A general view of housing in Brixton on January 30, 2013. Photograph: Getty Images.
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We need rent controls to solve London's housing crisis

Too many essential workers are being priced out of the capital. Rent controls could address the uncertainty and unaffordability they face.

In an unusual break from the disagreement, dissent and bickering that pervades politics, consensus has broken out amongst policy makers in the capital: London is in the midst of a housing crisis.

The facts are stark. Private rents in London have risen nine per cent since December 2011. Property price growth has returned to pre-2008 levels and is on the brink of exceeding it.Higher rents make it difficult to save a deposit, and rapid house price growth pushes the size of that deposit further and further out of reach. Indeed, those two factors combined mean that the projected average age by which a young person will be able to buy their first home in London is now 52. Sixty six per cent of first home buyers are supported by the bank of Mum and Dad in order to afford a deposit.

London has reached the point where the cost of housing is affecting productivity growth. We are on the cusp of having to bus in cleaners, retails workers and hospitality staff from the Shires because those on low incomes cannot afford London rents. Londoners on average already spend more than half of their income on paying their rent or mortgage. Not only does that disincentivise the best and brightest teachers and nurses from living in London, it also significantly reduces the disposable income of those with the highest propensity to spend, threatening the future of the retail sector in particular and the economic recovery in general.

London clearly needs to build more homes. A report by London Councils found we have 283,000 too few homes in London now, and we will need a further 526,000 by 2021 to cope with a growing population. But building hundreds of thousands of homes will not happen in the very short- term; meanwhile, Londoners are struggling to pay their rent.  With the monthly rent for a one-bedroom flat in Wandsworth sitting well above £1,100, it has become patently obvious that London needs some form of rent control.

But let me be clear about what I mean when I talk about rent control. I don’t mean the old-school "first generation" rent control that was introduced in the UK during the Great War, which prevents any increase in rents, diminishes investment returns in real-terms over time, and discourages people from becoming landlords. I don’t mean the type of rent control that keeps rents so low that they are not enough to pay for the proper maintenance of a home in a liveable condition. I mean rent controls that nod to the market but allow for the realities of what it is to have a home to live in; the type that are espoused by those who could hardly be called left-wing ideologues, including Angela Merkel and Michael Bloomberg.

Currently in London, a family can move into a home at an expensive but affordable rent. The landlord cannot evict them (except for non-payment of rent) for six months. But after a year that landlord can raise the rent as high as he or she would like to; the rent could be doubled without any notice to the tenant family, putting it completely out of the range of affordability. The family is obliged, then, to move house, move their childrens’ school, probably move to a different part of London, and pay another round of letting fees, bonds and two-months-rent-in-advance. The other option is to seek the landlord’s permission to sublet one of their bedrooms to another family, adding one more to the 207,000 London households already living in overcrowded conditions.

There is an alternative. Take, for example, the German system of rent controls. Renters have indefinite tenancies; a tenant can only be evicted for non payment of rent (over a number of months), damage to the property, unauthorised subletting, or to allow the landlord or a member of his or her family to live in the home or to sell the home. It is in the interests of a landlord to retain their current tenant because the costs of letting agents are borne by the landlord.  The initial rent is set by the market, but cannot be more than 20 per cent higher than similar properties in the area. Rents can be raised according to inflation or due to an increase in the landlord’s costs, but by no more than 20 per cent in any three-year period.  Further, proper maintenance of the property by the landlord is incentivised; a tenant only pays 100 per cent of the rent if the home is in 100 per cent good condition. Perhaps a system like Germany’s is exactly what London needs to address the uncertainty and unaffordability faced by tenants in our private rented sector.

A common criticism of rent controls is that they discourage investment in the private rented sector. But British history since the deregulation of the rental market in the late 80s has shown that argument to be flawed; 89 per cent of landlords are individuals or couples, not builders or developers. In general, they buy pre-existing properties as an investment or nest egg.  They aren’t the part of the housing market that builds new homes in London, though they do compete against first homebuyers for existing properties. The fact that more rental accommodation has not been built in London, with its high rent prices, shows the inelasticity of housing supply in London which has more to do with cautious developers, the planning process, and a scarcity of developable land than it does with rent prices.  

To encourage investment in new homes (rather than locking up investment equity in pre-existing houses), there could be concessions to rent controls on new developments. Maybe rent controls should not apply to any new property built after 1 January 2014. Or maybe they should not apply to the first tenant of any new development; that will have the added benefit of encouraging longer term leases by property developers.

We need to start getting serious about how to address the housing crisis in London, because it’s not just those on minimum wage or housing benefit that are struggling to afford to live here. Teachers, civil servants, retailers and service workers essential to the running of our city are all threatened by the crisis. Though not a silver bullet that will singlehandedly solve the crisis, we should think about how rent controls – done sensibly – can be part of a comprehensive plan to ensure that all Londoners can afford a home in our city.

David Lammy is Labour MP for Tottenham

Jeremy Corbyn in Crewe. Photo: Getty
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Is it too late to replace Jeremy Corbyn as Labour leader before the general election?

Make no mistake, replacing the Labour leader now would terrify the Tories. 

Received wisdom states that Jeremy Corbyn’s position in the Labour party is guaranteed, at least for the next six weeks, until the general election on 8 June. However, this belief is in large part down to polls conducted earlier this year among the Labour membership, which showed continued support for him.

In light of the changing political landscape, and the looming General Election, these polls should be revisited. It is clear they offer enough cause for hope to Labour moderates who might be willing to take the risk of removing Corbyn before the country makes this decision for them.

If you listen to pollsters talk about their surveys, one of the most common refrains you'll hear is that the results are "a snapshot, not a prediction". During the peacetime years between elections, this claim is made for solid reasons. With an election years away, polls offer the public a risk-free method to register dissatisfaction or support for a political parties and politician without consequence.

Nowhere is this clearer than in the polls we’ve seen in the past week. In every poll conducted after May's announcement on an early election, there has been a rise in the Tory lead. Elections focus minds and the risk-free toying with another party is no more; the public now need to make a decision about who they'll vote for in a little over a month and this decision matters.

Back in March, just 35 per cent of Labour members thought it likely that Corbyn would lead Labour to victory at the next election - yet they still supported him (PDF). Many commentators and Labour moderates asked why. They couldn't understand why the members would support someone who was so clearly electoral kryptonite.

The reason is relatively straightforward. The election was still years off and Corbyn was doing, for the members, a vital job in repositioning Labour on the left. With an election so far away, it didn't matter how Labour were performing in the polls, it was risk-free to support Corbyn.

The early election changes all that and the question is no longer about whether another leader gives Labour a better chance of winning but whether another leader gives Labour a better chance at surviving.

In the last poll published on Labour members, a majority wanted Corbyn to either step down immediately (36%) or before the next election (14%). Just 44% wanted him to lead Labour into the next General Election. With May’s announcement of a vote on 8 June, Labour's existential crisis has been brought forward by three years and it is likely that 14% who thought Corbyn should step down before the next election would side with those who wanted Corbyn gone immediately rather than those who wanted him to fight on in 2020.

There is also an argument to be made that the 44% who wanted Jeremy to fight the next election assumed he would have three more years to grow into the role and turn Labour’s fortunes around and these members could easily be swayed from their support given the change in terms the early election brings about.

What's more, 68% of Labour members felt Corbyn should go if Labour lost the next election and this includes 42% of those who say they would definitely/probably vote for Jeremy at a future leadership election. Only the most hardcore Corbyn supporters still believe he has a chance of victory in a few weeks. So, faced with the prospect of Jeremy going in June, after a heavy defeat, or now - giving Labour a better chance - many would reluctantly go for the latter.  

So how can Jeremy be removed? There are three things that need to happen. Firstly, pick the right candidate. For a new leader to have any impact with the public, it has to be someone who is not associated with Corbyn. However, to win over the members, the candidate cannot be seen as an instigator in the coup last year.  It would also be wise to choose someone the public are at least partly familiar with. This is a narrow pool but there are MPs who meet this requirement and could get through a leadership election and limit Labour losses.  

Secondly, limit the selectorate to the members. There is no time to vet 10s or 100,000s of new voters and they are unlikely to be favourable to an Anyone-But-Corbyn candidate. Among current members, Corbyn can be defeated and that must be the battle on which any leadership election was fought.

Finally, remove the risk of a centrist takeover in Labour members' minds by committing to a further leadership election in six months' time. Make it clear that Jeremy Corbyn needs to go - but that this isn't the end for his supporters. Any new leader is just an interim measure, someone who can limit the losses and give Labour the chance to fight again. Position yourself like the football manager who comes in three matches before the end of the season, promising to save the club from relegation before handing over to someone more suited to their team.

Make no mistake, replacing the Labour leader now would terrify the Tories. Their attacks on Corbyn will be worthless and new leaders typically enjoy a honeymoon period which would come at the perfect time. There are risks, of course, but the greater risk is in allowing Corbyn to lead Labour to a defeat from which there may be no return.

Laurence Janta-Lipinski is a former pollster with YouGov and now a freelance political consultant. He tweets at @jantalipinski

 

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