Almost 9 million people now rent their homes from private landlords in England, a remarkable social change which has occurred over the last two decades as rising house prices have priced more and more people out of owner-occupation. Unfortunately, a significant minority of them find their housing arrangements unsatisfactory, being forced to deal with damp and unsafe conditions, unco-operative and unprofessional landlords and rogue letting agents.
Most private renters pay a lot to fulfil their housing needs, yet have poor security of tenure compared to renters in other European countries, which is exacerbated by the freedom landlords usually enjoy to impose above-inflation rent increases. Insecure housing throws a pall of insecurity over the rest of tenants’ lives, making it more difficult for them to build links with their communities, form stable relationships and provide a stable environment for raising children, all of which imposes indirect costs upon the rest of society.
Yet most politicians continue to ignore the problems facing Britain’s army of private renters, perhaps because they are disproportionately younger and less likely to vote. However, the housing charity Generation Rent – formerly the National Private Tenants Organisation – is trying to change this by launching its official Renters’ Manifesto ahead of the 2015 general election.
Dealing with insecurity
The Renters’ Manifesto advocates changes to housing policy across a range of different areas, which are broken down into four sub-headings: Security of Tenure, Affordability, Management and Conditions. They suggest a number of new policies that apply to each of them.
On Security of Tenure, Generation Rent’s big idea is to introduce a legal minimum tenancy length of five years’ duration, with appropriate break clauses for both parties. This would end the current situation where most private renters can only sign up for Assured Shorthold Tenancies lasting one year or 18 months, which come with the prospect of being forced to move on – or face a rent increase – when they expire. To win the support of landlords, Generation Rent suggests that the tax system could be adjusted to penalise those who don’t offer longer-term tenancies, either by charging more income tax on landlords’ earnings or making them liable for higher capital gains tax when they sell their properties.
On Affordability, Generation Rent proposes several options, including one that would be rather radical. In a secondary paper released alongside the Renters’ Manifesto called Buying out of the Bubble, they argue that the government could use public land to build new rental housing and then sell this at cost price to landlords, with the properties holding a covenant that says they cannot be re-sold at a higher price and that rent has to be capped. Generation Rent argues that landlords would gain from having the rental income, even if they won’t be profiting from the increasing value of their investment, creating a long-term supply of affordable rental housing, while the money recouped by the government from sales could be re-invested multiple times in creating further new properties.
Alongside this idea, they also propose various ways in which rent levels could be controlled by more conventional means. In essence, these boil down to either setting rent caps for particular areas, via a body such as the Valuation Office (in Germany, groups of tenants and landlords come together to determine the maximum rent caps in certain areas), or creating a requirement for rent increases to be linked to an index of inflation throughout the duration of a tenancy.
With regard to Management, Generation Rent argues that it is time to end the situation where almost anyone can become a landlord or a letting agent without proving they possess any of the necessary skills and facing very little in the way of regulation. Instead, they argue that landlords and letting agents should have to register with a national registration scheme designed to root out bad practice. A similar scheme has already been launched by Newham Council in East London, using a model which it would not be difficult to roll out on a national scale.
The idea of licensing landlords is linked to Generation Rent’s recommendations on the fourth area of their manifesto, Conditions, where they argue that – as part of a national licensing scheme – landlords should have to prove that their property meets certain standards of habitability, possibly using some kind of national health and safety standards. Local Authorities would be allowed to fine landlords who were in breach of the regulations, with the income from fines being used to fund the enforcement of these rules.
Will the politicians listen?
Housing is one of the defining issues of our times, and looks set to be a key political battleground at the next general election. Although some of Generation Rent’s policy recommendations are likely to be controversial, at their heart is the basic concern that housing has such an important impact on everybody’s daily lives that an industry which now houses 9 million people cannot be allowed to continue operating in its current laissez faire manner.
Judging by the response to IF’s previous report on the taxation of the buy-to-let sector, Why BTL (buy-to-let) equals “Big Tax Let-off”, the political parties are beginning to take note of the widespread discontent with Britain’s private rental market. Now that Generation Rent have told them what renters want at the next general election, the only question is whether they will listen.