Labour's rental cap etc

[Mario149]

MODS: I accidentally posted this in NPE, can you move it to business?

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I'm not starting this as a thread on the rights or wrongs of the policy, I'm just trying to understand it as someone who, with my gf, rents out a couple of flats. We're not BTL landlords who make a living out of it, just fortunate to have 2 properties as investments.

Initially the rent capped to inflation thing had me quite worried, but from digging a little more, it seems to only apply to increasing rent during a multi-year contract (which I didn't realise you could do??) or if re-letting to the same people on a new contract/extension? Is this correct?

If the latter, it just seems that it if the market moved significantly we might, for investment reasons, be forced to deny tenants who wanted to renew the opportunity to as the market may have moved 10% up but we'd be limited to say 1% with them, whereas if we found new tenants, we could again charge market rate (albeit having to divulge what the previous tenants paid).

Is this about the sum of it? Or are these Labour proposals more severe than this?

[Mario149]

I don't even think you're going to see cheaper short term rents. First thing I did yesterday was email my letting agent and ask her whether the market rates for the flats we let out had gone up since their tenancies started. We let at least one of ours slightly below market rate for quick occupation, but if Labour win and decide to introduce this cap and the market rate has increased, to protect our medium term income from them we might have to give notice and start a new contract (possibly with new tenants) at a higher rate. Or at the least not allow tenants to renew if the legislation is already in effect as we wouldn't be able to charge what the flat is worth to the existing people, which seems like madness: turning down good tenants who want to stay and pay market rate. Admittedly this is london and one bed flats so somewhat different to other situations, but still.