Do Miliband’s plans for Generation Rent go far enough?

The shortcomings of such light-touch reforms are plain, writes Rob Edwards.

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The shortcomings of such light-touch reforms are plain to see, writes Rob Edwards

Forty-five pages of privacy invading paperwork – a bureaucratic crevice to find oneself lodged when wages won’t keep pace with the spiralling cost of rent.

The HCTB1 housing benefit form is a bulwark against destitution to which growing numbers of working people in the UK have resorted since the recession began, as outgoings on the necessities of life have strode mercilessly ahead of stagnant incomes.

Recent figures from housing charity Shelter demonstrate just how precarious the situation is for British families, with a third revealing they would be unable to make their next rent or mortgage payment if they were to lose their job this month.

A new study by Zoopla shows the cost of renting a two-bedroom flat has now topped £1,000 in all but two London boroughs. Rent rises in the past year alone mean that average rents on two-bedroom flats in a quarter of London’s boroughs now top £2,000 a month.

The private sector is failing to build affordable homes with numbers still well below pre-crash levels. At the same time, money the state could otherwise spend on building and maintenance is poured generously into the pockets of renegade landlords with a licence to charge the odds on frequently sub-standard housing.

It is somewhat surprising, then, that despite private sector rents routinely devouring more than half of Londoner’s incomes, until Labour’s announcement last week on second generation rent controls there were so few political voices lobbying for a renewed rent control regime.

City Hall has shed its share of crocodile tears, of course. London Mayor Boris Johnson recently approved two schemes in north London, with 30 per cent of the flats designated as ‘affordable’. On these terms, tenants would pay 80 per cent of the rent on the private market – in reality still over £22,000 a year.

There are in fact two ways of using the law to control private rent levels. The first being is old-style rent cap, originally introduced in the UK in 1915 as an emergency wartime measure to deal with housing shortages in the absence of any building workforce, and in response to the Glasgow Rent Strikes.

A rent cap involves setting overall maximum rent levels, giving tenants indefinite contracts and limiting the increases that can be charged once they are in a contract.

As in Germany, France and Spain, another means of holding down rents is to pin them to the market at the outset, as has been suggested by Ed Milibdan. Tenants in this instance have longer-term contracts and their rent can only be increased by an inflationary index, such as RPI or CPI.

Either option, no doubt, would sit well with Britain’s struggling tenants, but the reaction of private landlords, constrained by such regulations, may create issues down the line.

Landlords may attempt to maintain their profit margins by cutting down on repairs, leading to a rash of squalid conditions. Others may subdivide their properties further, with all the degenerative hallmarks of overcrowding on tenants’ quality of life.

Tenants could even find themselves with fewer options if caps force landlords with hefty mortgage repayments to sell up.

The shortcomings of such light-touch reforms are plain. More than plastering up the cracks with gimmicks like Affordable Housing Schemes, we need genuine bricks and mortar alternatives.

Councils should launch registers of private landlords and council run lettings agencies, ensuring the quality and safety of private accommodation and capping rents at council rent levels.

Today’s councils need to build many thousands of new houses as a matter of urgency to give new hope to tenants and put a brake on private rents. Moreover, we must defend what precious council housing we have left.

These progressive demands should be matched with the scrapping of the socially corrosive bedroom tax and with the introduction of a living wage that marches in step with the cost of living. In the absence of a stable and sustainable housing policy, nothing short of this will do.

10 Responses to “Do Miliband’s plans for Generation Rent go far enough?”

  1. neilcraig

    Miliband is, as normal, being a corrupt and cynical liar. His “reform” will not help people and is not intended to do so. It is intended to give the impression of trying to do so and even moreso of giving the impression that housing costs are the fault of rental owners, bankers, Jews, and probably Jimmy Saville if he can get away with it.
    House prices have risng 4 fold compared to the RPI over the last century. There is no technological reason for this. This means that, at least, 3/4 of all housebuilding costs (& rent and other costs down the road follow) are government regulation. Thus it is hardly surprising that builders now spend more on lawyers than bricks.
    We could have good “affordable” housing any time the politicians decide they are willing to get out of the way. Miliband knows this. He also knows how much money Labour (& Tories & LDs)get from donations from property developers. So give them the illusion of reform instead of the actuality.

  2. PoundInYourPocket

    ” 3/4 of all housebuilding costs (& rent and other costs down the road follow) are government regulation”
    What do you mean “goverment regulation” ? In the interests of good reasoned debate can you explain what you mean by this cost and show the figures or reference a report. Otherwise it’s just a meaningless accusation.

  3. neilcraig

    Here are figures http://a-place-to-stand.blogspot.co.uk/2008/07/house-prices-then-now.html
    “Government regulation” means the entire gamut of regulations produced by government. If there is any technical explanation for the comparative 4 fold increase in housing cost other than political parasitism I have yet to see anybody give it. In the interests of good debate perhaps you will do so.

  4. becky

    Yes, we urgently need a rent cap in London. Please sign this petition: https://you.38degrees.org.uk/petitions/introduce-a-rent-cap-in-london

  5. blarg1987

    It is over simplistic to blame it on goverment regulation, I think a major factor is the lack of goverment in building housing, and relying on the markets who as soon as the financial crisis happened, just dropped tools and waited it out untill market prices are back up to return to building.
    Private house building has not filled the hole that state house bulding left, and as a consequence this combined with an increase in foreign buyers of existing and new property as well as BTL has increased the prices on property.

  6. PoundInYourPocket

    Thanks for the web-site reference.
    As far as I can tell house price increases have been due to a whole multitude of factors such as, rising incomes, low interest rates, easy credit, rising demand as more people live alone and for longer, second homes, housing used as rental assest, cities are denser hence inner city planning laws are more constrained, poor transport links to less dense areas, Green Belt restrictions, argricultural land restrictions, shortage of skilled builders, more stringent building regs etc etc. Not sure all of these are due to “political parasitism”. I don’t see an easy solution to this problem, as those given by politicians are too simplistic. A modest increase in house building to 200,000 / year won’t do it and neither will tinkering with rental contracts. The only solution I can suggest is to outlaw private ownership and re-distribute the existing housing stock based on need. But that’s communism which has fallen out of fashion recently.
    Otherwise, I think the crisis will continue to deepen as there are no changes in the present trends.

  7. neilcraig

    Several of them (planning restrictions, building regs) clearly are, by definition, governmental. Most of the others ain’t so, usually the opposite of so, for example the claim that transport links are worse than they were a century ago.

    Your point (though you neglected to give a reason) about private ownership is answered below.

  8. neilcraig

    It clearly cannot be the reason you give because a century ago “lack of government in building” was far greater in that the free market provided almost all of it at 1/4 the price.

    It is clear from both answers that there is no actual factual dispute that 3/4 of housing costs are state produced merely a purely idealogical insistence that we need more such parasitism.

  9. blarg1987

    If that was the case, then house building would have continued at a growing or condistant rate following the financial crisis. Instead it stalled, now correct me if I am wrong but last time I checked no new government regulations on housing was introduced as soon as house building stopped. So how you explain that?

  10. neilcraig

    It appears to have escaped your notice that we have been in a recession – which has affected the entire economy. Why should housing be magically immune to what effects everything else?

    That is, obviously, irrelevant to the long term trend of housing now costing 4 times more, compared to the RPI, that it used to. You appear to have omitted to explain how this increase in cost can be due to free enterprise when the business was almost entirely free then and almost entirely state owned or regulated now.

    Or how getting rid of the last vestiges of what once worked would make it work better.

    Perhaps you might like to try answering?

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