Posted by: Jules Birch19/07/2012
Labour’s plan to regulate letting and managing agents is a good start to its policy review on housing – but no more than a start.
The idea enjoys widespread support – not just from private tenants who are fed up with being ripped off by outrageous fees but from private landlords and reputable agents too. As Labour points out: ‘It’s a peculiarity of current policy that while estate agents, who hold very little money on behalf of their clients, are regulated, letting agents who hold significant sums on behalf of landlords and tenants are not.’
But what took so long? The Rugg review commissioned by the Labour government proposed regulation of agents plus registration of landlords when it was published in October 2008. It took the government seven months to respond. A green paper in May 2009 included a pledge to introduce ‘full mandatory regulation of private sector letting agents and management agents’. But there was no Housing Bill in Labour’s final Queen’s Speech and the plan was still pending when it lost power a year later.
One of the first things Grant Shapps did when he became housing minister was to drop the plan completely, without actually mentioning letting agents. He said in June 2010: ‘With the vast majority of England’s three million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords. So today I make a promise to good landlords across the country: the government has no plans to create any burdensome red tape and bureaucracy, so you are able to continue providing a service to your tenants.’
Two years on, at a time when England has 1.4 million landlords and 3.6 million households living in the private rented sector and when the evidence has piled up about the rip-off fees imposed on both of them by unscrupulous agents, and Labour is pledging action again.
It may be sensible to start with a measure that will enjoy broad support across the industry but there is no mention of registration of landlords or some of the things that the light-touch system envisaged by the Rugg review ruled out, such as controls on retaliatory eviction. Shadow communities secretary Hilary Benn hinted at more to come in an interview with The Guardian yesterday. While he rejected calls for rent controls (‘we don’t want to return to that because [the rental sector] is meeting a demand for housing’) he said he would consider linking rents to inflation ‘on an annual basis’.
The caution is perhaps understandable in a month when the Montague review is due to publish its report on attracting institutional investment into private renting. The Resolution Foundation published a report on this today proposing a new build to let model with debt and equity investment by institutions and a new role for housing associations in getting schemes built that can be sold on to funds. Political uncertainty is one of the factors regularly cited by institutions as a reason why they do not invest and no party wants to cause more uncertainty at a time when public investment is in such short supply.
However, in the meantime the rest of the UK has been leaving England behind. In Wales, for example, the Labour government has just published plans for a national, mandatory registration and licensing scheme for landlords, lettings and management agents.
And, as Robbie de Santos points out in a blog for Shelter, there are signs that tenants in England are beginning to organise and call for action. The Cally Cows campaign was set up after the TV programme The Secret History of Our Streets exposed a landlord who said that if a cow is producing milk ‘you keep milking’. The Haringey Housing Action Group protested outside a letting agent over fees. And the Housing for the 99% campaign demonstrated outside the National Landlords Association.
However, one big problem is that the politicians know that millions of private renters are not eligible to vote. It could even be one reason why Boris Johnson won the London mayoral election despite Ken Livingstone’s private tenant friendly policies.
As I argued on my other blog in May, millions of people have effectively been disenfranchised by our housing system – by the unstoppable growth of private renting. A report published by the Electoral Commission in December 2011 estiamted that six million people were not registered to vote on December 2010 registers. While 89 per cent of outright property owners and 87 per cent of people with a mortgage were registered, just 56 per cent of private renters could vote. This disenfranchisement of millions of private tenants is only set to get worse as the sector grows and it could be permanently locked into the system if changes are adopted to define constituencies according to the number of people registered (as opposed to eligible) to vote.
The treatment of private tenants has broken through as a political issue but tenants need to keep up the pressure and politicians need to know they will take it to the ballot box.
From Inside edge
Housing commentator Jules Birch puts the latest news in context