Sorry Ken, rent caps aren't the best answer to our housing crisis

Ken Livingstone correctly identifies many of the problems in the rental market. But a more workable solution than his proposed rent cap may be right under our noses, says Shelter's Robbie de Santos.

Ken Livingstone, writing on Comment is Free on 19 July, was right to highlight the issues with private renting. We agree with much of his analysis – renting is too often unaffordable, unstable and subject to poor conditions and bad management. But we’re not sure that comprehensive rent caps are the answer.

For too long private renting has been the Cinderella of housing policy, largely ignored while successive governments dreamt up ways of helping first time buyers get on the ladder or fiddle around with social housing provision. Talk of private renting was quiet for a while, but in the last few years politicians have been forced to acknowledge that renting from a private landlord is the new norm – and an often unsatisfactory norm at that.

So who rents now? Well over eight million adults do, and more than a million families with children. Almost a third of private renters are over 45, and the biggest recent increases come from the top and bottom ends of the middle income bracket. Many of the new generation of renters are not there through lifestyle choice – it is a necessity as many will not be able to buy a home or access social housing. Politicians would be wise to spend a bit more time improving their lot.

What’s wrong with renting? Mr Livingstone touched upon unaffordable rents, hefty rent increases, poor standards, rogue landlords, and rip-off letting agents. Government statistics tell us that private renting families with children are ten times more likely to have moved house in the last year than those with a mortgage. Renting in this country can mean short contracts and uncertainty over future rent levels, which are increasing rapidly in many parts of the country.

There are effectively two different ways of making renting more workable. The old-style rent cap involved setting overall maximum rent levels, giving tenants indefinite contracts, and limiting the rent increases that could be given to tenants once they were in a contract. That’s what we had in this country until 1988.

But Shelter’s research finds that few other comparable countries have such an intensive set of controls. In Germany, France and Spain, rents are determined by the market at the outset; tenants have longer term contracts (often indefinite in Germany, three years in France and five years in Spain) and, as long as tenants are in these contracts, their rent can only be increased by an inflationary index.

These countries don’t cap overall rents; they just allow people to have more certainty and predictability about their future renting costs for a longer period, allowing them to anticipate higher rents and to know that they won’t be priced out of their own home.

Capping overall rents goes against the grain of the market – whether this is good or not, some of the side-effects can be really quite undesirable. In markets with rent caps and where demand outstrips supply, a landlord may discriminate on tenant rather than price. This could see people with lower incomes losing out because landlords might see prospective tenants with higher incomes as more reliable. For example, in New York City, where some apartments are subject to rent control, the people who may benefit the most from controlled rents are precisely the people who may find themselves excluded from such apartments.

Rent levels are high because there are too many people who have to rent, and not enough homes available for them to rent, driving up the prices people have to pay. Rents can only be reduced by increasing overall supply of all types of homes, so that fewer tenants are competing over each available home. Building new homes, including for rent, has to be a priority – especially in high pressure markets like London.

But introducing tenancy types like those in France and Spain could improve life for private renters up and down the country. For example, a five year tenancy with inflation linked rent increases could help families break from the uncertainty of short contracts and unpredictable rent increases, giving them the stability to make their rented house a home and plan for the future.

Shelter recently commissioned global property consultants Jones Lang LaSalle to look at whether landlords would be able to work with longer term tenancies. They would. In fact, rental indexing would enhance landlords’ returns, by keeping rents in line with inflation, reducing void periods and cutting out letting agents’ fees. Not only could they be attractive to landlords, longer tenancies could also be offered today, developed from the current framework.

As appealing as rent caps may sound, a more workable solution may be right under our noses. Longer Assured Shorthold Tenancies, with inflation-linked rents, could give millions of renters the chance of a stable home that they can truly make their own.

Robbie De Santos is Policy Officer at Shelter.

London faces a shortage of housing. Photo: Getty Images

Robbie de Santos is a policy officer at Shelter.

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Millennial Man: How Emmanuel Macron is charming France's globalised youth

At the French presidential candidate's London rally, supporters cheered for a reformist. 

If it weren’t for the flags – the blue, white and red of France, but also the European Union’s starred circle – the audience’s colourful signs and loud cheers could have been confused with those of a rock star’s concert. There even were VIP bracelets and queues outside Westminster Central Hall, of fans who waited hours but didn’t make it in. This wasn't a Beyonce concert, but a rally for France’s shiny political maverick, the centrist presidential candidate Emmanuel Macron. He arrived on stage under a thunder of applause, which lasted the full minute he took to salute the first rank.

Since he resigned from his position as François Hollande’s economy minister last August, the 39-year-old relative political newbie – he used to be a banker and only joined the French government in 2014 – has created his own movement, En Marche, and has been sailing in the polls. In this he has been helped by the fall from grace of Conservative candidate François Fillon. Macron, who can count on the support of several Socialists, the centrist François Bayrou and the unofficial backing of the Elysee palace, is seen as the favourite to face hard-right Marine Le Pen in the election’s run-off in May.

A screen displayed photos of supporters from around the world (Singapore, Morocco, United States, “We’re everywhere”) as well as the hashtags and Snapchat account for the event. Rihanna’s “Diamonds” played as a team of young “helpers”, en anglais dans le texte, were guiding the 3,000 French expatriates to their seats. “We’re about 90 helpers tonight,” said Pierre-Elie De Rohan, 23. A History student at University College London, he joined the youth branch of En Marche via a school group.

The movement has been very active among students: “We’re in all London universities, King’s, Imperial, UCL”, he said. “It’s exciting”, echoed fellow helped Arcady Dmitrieff, 18, from UCL too. “We feel like we’re taking part in something bigger than us.”

Hopeful millennials are flowing to En Marche en masse. Macron is young, attractive, and though, like most French politicians, he is a graduate of the elite École Nationale d'Administration school, voters still see in him a breath of fresh air. “He’s neither left-wing nor right-wing," praised helper 18-year-old Victoria Tran. Her friend Adele Francey, 18, agreed. “He transcends the political divides that have confined us for the past thirty years," she said. “And he looks sincere," added Lena Katz, 18. “He really believes he can make a change.” The Macron brand, a mix of smart marketing, cult figure (the first letters of En Marche are Macron’s initials) and genuine enthusiasm previously unseen on the French campaign trail, has given him momentum in a political system highly based on the leader’s personality.

For Katz, Tran and many of their friends, France’s 2017 presidential race is their first election. “I want to be invested and to vote for someone I like," Tran said. “More than the others, Macron represents our generation.” Their close elders are hoping for a political renaissance, too – perhaps the one that was supposed to come with François Hollande in 2012. “I really believe he can make it," said Aurelie Diedhou, 29, a wholesale manager who has lived in London for two years. “On many topics, he’s more advanced than his rivals, a bit like Barack Obama in 2008. In France, when a politician has the pretention not to be corrupt, or to have held a job before entering politics, they’re accused of marketing themselves. But it’s just true.”

Macron occupied the stage for a good hour and a half – during which his supporters never failed to cheer, even for boring declarations such as “I want more management autonomy”. He passionately defended the European Union, and pleaded for its reform: “I am European, and I want to change Europe with you.”

Such words were welcomed by French expatriates, many of whom have feared that their life in the UK may be turned upside down by the consequences of the Brexit vote. “Britain has made a choice, which I think is a bad choice, because the middle classes have lacked perspectives, and have had doubts," Macron said. He promised to stand for the rights of the French people who “have made their life choice to settle in Britain”.

As far as Macron's UK co-ordinator, Ygal El-Harra, 40, was concerned, that the candidate would make a trip across the Channel was self evident: “We’ve got people in Bristol, Cambridge, Edinburgh, in Cornwall. And they’re not just bankers and traders: some work in delivery, restaurants, many are students... They perfectly represent French society, and we want to keep in touch with them.”

In 2012, London’s French community opted for Nicolas Sarkozy over Hollande, but the vote was very close (48 per cent to 52 per cent). Just as within France, where he appeals to both left and right-wingers, Macron’s internationally-minded liberalism, coupled with his fluent, fairly well-accented English, could win big among the expat. And they matter - there are about 100,000 votes to grab. “For us who are in London, it’s important to have an open-minded, international candidate," the teenager Tran said.

Rosa Mancer, a 45-year-old strategist who has lived in London for 20 years, agreed. “I loved what he said about Europe. We must reform it from the inside," she said. But she admitted her support for Macron was “a choice by elimination”, due to the threat of the far-right Front National and the corruption case surrounding Fillon. “He’s got no scandal behind him," she said. Unlike their younger peers, voters with more experience in French politics tended to choose the dynamic Macron because he was the least compromised of the lot. “It’s certainly not Marine Le Pen, nor Benoît Hamon, the sectarist Fillon or the Stalinist Jean-Luc Mélenchon, who will rebuild our fossilised France”, said Roland Stern, a Frenchman in his sixties. “In 1974, Giscard D’Estaing didn’t have a party, either. But once he had won, the others followed him.”

British politicians had come to see the French phenomenon, too. Labour’s Denis MacShane and former Deputy Prime Minister Nick Clegg sat among the VIPs. For the latter, the enthusiasm around a promising and brilliant politician rang a bell. Looking back on the 2010 general election, the former Liberal Democrat leader reflected: “Although my platform was very different at the time, the basis was that the status quo was letting people down and that we needed something different.” Clegg’s advice to Macron? “Make sure you seek to set and manage people’s expectations.”

As Clegg knows too well, there is a danger in bringing everyone together, and that is keeping everyone together without disappointing them all. If his name comes first on the evening of May 7, Macron’s real challenge will begin: forming a government with his supports for a broad political spectrum, and dropping vague pledges and marketing slogans to map out a clear way ahead.

In Westminster, hundreds of supporters were literally behind him, seated in tiers on stage. A massive screen showed a live close-up of Macron's youthful face. Something in his picture-perfect smile seemed to wonder what would happen if the crowd stopped cheering.