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19 October 2015

It’s well-past time for the government to take action on bad landlords

The private rented sector needs more and better regulation - soon. 

By Tom Copley

Britain has some of the poorest protection for private tenants of any western economy. While British tenants have to settle for short-term tenancies, unpredictable rent hikes and a regulatory system that allows landlords to evict tenants for no reason, our European counterparts often enjoy indefinite tenancies, regulated rent rises and real powers to take on landlords if the boiler breaks.

I’m regularly contacted by tenants who have been evicted for no reason, or who fear the consequences of asking for basic repairs to be carried out. A small but welcome recent change in legislation now means that tenants cannot be evicted for no reason if they’ve registered a complaint with a landlord. However, given the severe imbalance of power between landlords and tenants it remains to be seen how effective this will be.

Last week, Karen Buck MP’s private members’ bill which would make it unlawful for a landlord to let out a property that is not fit for human habitation, was “talked out” by Conservative MPs, meaning it couldn’t be voted on. That this is not already unlawful is extraordinary – action is long overdue.

While most landlords are good landlords, poor behaviour is commonplace and astonishingly often perfectly legal. This should be considered unacceptable, particularly given that the number of families living in the sector has grown dramatically in recent years and is forecast to keep doing so. It’s a situation that our European neighbours do not tend to tolerate.

Yet any suggestion of tightening protections for British tenants is met by hectoring from landlord representatives and politicians alike, with references to statist “Venezuelan-style rent control” abounding. When even modest proposals by European standards, were announced by the Opposition in 2014, Grant Shapps claimed that “evidence from Britain and around the world conclusively demonstrates that rent controls lead to poorer quality accommodation, fewer homes being rented and ultimately higher rents – hurting those most in need.”

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Reminiscent of businesses’ response to the introduction of the minimum wage, landlords have promised that any increase in rent or tenancy security for tenants will produce a mass exodus from the rental market.

The problem is that this position doesn’t stand up to scrutiny.

Last week the London Assembly’s Housing Committee examined a report we commissioned from the Cambridge Centre for Housing and Planning Research. The report blows the myth about rent regulation wide open.

The research forecasted the likely growth of London’s private rented sector over the next decade and then modelled the likely impact that six different rent control models would have on this growth. The sector is expected to grow by 49 per cent over the next decade, but with all but the most draconian rent regulation, the sector would still be expected to grow by between 35 per cent and 49 per cent over the next decade.

It’s also important to note that the recent growth of London’s private rented sector has generally come at the expense of other tenures – particularly homeownership – and not by the expansion of overall housing supply.

For London, rent regulation would therefore mean that the number of privately rented homes still increases rapidly over the next decade, but tenants would have much greater predictability over rents and tenancy conditions, while more homes would also become available for first-time buyers. By dampening rent inflation, it would also help to reduce the Housing Benefit bill in a more humane way than the Government is currently seeking to do.

Britain has some of the weakest protections for tenants, but it also has a private rented sector that is remarkably insignificant in size compared to some of our neighbours. Even in London, where the sector now accounts for 26 per cent of the housing stock, it is dwarfed by the size of the sector in countries like Germany and Switzerland, where it is 60 per cent and 56 per cent of the total stock respectively. In both of these countries rents are regulated, tenancies tend to be indefinite and landlords can usually only evict tenants if they want to live in or sell the property.

The notion that London can’t, and shouldn’t, do anything to give private tenants greater security over rent and tenancy conditions is nonsense. With the sector forecast to grow to almost half of all homes in London by 2025, the case for action only keeps building.