“Rents in London and in most big cities are very high. People living in my constituency, usually young people, are paying £250 to £400 a week for a flat. That makes a big hole in their salary, and they have no permanent security of tenure. Normally, they are on six-month to one-year lease agreements, and the rents can go up again at the end of that time.
That has a number of effects. First, as a society we end up with a poorer sense of community, because people do not feel a sense of belonging or of security. Secondly, many people are making vast sums out of the buy-to-let market. Indeed, it is one of the biggest growth areas. Is it sensible to encourage that sort of investment without any rent regulation and with such vast profits being made? I ask the Minister to think seriously about what degree of regulation should be introduced into the private rented market.”
So Jeremy Corbyn said in the House of Commons on 5 February 2008, in the midst of a financial crisis that would see first-time buyer mortgages disappear and the buy-to-let market boom. Nearly a decade on, as the unchallenged Labour leader, he is closer than anyone in 2008 imagined to enacting his demands. In his speech, he reiterated a pledge made before, but increasingly pitched as a priority. “We will control rents,” he said. “When the younger generation’s housing costs are three times more than those of their grandparents, that is not sustainable.
“Rent controls exist in many cities across the world and I want our cities to have those powers too and tenants to have those protections.”
Rents are to millennials what mortgages were to Gen X. When I started out reporting on the property market in the turbulent years following the recession, it was common for those in the buy-to-let industry to kid themselves that renting was a lifestyle choice, and that regulation only got in the way of supply and demand.
This kind of wilful complacency is getting its comeuppance. If half your salary goes on rent every month, and it could be even more depending on a landlord’s whim, you are not going to applaud the merits of a market economy. The idea that it is a market economy, indeed, is a fallacy for renters everywhere but Scotland, so long as letting agents are still able to charge arbitrary fees (a bill banning them is in the process of being drafted). The biggest cause of homelessness now is simply a rental lease coming to its end.
Another interest group are baby boomer landlords, who have snapped up properties with an aim to securing a reliable rental income to fund their retirement. They may well be worried about the impact of rent controls on their bank balance, but this is of little interest to the millennial renter, who is more concerned about correcting their misunderstanding that a property is an investment, rather than a home.
Indeed, even the idea that housing might be a necessity, rather than some kind of luxury item, has been a struggle for those at the sharp end of the housing market. Nothing is more illustrative of this than housing benefit. The fact it exists – and is funded by working-age taxpayers, who are increasingly likely to also be renters – suggests that everyone agrees there is social good in having a roof over your head. Yet housing benefit subsidises private landlords, without imposing any corresponding limits on rents. Why does the government feel compelled to underwrite the private renting sector, and yet feel unable to have a say in controlling its own costs?
Corbyn has long been aware of the problems in the private rental sector, but over time capping rents has grown from one of many policy ideas to being front and centre of Labour’s appeal to young people (it was the most popular pledge in the 2017 manifesto, according to YouGov). What is remarkable, perhaps, is how long it took to get there. In 2008, the idea was confined to backbench lefties like Corbyn. In 2015, Ed Miliband, Corbyn’s predecessor, was lambasted by right-wing (property owning) politicians for merely floating the idea of longer tenancies. But between 2005-6 and 2015-16, the proportion of those aged 25 to 34 privately renting increased from 24 per cent to 46 per cent. More than half of private renters voted for Labour in the 2017 election, according to Ipsos Mori, compared to 30 per cent who backed the Conservatives. As for those aged 35-44 in the age bracket associated with turning Tory, the top end of Generation Rent, 49 per cent opted for Labour, compared to 33 per cent for the Tories. Offered nothing except the predictability of rising housing costs, it seems voters feel that the time for rent controls has come.
The usual protests from economic liberals and the property market are already winging their way to journalists’ inboxes. They have valid points – as my colleague Jonn Elledge notes, San Francisco simultaneously has rent controls and a housing crisis. But these interest groups opposed more moderate policy changes in the past, from registering landlords to banning letting agent fees. If a Prime Minister Jeremy Corbyn introduces rent controls, they have only themselves to blame.