Friday, 18 April 2014

Learning lessons

From: Inside edge

The plight of families with children highlighted in a report from Shelter illustrates yet again why private renting in England so urgently needs reform.

If the experiences of tenants facing damp and disrepair and soaring rents are depressingly familiar, the report adds detail to what has become a way of life for the one in five families with children who now rent their home privately.

The insecurity inherent in short-term tenancies means that one in 10 of 4,000 families surveyed have had to change their children’s school as a result of moving. They were nine times as likely to have moved in the last year as families who own their own homes.

While 44 per cent of parents feel their children would have a better childhood if they had more stability in their home, less than 10 per cent said they valued the freedom and flexibility that renting gives them.

The report quotes the case of Helen, who has lived in nine different houses with her family since her eight-year-old daughter was born. The daughter has already moved school once and now they face moving again because the landlord has stopped paying the mortgage and there are no other rentals available nearby. Helen now has two other children at school but the chances of placing all three children in the same school are very unlikely.

Add cases of sudden rent rises, rip-off letting agent fees, losing your home for complaining about disrepair and the everyday struggle of affording the rent and you have millions of people crying out for more stability but unable to afford to buy or stuck on the waiting list for social housing.

Shelter is promoting a stable rental contract that would ‘give renters five years in their home during which they could not be evicted without good reason’ and a guarantee that rents would rise by no more than CPI during the five years. Renters would be able to give two months’ notice to end the tenancy at any point but landlords would have the right to end the tenancy if they sell the property.

As I blogged on Friday, there are signs that some small things are starting to improve for private renters including some (limited) action at last from the government on letting agents and a pledge by Genesis, one of several housing associations expanding into private renting, to offer tenancies of up to five years with yearly agreed rent increases.   

On Monday, Labour published an alternative Queen’s Speech including a Housing Bill to tackle problems in the private rented sector. As well as a national register of landlords and action to tackle ‘rip-off letting agents’ this would ‘seek to give greater security to families who rent and remove the barriers that stand in the way of longer term tenancies’.

One of the biggest barriers is the way that buy-to-let mortgage lenders insist on assured shortholds, giving landlords no choice but to offer six or 12-month tenancies even where they can see the benefits of having longer-term more secure tenants.

However, another is landlord attitudes. While landlord organisations have not rejected Shelter’s idea out of hand even the most sympathetic have doubts about how it would work in practice. The least sympathetic will see restricting rent increases to CPI inflation as a form of rent control and complain that they will not have enough remedies if things go wrong. Longer-term tenancies may work very well in other countries but, as Alex Marsh argues on his blog:

‘Just because German landlords will happily offer multi-year tenancies with built in inflationary uplift doesn’t mean British landlords will do the same, if they consider it their God-given right to extract as much money from tenants as they can get away with and dispose of their property at short notice as they see fit.’

This is perhaps where housing associations - and institutional investors - could take a lead. The funding of their schemes should mean they are free from the restrictions imposed by buy-to-let lenders and they ought to welcome the reduction in voids and management costs that should come with longer-term tenancies. However, are their new-build schemes more likely to be aimed at young professionals rather than families with children?

If it chose, the government could do more too. It could encourage longer-term tenancies as part of its build to rent guarantee programme and it still owns a sizeable stake in two of the biggest mortgage lenders. However, this response from the DCLG to the Shelter report hardly suggests that action is imminent:

‘There is no legal barrier to long-term tenancies. However, restrictive laws making this compulsory would mean fewer homes to rent, less choice and higher rents. With 75 per cent of tenants moving out of choice, and only nine per cent of tenancies ended by the landlord, we are determined to do all we can to help tenants and landlords get a fair deal in a way that doesn’t jeopardize that flexibility or strangle the industry in red tape.’

So change is clearly going to take time but in that time the rise and rise of private renting will continue and so too will the number of families with children in insecure tenancies and uncertain schooling. As Shelter says, private renting was never intended to be a long-term home for families with children. It has become so by default while offering little of the stability that most of us take for granted in a ‘home’. Today’s report is just the start of its 9 Million Renters campaign.

Readers' comments (3)

  • Peter Hall

    Its great that Genesis is committing to this. Many more HA's should follow and lead the way - emulating the example of recent HCA funded schemes in Manchester. There's no reason why HCA adminstered funding for any private rent schemes shouldn't follow suit either?

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  • Riman10

    Tories have no chemistry with the poor; they feel they are too much trouble. To expect this government to do anything like that is as good as expecting that it will snow in Libya this year!

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  • Joe Halewood

    Genesis Housing Group moving into private renting a good thing? Certainly natural given the way they treat tenants in Haringey!!!

    http://www.guardian.co.uk/society/2013/may/01/benefit-cap-eviction-threat

    Social landlord starting to evict tenants AHEAD of the benefit cap is an issue even the worst private landlord will seize upon and makes this action not just a "cack handed" letter as Genesis claim

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