Two cheers

I’d love to give three cheers for Labour’s new approach to the private rented sector but I can only manage two.

Yesterday it published a policy review paper on stability and affordability for renters and families. This is the second of three policy review papers on private renting: the first covered management and letting agents, the third will cover standards and rogue landlords.

My first cheer is for the party’s analysis of the problems faced by private tenants.  

The statistics provide strong backing for a new approach. Figures just published from the 2011 census reveal that private renting now accounts for almost 17 per cent of housing in England and Wales compared to just 9 per cent in 2001.

We know that there are 1.1 million families with children in the private rented sector and that six-month assured shorthold tenancies do absolutely nothing to give them the stability they need. Private renters with children are 11 times more likely to have moved within the last year than home owners with children.

Projections of future trends make an overwhelming case for reform: the policy document quotes predictions of a million people locked out of home ownership by 2020 and 27 per cent of low to middle income families in the private rented sector by 2025. A new report from the IPPR yesterday revealed the impact that these trends are having on young people in particular.

My second cheer is for the future it envisages of greater stability with longer-term tenancies and predictable rents very much along the lines of the one proposed by Shelter recently.

The policy document says: ‘We need real change in the housing market so that private renters can, where they want to, gain access to longer tenancies and obtain greater financial certainty. When renters and landlords enter into these longer tenancies, rent could be indexed for the duration of that tenancy – we will consider the most appropriate type of indexation to allow the market to operate as freely as possible, while giving certainty over future rent levels for renters and landlords.’

It makes a wholly convincing case for longer-term tenancies, one that is overwhelmingly backed by tenants and is also supported by many landlords who see that they could also benefit through reduced costs and greater ability to plan ahead. It is often the practices of letting agents and the conditions imposed by lenders for buy to let mortgages, rather than the preferences of landlords, that get in the way of this.

Labour will look at options ranging from a voluntary incentive-based approach and a ‘something for something’ deal with landlords to one that gives renters greater legal rights to longer tenancies and predictable rents. And it quotes the examples of Germany, where private tenants have a high level of security and there are limits on rent increases, and France, where the minimum term is three years and rents cannot increase by more than the increase in the reference rent index.  

The party will work with mortgage lenders to ensure that buy-to-let mortgages do not prevent landlords offering longer tenancies. And it will look at options including the direct payment of housing benefit and tax incentives to landlords who do offer them.

As shadow housing minister Jack Dromey sums it up: ‘With longer term tenancies and predicable 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.’

As for my third cheer, I can’t quite give that because I still have a nagging doubt about Labour’s ultra-cautious approach.

The party is quite right to be concerned about the impact that talk of greater regulation in general and of rent control in particular could have on the supply of privately rented homes. It’s also right that ‘all too often, private renting is unaffordable, unstable and subject to poor conditions and bad management’.

However, when it claims that ‘our first Policy Review paper on housing set out steps to tackle unscrupulous letting agents and to end rip-off charges’, er, no it didn’t. It actually promised to ‘consider’ different models to improve standards, to ‘work in partnership with the sector to develop solutions’ and to ‘consider’ how compliance could be monitored, for example by a regulatory body with enforcement powers’. Again, it was hard to disagree with the content but there were no definite proposals and no actual policy commitments.

It could be argued that two and a half years before the next election is not the time to expect an opposition party to make those sort of commitments. However, when it comes to making all the right noises about private renting and then doing very little, Labour has previous.

Remember the Law Commission’s 2006 report on Renting Homes with its proposals for a shake-up and simplification of the law relating to all forms of renting? The last Labour government let the proposals gather dust on the shelf alongside the draft Bill that would have implemented them.

Remember the Rugg review, the independent report commissioned by Labour that in 2008 proposed regulation of letting agents and registration of landlords? As I blogged in July, the last government produced a green paper in May 2009 pledging mandatory regulation of letting agents and management agents’ but had done nothing by the time it lost power a year later.

The Labour government in Wales is now about to implement most of these proposals through its Housing Bill and Rented Homes Bill. The party in England is making all the right noises and some of what it is talking about could go still further if it wins power in 2015 – but will it actually be prepared to act next time around?