It is to their credit that Labour’s frontbench housing team, Hilary Benn and Jack Dromey, have invested a lot of energy in seeking to understand the workings of the private rented sector and to develop a distinctive new policy.
Their latest document sets out the policy directions they wish to move in and they have addressed the two thorniest issues: rents and security of tenure.
They trace the huge changes that have taken place in the sector in the last two decades, as the failure of supply, first in social renting then for affordable home ownership, together with the emergence of buy to let mortgages, created a whole new market for private renting. The emergence of ‘generation rent’ has been spectacular, even if it has not been led by consumer preference – there is still a strong preference for home ownership or social tenancies.
One of the biggest changes has been the reinvention of private renting for families – now 1.1 million families with children are private renters and the number is growing fast. It is for these families that the toxic mix of high and unpredictable rents and insecurity of tenure is most damaging. Benn and Dromey point out that private renting families are eleven times more likely to have moved house in the last year than those with a mortgage. Frequent moves raise costs for both landlords and tenants and only benefit agents and help drive rent increases. They are extremely destabilising for families and even the Government accepts that there is an impact on children’s attainment. Private renting is increasingly the destination of homeless families but the end of private tenancies is also now the biggest cause of homelessness – the revolving door.
Benn and Dromey are developing policies that reflect the practical realities of the current housing market and strengthen the business model for most private landlords. The interests of tenants and landlords could be better aligned than many recognise – both could benefit from longer term tenancies and more predictable indexed rents, although agents would lose out. They also challenge the practice that buy-to-let mortgages often insist on tenancy lengths of one year or less.
Most calls for change or regulation in private renting are met with howls of outrage about bringing back ‘old-style rent controls’ that stopped landlords making a return. Benn and Dromey are clear that that is not where they are heading and that the viability of the sector is crucial. They intend to look at the tax treatment of private renting to see if arrangements could be made for depreciation and the treatment of rent rather than profit as income. Lessons from other countries, and especially Germany and France, with more successful private rented sectors and a less short-term culture, need to be learned.
Launching the document, Labour’s Shadow Housing Minister, Jack Dromey MP, said:
‘Families need stability to plan where they send their kids to school and certainty to manage their household budgets.
‘That’s why Labour is committed to reforming the private rented sector so it works for Britain’s families. With longer term tenancies and predictable rents, the private rented sector will offer the affordable and stable homes that renters need.
‘Families will feel that their rented house is a home and it will help strengthen communities as people put down roots and get to know their neighbours.
‘Labour’s One Nation housing policy offers stability for families, certainty for landlords and strengthened communities.’
More quotable quotes
Stuart Law, Chief Executive of Assetz plc, ‘one of the top property investment specialists in the UK’ told Moneyweek magazine (7 Dec 2012): ‘Short term contracts are really destabilising. They really upset tenants. I’ve turfed some out to do renovations or just to up the rent, and they get really upset’. And his investment advice? ‘I keep saying, year after year – sell your retail shares. In the end, this is all going to come home to roost on the high street. Because I will keep putting rents up, and will find tenants who will pay the rent, and they will stop buying handbags, and stop going out for expensive meals. I will have that money. I will decimate the high street. So sell the retails shares.’