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22 January 2015

Renters have few rights in a sector run by hobbyists

Landlords have all the perks of being a business but none of the responsibility.

By Dan Wilson Craw Dan Wilson Craw

The customer is always right. That’s not exactly law, but it is a dictum that has served generations of businesses well since the phrase was coined by Harry Selfridge in the early 1900s. And successive governments have turned the sentiment into law through legislation that gives consumers protection in scenarios ranging from unsanitary products to simply changing their mind.

But in one part of the economy, suppliers are still free, in practice, to trample over their customers’ wishes. In this industry, the supplier is free to withdraw their product while the customer is using it without giving them a reason. In this industry, the supplier can sell a product that damages a person’s health and can get away without remedying it. In this industry, unhappy customers can’t get a refund.

That industry is privately-rented housing. In a report on 13 January, Citizens Advice pointed out that you are more protected when you buy a toaster than when you rent your home.

The reason for the anomaly is that the private rented sector falls somewhere between a lucrative hobby and a proper business, enjoying the advantages of both and suffering the disadvantages of neither. As a lucrative hobby, buy-to-let escapes the consumer rights legislation that is taken for granted in other industries. For example, because the simple investor must be able to cash in his investment when it suits him, he has a right to evict his tenants without giving a reason with just two months’ notice. Letting agents brazenly charge fees to tenants rather than their actual customers, the landlords – a practice that would be unheard of anywhere else.

But as a proper business, the landlord gets perks that would be silly to give to other hobbyists. He has access to loans that a speculator in company shares could only dream of having. And the interest on those loans can be excluded from his tax bill as a business expense.

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With the best of both worlds awaiting them, thousands of people have become buy-to-let landlords over the past two decades. And they’ve been vindicated, collectively enjoying £177bn of capital gains over the past five years, according to Savills. That’s £177bn of unearned wealth accrued at a time when their tenants have seen inflation outstripping wages, public services scaled back to meet the demands of deficit reduction, and an average of 40 per cent of their income paid in rent that most tenants would much rather be spending on a home they owned.

It is time that landlords started giving something back, and when they do it will really be their own fault. Because investors have been buying up homes and pricing out first time buyers, the private rented sector has doubled in the past decade, and there is now a force at the ballot box that will push for change. Renters now outnumber homeowners in 65 parliamentary seats, a number that will keep growing as long as prices stay high. With 35 per cent of private renters considering themselves swing voters, there are enough of them to cast the deciding vote in 86 seats in May. If politicians want to keep their jobs, they have to start offering renters better rights as renters, not just the slim chance of escape to home ownership.

On Wednesday 4 February, Rent Freedom Day will give politicians a chance to hear from renters before they make their pitch to voters. Generation Rent and other campaigns and renter groups are taking over Westminster with a mass lobby of parliament, the first National Renters Hustings between Conservative, Labour, Lib Dem and Green housing spokespeople at 3pm, and a series of talks and workshops for private renters who want to take more control over where they live. The day is free for private renters to attend and make their voice heard. They might be second class citizens in their homes, but in our democracy, the constituent is always right.

Dan Wilson Craw is communications and marketing manager for Generation Rent

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