Thursday, 30 March 2017

Fresh perspective on renting

From: Inside edge

A new manifesto for private renters published today highlights the new thinking on housing emerging ahead of the general election.

This is the first of two manifestos being launched this week by new organisations with different priorities and constituencies to the existing ones. We’ll hear from SHOUT, the campaign for social housing, tomorrow but today it’s the turn of Generation Rent.

And it’s about time. Since the creation of the assured shorthold tenancy and the invention of buy to let, the private rented sector has more than doubled in size. That’s great news for landlords and letting agents but not so great for tenants with minimal security of tenure and consumer rights.

To illustrate my point, here are three recent bits of news. First, take a look at the limp DCLG guide to ‘How to Rent’. Second see the incredible story on Nearly Legal of the ‘the unacceptable face of London landlords’ who turns out to be the Conservative mayor of Barnet. 

Third, have a read of last night’s debate in the Commons on the Consumer Rights Bill, which saw the defeat of a Labour attempt to ban letting agent fees to tenants. Business minister Jenny Willott ignored evidence that just such a ban has worked in Scotland without increasing rents and pressed ahead with the coalition’s plans to ensure that fees are transparent.

That gave Labour’s Stella Creasey the chance to repeat one of the most memorable Commons lines about housing during this parliament. Transparency on fees is, she said, ‘a bit like telling someone who is tied to the train tracks what the timetable is for the trains. However, as Willott pointed out, Labour had 13 years in government but failed to act.

The major political parties have at last woken up to the need for action and to the fact that private renters have votes at the next election. Even the coalition has made cautious moves on transparency and redress, while Labour has proposed not just the fees ban but minimum three-year tenancies with limits on rent increases.

Generation Rent goes further in today’s manifesto that it says will make the private rented sector fit for the 21st century. Proposals include:

  • The right to a five-year tenancy, with flexibility for the tenant
  • A national register of landlords and licensing of letting agents
  • Requiring landlords to prove their properties meet decency standards
  • Rent increases linked to average earnings 
  • A right to buy for private tenants (based on the right of first refusal still available to long leaseholders and regulated tenants when their landlord decides to sell).

The manifesto also includes reforms that could be introduced while the legislation is being implemented or if the government insists on maintaining a voluntary approach. These include tax reform to incentivise landlords to offer longer tenancies and a change for longstanding tenancies to get extra notice at the end of a tenancy on top of the existing two months.

Without going into the proposals in detail, reaction from landlords will no doubt be hostile, although the intention is to promote a professionalised sector based on longer tenancies. However, as with the Labour plan for three-year tenancies, there could be obvious loopholes for landlords to exploit, such as a discretionary ground for possession where the landlord or a member of their family wished to occupy their property.

However, Generation Rent’s manifesto is not just about the current plight of renters, it also looks to the future of the housing system and what it calls ‘a permanently affordable private rented sector’.

This amounts to a scaled-up version of the community land trust model with government backing. ‘A secondary market of new private rented homes, built by government and sold to buyers at close to cost price, is one way to produce affordable homes for renters,’ argues the manifesto. The initial affordability would come from requisitioning public land. Buyers would be able to live in the homes themselves or rent them out, but only at a greatly reduced rent to reflect the cheap purchase price.

More detail is set out in a separate paper on Buying out of the bubble: A bubble-free housing market. This proposes £1 billion of state funding (plus private funding) for a first wave of 10,000 homes, with sales receipts funding future waves and prices capped at 110 per cent of the build cost. All homes would be sold leasehold with price inflation capped.  Subsequent sales could only be at the regulated value and rental incomes would be capped at a fair proportion of the regulated value. Housing associations and councils could buy the homes for social tenancies, with the right to buy limited to the secondary market.

The manifesto offers three mechanisms for achieving reform:

  • A new Landlord and Tenant Act introducing wholesale rather than piecemeal reform
  • A new Department of Housing, with a dedicated secretary of state for housing, bringing together oversight of the private rented sector and social housing, but also taking over housing benefit from the DWP and combining the skills, planning and housebuilding functions spread between different departments.]
  • A review of how the legal system treats housing cases including consideration of a new housing court of tribunal. 

How much of this actually makes it into the policy of the next government does of course remain to be seen. However, the contrast between the debate that Generation Rent is opening up and the one in the House of Commons last night could hardly be starker.

And this is just the start of what will be a big week for housing policy, with SHOUT tomorrow and the IPPR’S Condition of Britain report with new proposals on the welfare state on Thursday. 

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