound
($1.7 billion) portfolio of rental homes. "A lot of institutions
take ... fright at hearing those words."
"(Labour) said the rents would go up by a reference to some
sort of average figure in the market place, (which) we think
would not get what they want which is an improvement in
standards," Cunningham told Reuters on Friday. "If you were a
very good landlord, why would you outperform just to get the
average market rent?"
The CEO said that while the company supported longer
tenancies, such as three-year leases, there needed to be more
clarity over how rents could be regulated.
Rob Noel, chief executive of Land Securities Group Plc
, Britain's largest listed property firm, also said the
upcoming election was causing uncertainty in the industry.
Citing Milliband's pledge, he said on Thursday: "That would
be a serious concern to our industry, it would absolutely put
the brakes on residential development which we all know is
A rising number of pension funds and insurers have snapped
up or built thousands of British homes to rent out over past two
years, betting that a shortage of housing and mortgages will
produce a generation of renters rather than owners.
Yet the rental sector remains highly fragmented, made up
mainly of individual landlords who each own a small number of
buy-to-let homes. Some analysts have argued that an influx of
investment from larger institutions could improve tenant
conditions, as such companies may be more likely to offer longer
tenancies to secure stable income and returns.
($1 = 0.5954 British Pounds)
(Editing by David Holmes)