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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The far right rises as the Nordic welfare model is tested to breaking point by immigration

Writing from Stockholm, the New Statesman’s editor observes how mass immigration has tested the old Scandinavian model of welfare capitalism.

In the summer of 1999 I was commissioned by a Scandinavian magazine to write about the completion of the longest road-and-rail link in Europe, connecting Denmark and Sweden across the Øresund strait at the gateway to the Baltic Sea. I was a guest at the ceremony, along with assorted Swedish and Danish royalty, at which the final girder of the concrete and steel-cable-stayed bridge was fitted into place.

It was a cold day but the mood was joyful. The Øresund Fixed Link symbolised the new Europe of open borders and free movement of people. There was much excitement about the creation of an economic zone centred on Copenhagen but incorporating Malmö and the university town of Lund in Sweden. The Øresund Bridge has since become an icon of Scandinavian culture, in part because of the success of the noirish television crime series The Bridge, starring the blank-eyed Sofia Helin as the Swedish police detective Saga Norén, which fetishises the structure in its brilliantly stylised opening credits.

Emergency measures

Last autumn, after Angela Merkel declared that Germany’s borders were open to Syrian refugees, it was across the Øresund that tens of thousands of desperate people began arriving in Sweden, straining the country’s habitual openness to incomers. They were arriving not just from Syria but from Afghanistan, Iraq, Pakistan, Eritrea and elsewhere in Africa – sometimes as many as 10,000 a week. In 2015, 163,000 people registered for asylum in Sweden, including 36,000 unaccompanied children. Many others are presumed to have entered the country illegally. (The comparative figure registering for asylum in Germany was 1.2 million and in Denmark 25,000. David Cameron has pledged to resettle 20,000 Syrian refugees in Britain by 2020.)

There was a sense last November that Stefan Löfven’s minority Social Democratic government was losing control of the situation. As a result, Sweden was forced to introduce emergency border controls, as well as security checks for those arriving across the bridge from Denmark. The rules of the Schengen passport-free area allow for such measures to be enacted in a crisis. Denmark responded by tightening border controls with Germany as fences and barriers were erected across Europe in an attempt to stem the flow of refugees heading north along the so-called western Balkan route.

Sweden’s Blair

To the outsider, Sweden no longer seems to be a country at ease with itself. Mass immigration has tested the old Scandinavian model of welfare capitalism to near breaking point and resentment is festering. “Immigration is now the number one issue facing our country,” Johan Forssell told me when we met at the Riksdag in Stockholm. He is a former chief of staff for Fredrik Reinfeldt, prime minister from 2006-14. As a former leader of the Moderate Party, Reinfeldt is a conservative, but, in his commitment to free markets and open borders, the politician he most resembles is Tony Blair. I was a guest at a lunch for Reinfeldt in London last autumn, and, as he defended his immigration policies, I was struck above all by his liberalism.

In August 2014, in a celebrated speech, he called on his fellow Swedes to “open their hearts” and “show tolerance” to immigrants and asylum-seekers. The speech was received with derision. It surely contributed to the defeat of the Moderate-led centre-right coalition in the general election in which the far-right Sweden Democrats, led by Jimmie Åkesson, recorded their best ever performance, winning 49 out of 349 parliamentary seats. “It was a brave speech, but Freddie didn’t prepare the people for it,” one senior Swedish politician said to me.

Editorial positions

One afternoon I visited Peter Wolodarski, the 38-year-old editor-in-chief of Sweden’s leading quality daily newspaper, Dagens Nyheter (“Today’s News”), at his office in Stockholm. The son of a Polish-Jewish architect who came to Sweden in the 1960s, Wolodarski is highly influential: editor, columnist and television commentator, and an unapologetic liberal internationalist. He likened his politics to David Miliband’s. In the past, Dagens Nyheter, which is privately owned by the Bonnier family, supported the then-hegemonic Social Democrats but, reflecting the fluidity and shifting alliances of Swedish politics, it now pursues what it describes as an “independently liberal” editorial position.

Wolodarski, who used to edit the comment pages, is slim and energetic and speaks perfect English. We discussed the EU referendum in Britain, which alarmed and mystified him, and Islamist terror as well as the rise of the anti-immigrant Sweden Democrats. Security at the Dagens Nyheter offices has been tightened considerably since the Charlie Hebdo massacre – Wolodarski’s paper as well as others in the group republished Charlie cartoons – and it has been reported that as many as 300 Swedish nationals are fighting for Isis in Syria. One Swede, Osama Krayem, is suspected of being part of the group that carried out the Brussels attacks in March. The Sweden Democrats have seized on this as further evidence of the failures of Nordic multiculturalism.

A refugee’s story

One morning I visited a refugee registration centre in Märsta in the northern suburbs. The people there were fleeing war or persecution. Each was waiting to discover where next they would be moved while their asylum application was processed.

One young, secular Muslim woman from Gambia told me she was escaping an arranged marriage (to her mother’s polygamous brother, who was in his sixties) and the horror of female genital mutilation. Articulate and frustrated, she wept as we talked. The next day, I received an email from her. She was now in a small town in the far north. “It is remote here and cold,” she wrote. And then she wished me a “safe return journey” to London.

Jason Cowley is editor of the New Statesman. He has been the editor of Granta, a senior editor at the Observer and a staff writer at the Times.

This article first appeared in the 05 May 2016 issue of the New Statesman, The longest hatred