On tenant protection, England lags behind most of Europe. It's time to modernise
The remarkable growth of London’s private rented sector represents a fundamental challenge to the currently regulatory framework and the status quo it has facilitated, of unpredictable rent rises, poor property standards and insecurity.
In 2013, Jessica was renting a one bedroom flat from a private landlord in Clapham, south London.
“We realised it was damp pretty quickly and told the landlord. He provided a dehumidifier but did nothing else. We kept the heating on low, windows with vent open but we couldn’t stop the condensation and damp – soon we had black mould on the walls, which we tried to scrub off every week. Our stuff went mouldy and it was cold all the time. We asked the landlord to come over and see how bad it was and said we couldn’t stay if it didn’t get better. He did nothing and then terminated our contract.”
After they were evicted, the landlord took £400 from their deposit but, faced with fees associated with moving into their new property, they couldn’t afford to fight his seemingly unjust decision. As Jessica puts it, ‘they have you over a barrel.’
The overwhelming majority of London’s landlords are good landlords, and private renting can offer a range of positives for the capital. Most notably, it is the most efficient housing tenure as most people only rent what they really need, thus limiting under-occupancy.
But the sector needs to work well in the interests of all Londoners, and too often Londoners’ experience of the sector matches Jessica’s.
The extreme insecurity faced by tenants is increasingly unsustainable, and a more modern regulatory framework is now needed to make the sector fit for the future. The report published recently by the London Assembly Housing Committee – At Home with Renting – sets out that a better alternative is possible for London renters.
England is near unique among western economies in offering private tenants like Jessica only short-term tenancies, with no predictability in regards to rent increases and the possibility of eviction with just two months’ notice for no reason whatsoever.
London’s private rented sector has witnessed extraordinary growth over recent years. Whereas nearly one in six London households rented privately at the turn of the century, today that figure is nearer one in three. By 2025, Shelter estimates that the sector will be London’s largest housing tenure.
But rather than contributing towards the 48,841 new homes London needs to build every year for the next two decades, the expansion of the private rented sector has been predominantly built on acquiring existing homes.
Its growth has overwhelmingly come at the expense of home ownership, rather than the creation of bespoke Build to Let.
This growth has also fundamentally altered the nature of London’s private rented sector. The typical profile of a private tenant is no longer the student or young person who values the sector’s flexibility and short-term tenancy conditions.
Increasingly, with the number of children in private rented accommodation tripling to over half a million in the ten years to 2014, it is the family that needs stability for their children or the young professional who is locked out of home ownership because of high house prices and high private rents that make saving for a deposit ever more difficult. These are the people who now fit the typical profile of a private tenant.
But despite the seismic changes that have occurred in the sector, the regulations that govern it have remained largely unaltered since the 1980s.
This status quo is no longer acceptable; London’s private rented sector needs modernisation.
The argument that better standards for tenants would lead to fewer homes simply does not stack up, either against the evidence produced for this report or international comparison.
London’s private rented sector, though growing, is relatively unremarkable in size compared to other major European cities, despite the capital’s weaker regulations. The main finding of the Committee’s report is that tenancy reforms could be introduced with minimal impact on the size of the sector, while adding greater protections for tenants.
Under the measures proposed in the report, which would see three-year tenancies offered as standard with annual rent increases limited to the Consumer Price Index, the sector would still be expected to grow from just under a million properties today to over 1.4 million by 2025. Many institutional landlords have already introduced such tenancies of their own accord, showing that this system can work for landlords and their investors, as well as tenants.
Currently the Mayor of London has no power to regulate private tenancies, so the report calls for the next mayor to seek devolved powers over the private rented sector from government in order to introduce tenancy reform. Such powers are already devolved in Scotland.
The report also calls for other measures to modernise the sector, including measures to stimulate the build to let sector and a new London-wide register of landlords to help the boroughs enforce existing legislation.
Setting aside the problems already faced by private tenants such as Jessica, the prospect of London’s largest housing tenure offering just six months to a year’s security, no predictability over rental costs, and the possibility of baseless evictions, is simply unsustainable and unfair.
The status quo is no longer acceptable to Londoners.
Tom Copley AM is Labour’s London Assembly Housing Spokesperson
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