How do we make renting better for the increasing number of people who rent from private landlords? It’s a question that’s getting a lot more attention as the number of renters rises and the profile of renters changes.
There are now more than a million families renting their homes from private landlords. People on higher incomes are increasingly having to rent, as buying moves beyond their means. And those in need, who in the past would have got social housing, are living in privately rented homes supported by housing benefit. As a consequence rents are rising rapidly.
This has led to calls for the introduction of rent controls: maximum caps on the amount landlords in can charge. I share the sentiment behind these calls, but there are more realistic and popular measures Labour should advocate.
The top-down bureaucracy needed to set and enforce rents centrally is unlikely to be either effective or popular. And it’s a form of regulation which doesn’t put power or choice into the hands of tenants. It is also a particularly bad time for Labour to advocate new quangos with expensive administration and far reaching and intrusive powers.
We are also seeing the beginnings of investors financing the building of new homes specifically for rent. Regulation of rents in a slowly emerging market would choke off this supply of new homes – at a time when private and public developers are building at an all-time low.
So, what else? Labour should focus on security first, then predictability of costs. Affordability of rented housing will ultimately be achieved only when we are building as many homes as we need.
Under the normal contract that renters sign, they can be asked to leave their home with two months’ notice and their rent can be increased by any amount each year as the tenancy expires annually. That’s unfair if you’re single or a couple. It’s a potential disaster if you’re a family with children in school and planning carefully every month to make ends meet.
Labour’s alternative could be to give renters the right to trigger a five-year secure tenancy. This right could only be triggered after a year of problem-free renting, with no rent payments missed or records of antisocial behaviour. Once this longer tenancy is triggered, annual rent rises could be limited in the agreement to, for example, 2-3 per cent. So renters could plan for several years in one place and budget properly for the cost of their housing.
There is a fear that any regulation of landlords will force some out of the market. That may be true even with this proposal. However, the consequences of this are not as serious as landlords’ advocates say. Those who choose to sell up will find that their properties are bought by first-time buyers or other landlords willing to provide a longer-term service to their tenants.
It’s time to give renters more rights in their homes. It’s the wrong time to give control of our rented market to a new body distant from tenants’ needs.
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Tony Clements is the editor of Red Brick Blog
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The only long-term solution to rising rents is increased supply of housing stock, both to buy and to rent. The policy prescription here – greater security for long-term tenants – appears to be a solution in search of a problem – where is the evidence that a substantial number of tenants in the private sector are unable to find long-term lettings?
The “evidence” my dear Antoine is that the only security in law is the 6 month tenancy which is not worth the paper it is written on according to the legal advice I have; consequently I do not have one. The current landlord “trusts me”…As a care worker who has always paid his rent would you care to enquire how many times I have had to move in the past due to the demands of the landlord ? I’m fifty; it works out at every 2/3 years.
Tony, what world are you living in?
The increase in rents has attracted a new wave of professional criminals into the landlord business,
1) cash in hand without tenancy agreements
2) new unregisteres Houses in Multiple occupation
3) extensions without Building Regs approval or Planning Permission
4) renting out beds in sheds
Unless we have drastic new laws to deter these people, including locking them up and confiscate their freeholds, what would be the point of offering more rights to those who have already got signed contracts?
I personally have believed there needs to be regulation of rents, through a Living Rent or some form of rent controls managed by an independent commission not the state, the main reason being to cut the housing benefit bill down. I think that a national landlords’ register where we refuse housing benefit to homes that do not meet the Decent Homes Standard should be party policy, or maybe we just refuse housing benefit to homes that do not abide to some form of rent controls.
What is to stop landlords who don’t wish to be tied into a five year tenancy giving their tenants notice at the end of the first year? This policy could lead to even less security/predictability than we have now. Labour needs to develop a comprehensive and long-term housing strategy across all tenures based on what it believes to be the right balance between renting and owning and the prevention of exploitation.
Buy to let returns are 11% that is a scandal off the poor…on a market that is 30% overvalued by the IMF…let it collapse, structure the landlords out, buy their houses via the nationalised banks…fair rent act set at 70% of current rental value to reflect IMF valuation.