Patrick Collinson writes in the ‘Guardian”;
The sheer number of reforms suggested by the select committee into the rental sector show how deep the problem is
Nine million people now pay rent to private landlords in the UK after the reckless expansion of the buy-to-let market, with too many stuck in expensive, substandard homes and desperately insecure tenancies. The sheer number of recommendations for sweeping reform in a House of Commons select committee report this week is itself testament to just how deep the problems are in this sector.
Letting agents should face far tougher rules, says the committee. The worst should be banned. Tenants need to be protected from the appalling rise in letting agency fees, with the committee proposing that adverts for properties reveal every add-on fee. Councils should have new powers to weed out rogue landlords who soak up billions from housing benefit but leave their tenants in dirty, damp and overcrowded homes.
The committee also recommends a reform of letting contracts to remove the constant threat of eviction for families forced into renting long term. The report highlighted one tenant, Carl Thomas, whose 10-year-old daughter had already moved seven times.
But two words are conspicuously absent from the long list of recommendations: rent control.
Conservatives reel in horror at the idea of rent control, which they blame for the dilapidation and collapse of the rental market in the 1960s. Landlords, unable to put up the rent, simply let their properties (and tenants) rot. A return to rent control will strangle supply, returning us to the bad old days, they warn. Yet the same people used the same economic theory to oppose minimum wage legislation – and were wrong then, too.
Let’s examine this “strangling supply” argument. The rise of landlord buyers has not provoked a fabulous new supply of property. Instead, with so little new building going on, landlords compete head-on with first-time buyers for existing properties and, as they enjoy easier access to loans and better tax breaks, outbid young adults and families time and again. The only “strangling” is of first-time buyers.
Members of the committee travelled to Germany to examine its rental market, praised for its longer term tenancies, protections from eviction, higher quality property and regulated rent increases. Somehow the regulated rent increases bit didn’t seem to sink in.
“We do not support rent control which would serve only to reduce investment in the sector at a time when it is most needed,” was their conclusion.
The italics are mine. Building a new property creates jobs and expands supply, and that is a real investment. But that’s not what many landlords do. They are “rentiers” and speculators on existing property, adding nothing to the economy, enriching themselves by gouging ever higher rents out of younger adults. Rent control will make this game unprofitable and cut house prices – a good thing, unless you are a chancellor so bereft of ideas that you think a property bubble is the only way to win an election.
The committee believes that expanding housing supply is the best route to make rents more affordable, but given Britain’s sclerotic planning system and the near-cartel of big builders, we all know that’s not going to happen. A report to be published on Monday by the National Housing Federation paints a bleak outlook on rents and house prices for the rest of the decade.
The government has upped its financial backing for build-to-rent from £200m to £1bn, but the committee found that the results so far are disappointing. Canny developers are bringing forward projects rather than creating new ones. How many additional new homes will be built as a result of the £1bn subsidy is yet to be seen.
There is much to applaud in the committee’s probe into the private rented market, but of course these are recommendations only, and with the landlords’ party in control few will probably reach the statute books.
The Association of Residential Letting Agents has issued a statement “wholeheartedly” welcoming the committee’s recommendations – which should tell every tenant what they need to know about this report.