The fight for decent, affordable homes must not be abandoned
One of Labour’s only successes in the General Election was, according to Ipsos Mori, increasing their share of the vote among private renters by 10 percentage points. Despite its flaws, the party’s rent stabilisation policy appears to have paid off, although nine percent of private renters opted for a bolder policy package offered by the Greens.
Private renting happens to be one of the fastest growing demographic groups, increasing by a quarter of a million households per year since 2010. Their votes will be even more important for a future Labour victory. Analysis by Generation Rent suggests that the 30% of renters who are swing voters could decide 231 seats at the 2020 election – 96 of those are Tory-held and Labour has 102.
Yet, in its post-election soul searching, there is a risk that the party could retreat from intervention in the private rented sector, abandoning tenants to the whims of the market. Chris Leslie, the new Shadow Chancellor, gave a flavour of this new tone in an interview with the Observer and a piece for the New Statesman over the weekend. As part of his plea for Labour to demonstrate an understanding of markets, he suggested jettisoning the party’s policies on controlling rents and regulating letting agents. Instead, the housing crisis would be ended with subsidised loans to smaller builders to boost supply and greater transparency in the lettings market to deliver a better deal for renters.
The housing crisis is certainly a failure of supply, but doubling house building now will still not bring down rents for years. People on ordinary incomes cannot cope with another decade of rising rents, and the cost of recruiting public sector and hospitality workers, for example, will start hobbling the most expensive parts of the country. That’s why we need mechanisms to keep housing for private renters affordable. Generation Rent would go further than Labour’s policy and use a system of genuine rent control that would also help boost supply – landlords would pay a levy on rents charged above a certain level to help pay for new housing.
As long as competition for homes remains fierce, transparency alone will struggle to empower renters. With flats in London and other booming cities snapped up within hours of being listed, renters who want somewhere to live have to take the first place they can afford, realistically. Knowing how the level of fees compares with the agent’s competitors is usually irrelevant.
Instead, you could hand real power to consumers by banning letting agents from charging fees to tenants. For a start, these fees should only be charged to the letting agent’s customer anyway: the landlord. Once freed from paying hundreds of pounds every time they move, tenants would be more willing to leave an unsuitable home, and that would help make the wider market more efficient, forcing landlords to up their game.
Leslie felt that Labour’s policy implied that all landlords are exploitative, and we agree that this is not the case. However, the undeniable fact that some landlords are exploitative should be grounds enough to intervene. Leslie acknowledges that “essential human needs can collide with the profit motive”, and this is a reason to intervene in healthcare, but when the most vulnerable people in society depend on private landlords for a roof over their heads, it should apply to housing too.
All tenants should expect minimum standards that allow them to live in an affordable, secure and well-maintained home. The “well-meaning pensioners” that Leslie is wary of demonising already meet these minimum standards – they don’t raise the rent, they don’t evict well-behaved tenants, and they fix things promptly. There is no reason not to impose those same standards on the rogues as well. With landlords earning £44.3bn in rent each year and claiming only £14bn in costs, I think they can bear a little more regulation.
Understanding markets will be a theme of the Labour party over the next five years. For the sake of the country’s 11m renters, it is essential that the party understands the unique failings of the housing market.