Please Note: This Article is 6 years old. This increases the likelihood that some or all of it's content is now outdated.

As we approach general election time the cries for more and more control of the private rented section (PRS) increase by the day. The hot topic of housing is grist to the politicians’ mill especially if it can be turned into a vote catcher, regardless of whether their promised policies,  designed to be attractive to the renters, would improve matters or not.

We have those in politics and academia, few of whom have the slightest idea of running a business, let alone a rental one, constantly producing inquiries and reports into housing; after all that’s what politicians do isn’t it?

Much of the output from these activities bears little resemblance to reality in my opinion, as the “experts” researching and producing these reports, with a view to more legislation, have no practical experience of what’s involved in a rental operation. What’s more, they are not really interested because in general they are viewing the issues from one side only, and it’s rarely the landlord’s side.

The cohort of politicians, academics and campaigners I am talking about invariably see private landlords as providers of social housing, which I reality they are not, or should not be. As Kate Faulkner rightly points out in a recent article in the Landlord & Buy to Let Magazine, “the Private Rented Sector can’t look after everyone, we still need social homes”, a role that is gradually being abdicated by local authorities.

- Advertisement -

We are now told that one local authority is hiring a housing consultant to look at ways of capping PRS rents.  Camden Council hired Christine Whitehead, a professor of housing economics at the London School of Economics, to look into this. Camdem is perhaps the first council to suggest such a move but apparently the idea is receiving support from several other councils.

All this follows the opposition leader Ed Miliband’s proposals for long-term tenancy agreements beginning with a six-month probationary period, where tenants can walk away with minimal notice, but landlords are tied in for the full term. Included is a ban on what he has said are “excessive rental increases”, and the control of how letting agents can charge their fees.

It seems in life that learned lessons from the past are never enough. Each generation has to re-learn again and again, at great cost to society. Much of what is being suggested was tried back in the 1950s and 1960s. Then, over the next 30 years the private rental market was reduced to a shadow of its former self. It was only after the introduction of the 1980 Housing Act, the Assured Shorthold Tenancy with the section 21 procedure, and the abolition of “fair rents” that the letting market finally revived.

Furthermore, this was in the days when social housing was mainly provided by local authorities. So can a responsible government today risk driving private landlords out again, but this time when they rely so much on them to provide a large proportion of current social housing?

The arguments being used in favour of this private landlord bashing, in my view defy logic from a social utility and business sense, but they masquerade as “common sense” and “fairness”. They may make sense to a part of the consuming renting sector, but they certainly don’t to those that matter – those who provide the investment, the time and the energy to provide this necessary housing.

Those with experience in the business, and that excludes most MPs such as Shadow Housing Minister Emma Reynolds MP, are concerned that these proposed policies will not only destroy the viability of the PRS and drive out many willing investor landlords, it will make matters worse for tenants.

As the Residential Landlords’ Association has pointed out:

“Sadly, once again Labour are playing to people’s fears and failing to tell people that the average length of residence for tenants in the private rented sector is now 3.8 years and where tenancies are ended, just 9% of them are ended by the landlord.”

Further, Labour’s proposals, including a surprising suggestion that rent increases are fixed to inflation, would in practice, in most cases, mean rents increase at a faster rate than at present. In an attempt to encourage their tenants to stay on longer, many private landlords forgo rent increase between tenancy changes.

Surely, a far more productive approach would be for politicians to encourage more investment in the PRS by making life easier for those providing the service. The only way to reduce market rents and increase tenant choice is to effect more housing building and investment. Threatening the viability of a whole industry, and labour under Ed Milliband appear to be developing a track record of doing this, is never going to be the answer.

Tom Entwistle, July 2014.

Please Note: This Article is 6 years old. This increases the likelihood that some or all of it's content is now outdated.
Subscribe to LandlordZONE

LEAVE A REPLY

Please enter your comment!
Please enter your name here