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Rent reforms on the horizon: comparing home and abroad – Stanton

by: Rob Stanton, sales and distribution director at Landbay
  • 17/05/2024
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Rent reforms on the horizon: comparing home and abroad – Stanton
With rent reform on the horizon in England and Wales, what are rental systems like in European countries?

Despite the common assumption that more people rent in Europe than the UK, the opposite is now true. In the UK, in 2022, 35.7% of the population rented, according to Statista Research Department. In the EU, in the same year, according to the EU, 31% lived in rented housing.

In all member states, except Germany, owning has become more common.

Rental controls may have something to do with this turnaround. There is some evidence that the tougher controls have had a negative impact on rental housing supply in some European countries, both for new construction and existing rented housing.

The British Property Federation’s report The Impact of Rent Control on the Private Rented Sector points out that many European countries have abolished rent controls on new-build housing in an attempt to reverse this trend.

 

France 

France is trialling a new rent control system. This is for urban areas with a population of over 50,000 where there is a marked imbalance between housing supply and demand, and certain conditions have to be met, including a big gap between the average rent in the private sector and the average rent in the social sector.

Unsurprisingly, rent control areas include Paris and other big cities such as Bordeaux and Lille. 

Tenancies are always fixed term.

If the landlord is an individual, the duration is three years. But if the landlord is a company, the contract’s length is six years. For furnished student accommodation, the length is either one year or nine months.

No one can be evicted during the winter months. Landlords can make a tenant move out if they need the home for themselves or for a relative, if they are selling the home or if the tenant has not paid the rent and committed certain other faults.

But groups such as over-65-year-olds on low incomes are protected. 

 

Germany 

Rent overcharging is banned in Germany, and landlords commit an offence if they charge over the standard local rent by 20% or more. 

In areas with a tight housing market, landlords are restricted from re-letting properties at more than 10% above the local comparable rent. Each federal state independently determines what qualifies as a tight housing market. 

Rents can be increased either by agreement, or by law. Through an individual agreement between the parties to the tenancy agreement, rent can be increased during the current tenancy.

By law, it can be increased up to the standard local comparative rent, following modernisation, due to changes in operating costs. 

Letting for a fixed term is only permitted if there is a reason within the law. 

 

Spain 

In Spain, if the landlord makes improvements to the property, they can increase the rent. However, the rent must meet certain standards and can’t be more than 20% higher than the current rent. 

Tenants can sign a contract verbally or in writing. There are two types of rental agreements: short term or long term.

A short-term rental agreement is for a period of up to a year and is not extendable. A rental contract is long term when the rental period is at least a year and can be extended. 

After the first year of the tenancy agreement, the landlord can claim the accommodation for themselves or family but must give the tenant two months’ notice. This must be in the tenancy agreement. 

For a long-term tenancy, if a landlord doesn’t terminate a tenancy four months before the end of the five years, the tenancy is automatically extended annually for a maximum of three more years.

 

Denmark 

In Denmark, the value of rented properties built before 1991 is determined on a comparable price to similar properties in the area. The rent for the comparable property must be cost-related (relatively low rent vs market rent).

If a tenant complains about the rent, this can be considered by a housing tribunal.

If the property was built after December 1991, the landlord can determine the level of rent, but it must not be unreasonable. 

The landlord can only force a tenant to move out if they’ve done something wrong or if the property needs major work. If the landlord chooses to evict, they need to provide the tenant with three months’ notice. If the landlord wants the property for themselves, they need to provide a year’s notice. 

The landlord always has 12 months’ notice of tenancy. Properties can only be rented out on a fixed-term basis if there is a plausible reason such as wishing to sell the home. Without a plausible reason, landlords have to rent out on an indefinite basis.

Ahead of the Renters Reform Bill passing into law, landlords can look to Europe to see how rental restrictions work in practice. 

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