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The private rented sector offers flexibility to landlords but very little stability for tenants, writes Tom Copley
James lives in Bethnal Green. When he renewed his contract this year the landlord demanded an increase of more then 20 per cent, and refused to give him a contract of more than twelve months.
Francois lives in Camden. He moved into a shared house and paid a month’s rent and deposit in advance. When he arrived at the lettings agency to sign the tenancy agreement they demanded another month’s rent as their “fee”.
I have heard countless stories like these from Londoners. Whether it’s landlords hiking up already exorbitant rents, rip-off lettings agency fees or retaliatory eviction when tenants make legitimate complaints about the state of the property, the private rented sector offers plenty of flexibility to landlords but very little stability for tenants.
Londoners feel this more than anyone else. More of us rent from a private landlord here than in any other part of the country – a full quarter of the residents of our city – and home ownership has now dropped below fifty per cent. That’s why Ed Miliband’s announcement of private sector tenancy reform this morning will be cheered to the rafters across the capital.
The next Labour government is now committed to longer, three year tenancies as standard with annual rent increases capped. Labour will also move England and Wales into line with Scotland and ban lettings agencies from charging tenants fees.
These changes would be the most significant changes to private renting since Margaret Thatcher abolished rent controls and introduced Assured Shorthold Tenancies in 1989. The Thatcherite model of private renting will finally be ripped up and replaced with a system that rebalances tenants’ rights with those of the landlord.
This reform is very welcome and long overdue. Currently, most private tenancies last for six months or a year, and landlords can evict tenants for no reason at just two months’ notice.
No doubt landlords will be apoplectic with Ed Miliband’s proposals. They’ll scaremonger that more regulation will drive landlords out of the market altogether. Just this week research commissioned by the Residential Landlords’ Association even called for existing regulations to be weakened, including abolishing deposit protection – one of the only positive reforms to private renting in recent years.
Don’t listen to them. So long as renting is still profitable (and let’s remember that since 1996 they’ve made on average a 16.3 per cent annual return on their investment) they will continue to rent to tenants. Britain currently has one of the least regulated private rented markets in Europe. Even with Ed Miliband’s reforms the sector will still be far less regulated than in Germany, where sixty per cent of the population rent from a private landlord.
It’s an oft repeated fallacy that the private rented market only grew once rent controls were lifted. In fact, in the decade following the abolishion of rent controls the sector didn’t grow at all. It was the introduction of buy-to-let mortgages in the late ’90s that kicked off the boom in private renting.
There is still more that could be done to make renting better for tenants, but Miliband’s proposals represent a major, major step forward.
Tom Copley AM is Labour London Assembly Member (Londonwide)