As the cabinet member for housing at the UK’s largest local authority, one thing I quickly learned was that it’s not simply enough to assume that a roof over someone’s head solves all their problems. Tackling homelessness is of course very high on the agenda, but the quality of accommodation and the support on offer is also key.
That’s why in Birmingham we are focussing on the exempt accommodation sector. Exempt accommodation is an unregulated type of supported housing. It is often used as a means of housing those with no other housing options, such as prison leavers and people from other vulnerable groups.
This sector has almost doubled in size in the city over the last two years, from 11,500 units to close to 20,000 and we’re seeing huge increases of exempt housing in some neighbourhoods, as private landlords build up portfolios of leased and owned accommodation, and then apply for registered provider status, exempting them from licensing regulations and local scrutiny. Over £200 million is spent on such housing in Birmingham alone.
Such accommodation can only be regulated through the Housing Benefit system and the regulatory standards for registered providers, overseen by RSH (Regulator of Social Housing) not local authorities on the ground. There is little or no regulation of care, support or supervision provided, merely an extremely vague requirement for it to be ‘more than minimal’. Lax Tory regulations means the sector is ripe for corner-cutting, exploitation and profiteering.
And, while there are many responsible and respected providers, there are also horror stories of vulnerable people being exploited and of neighbourhoods being blighted by an explosion of sub-standard accommodation.
So as a Labour Council what are we doing to fix things in Birmingham?
We’re focusing on halting the growth in exempt housing while vital oversight work can be carried out to:
Improve property standards through inspection and intervention
Improve support through increased scrutiny of claims
Gather intelligence of suspected organised criminal activity and dealing with anti-social behaviour with the police
Better scrutinising new claims for Exempt status
In Birmingham we are working with responsible providers who, once accredited, become the main point of referrals for statutory agencies.
We are also rolling out a Quality Standards Framework and a Charter of Rights for residents (both co-designed with people who live or have lived in exempt accommodation) to set a local standard until Government regulations catch up.
A growing number of key partners across Birmingham have now signed up to only referring to providers that adopt both the Quality Standards and Charter of Rights. This of course requires a robust inspection regime and we are piloting one in the city.
But there is only so much we can do as a Labour Council. Ultimately we need the government to change course too.
The exempt sector has been, and sadly continues to be a rich market and there’s a clear need for stronger regulatory powers so that those who provide poor standards to their tenants, face real consequences. This effort is being spearheaded in Parliament by Steve McCabe, Liam Bryne and Shabana Mahmood on behalf of Birmingham’s Labour MPs, and new West Midlands PCC – Simon Foster.
On 19th April Birmingham Labour Group in collaboration with the Birmingham Labour MPs launched a city wide petition calling on Government for urgent policy reform:
The local impact in some areas is causing a misery for tenants and local communities. We firmly believe there should be local impact assessments implemented and tests of whether someone is fit to be a landlord to protect communities. We just need government support to do so and have put a bill to parliament that would guarantee this.
In Birmingham we’re making a difference and our message to unscrupulous providers is that we’re coming for you and your time will soon be up.
Cllr Sharon Thompson
Sharon Thompson has been a Labour Councillor for the Birmingham North Edgbaston ward since 2014.
Once homeless herself, and a single mother at an early age, Cllr Sharon Thompson is currently the Cabinet Member for Homes and Neighbourhoods and on the WMCA Housing & Land Delivery Board.
New polling by the Fairer Share campaign hints at the huge potential gains in store for a party that is brave enough to reform our broken property taxes. With local elections around the corner, four out of ten people would consider switching their vote to a party pledging to replace council tax with a fairer property tax system with lower annual bills for most people and local services maintained at the same level. In the so called ‘red wall’ areas of the country, the figures are higher with almost half of all people questioned saying they would consider switching their vote.
It should come as no surprise to see the extent to which many people are fed up with council tax. It is outdated and highly regressive, both within local areas and between them. Council tax hits the poorest residents of our society hardest while mansions or luxury apartments in Westminster or Kensington barely notice council tax, deeming it less than a service charge.
The worst hit areas are the regions of the United Kingdom once known as Labour’s heartlands, with the North East getting hammered the hardest. Hartlepool, for example, is the worst hit local authority. Residents there pay 1.31% of the value of their homes in council tax, whereas in Westminster, the average resident pays just 0.06% of their property value in council tax. That means the average resident in Hartlepool has a council tax burden 22 times that of Westminster.
Yet to talk about the regional disparities is to underplay the full extent of the problem. Council tax is derived by bands based on 1991 house valuations. The bottom bands pay a larger percentage of property value than the top bands, and houses at the bottom of each band pays significantly more than a property at the top of it.
At Fairer Share, we propose replacing council tax and stamp duty, which has a whole host of problems that hinder economic growth, with a flat property tax of 0.48% of the value of the property.
Flat taxes usually aren’t considered great progressive victories, but that is merely a reflection of the backwardness of the current system (something that shouldn’t be surprising given that portable MP3 players are five years newer than the current council tax regime).
Replacing council tax and stamp duty would be beneficial 76% of households across the UK. There are particular benefits for the poor, nearly 90% of the poorest in society and would add nearly £300 to their average net income per year. Although, on the face of it a neutral policy, it would also have social justice implications, with our analysis showing that large majorities of households in all the UK’s major ethnic minority communities benefiting from a move from council tax to a proportional property tax.
Remarkably, this policy can be achieved without taking a penny out of the treasury’s coffers. The flat rate of 0.48% would return exactly the same revenue as that lost by council tax and by stamp duty, and helping to preserve the vital local services on which we all depend. Raising money for police or social care with regressive precepts could be a thing of the past as local authorities could flex their local rate and raise revenues more fairly from their residents.
Support for the policy is growing in Westminster. Labour’s Grahame Morris is a key supporter, having pushed Boris Johnson on the policy at Prime Minister’s Questions recently. But the policy cuts across party lines, with a number of northern Conservative MPs also supportive.
Across the UK, more than 120,000 households have signed our petition calling for a proportional property tax. A progressive Labour party should also be wholeheartedly backing the introduction of a fairer system of property tax that will deliver in real terms for the majority of voters up and down the country.
Andrew Dixon
Andrew is the Founder of Fairer Share, the campaign to replace Council Tax and Stamp Duty with a fairer system through the introduction of a Proportional Property Tax.
Housing Revenue Accounts (HRAs) manage council housing. They receive no subsidy. Their income is overwhelmingly from tenants’ rent and service charges; 94% of the collective income of all HRAs. The quality of the homes, and hence the living conditions of tenants, depends upon key housing components (bathrooms, kitchens, central heating, roofs etc) being renewed in good time. If they are left beyond their useful life then the homes deteriorate.
Today, HRAs have insufficient funding to renew existing homes over the long term. My own council, Swindon, has a shortage of capital funding of £80 million over the next five years alone. This is unexceptional amongst councils. Whatever the differences between them all HRAs are short of sufficient resources.
Why are they short of funding? In 2012 a new council housing finance system was introduced – self-financing. It involved a ‘debt settlement’ in which what was deemed by government to be the national council housing debt was disaggregated and shared out amongst stock owning councils. £13 billion extra bogus debt was imposed on 136 councils.
In this fraudulent paper exercise the Public Works Loans Board (an agency of the Treasury) ‘loaned’ them £13 billion. Together with ‘historic debt’ councils owning housing are burdened with around £26 billion debt.
This isn’t in any real sense debt. It is the result of what you might call creative accounting by the Treasury. It’s a means of fleecing tenants whose rent pays off the loans and the interest charges. Currently, it costs councils £1.25 billion a year – 15% of the £8 billion total income of HRAs – to service this debt. Only 12%, £970 million, was budgeted for capital spending last year. That covers renewal of existing stock, cost of new build and purchases.
We can say this debt is bogus because we know that council tenants have paid more rent than the costs of borrowing for past building programmes. The House of Commons Council Housing Group discovered that in the 25 years to 2008, tenants paid £91 billion in rent but councils only received £60 billion ‘allowances’1. The £31 billion difference was more than outstanding debt for past building programmes. That’s why the demand to cancel this so-called debt was made by Defend Council Housing, the House of Commons group, even the LGA. Unfortunately John Healey refused to agree, as did the Tories when elected.
Grant Shapps, Housing Minister in 2012, said that it would provide sufficient funding for councils to be able to maintain their stock to the Decent Homes Standard, over the 30 years of their business plans. This wasn’t true. The previous government’s own research showed that if funding was based on actual need, it would require a 67% increase. Yet the increase was just 24%. So under-funding was built into the system from the very start. Then from 2012 the coalition and Tory governments introduced policies which resulted in the amount of income councils collected being much less than projected in the ‘debt settlement’.
The amount of so-called debt which each council was given was based on an estimate of their rental income over 30 years and the number of RTB sales (each home sold is rent income lost to HRAs). However, the government
increased discounts on RTB as a result of which there was a five-fold increase in sales. This meant that councils lost far more rent than estimated in 2012.
introduced a 4 year rent cut of 1% a year.
Since HRA business plans were based on projections which are now completely out of synch with actual income, councils are collecting hundreds of millions of pounds less rent than incorporated in their business plans. For example, Swindon is projected to collect approximately £360 million less rent over the course of the business plan than the 2012 estimate, Newcastle in the region of £500 million less. Overall, councils will take in many billions less rent income than estimated in 2012.
The result of this is that HRAs have insufficient funds to renew their existing stock in the long-run. Key components which are left in place beyond their useful life not only lead to worse living conditions for tenants and the irritation of repeated job requests as components fail regularly, but they also drive up responsive repair costs.
Labour’s 2019 general election Manifesto included a commitment to review council housing debt. Obviously it cannot do that directly without being in government. However, it is time for Labour to end its silence on this issue. It can challenge the Tories under-funding of HRAs. Under the 2011 Localities Act the government has the power to reopen the ‘debt settlement’ and readjust the debt if there are significant changes in income or costs. Labour should be demanding that the government do just that and write off debt at least in line with the projected losses that have resulted from their policies since 2012. Through its group in the LGA, Labour could collect statistics which highlight the scale of the shortfall faced by councils over the course of their business plans and organise a national campaign.
Labour should also make a commitment itself, to cancel the debt if elected. The Labour Campaign for Council Housing has just published a pamphlet, The case for cancelling council housing debt, which examines the historical reason for this financial crisis in more detail than I have space for here.
Debt cancellation would address the under-funding of HRAs in relation to the existing stock. The extra £1.25 billion would enable more than double the level of investment in renewal of key components to be spent. Labour should be demanding from the government funding sufficient to maintain and improve the standard of existing homes. Moreover, with a Decent Homes Standard review currently taking place Labour has a duty to highlight the consequences of this under-funding. Proposals to improve the standard of the DHS would be worthless without councils having the wherewith-all to carry out the necessary work.
The last year has heralded massive changes to the way we live and work. Millions of those in work have seen huge changes in the way they do their jobs, learning how to reduce Covid risks in the workplace, or carry out their job from home via video calls and remote working. Millions of others, however, have been out of work throughout this time – creating a growing gap with the new skills required in the workplace. Some jobs are starting to come back, but how many? In what areas? And will people whose jobs don’t return be able to find work in new areas?
Peabody Index background and findings
As a London-based housing association with over 150,000 social housing residents, Peabody has long been interested in helping our residents into stable employment with a living wage. Our Peabody Index reports track employment among our residents, comparing them with broader measures in London and throughout the UK, publishing updates throughout the pandemic.
Job vacancies in London are recovering, but they are sill 14% below pre-pandemic levels, compared with vacancies back to normal levels (or higher) in the rest of the country. Unemployment is still growing faster in London, with a 4.9% increase between December 2020 and March 2021 compared with 3.8% in the rest of the country.
Falling incomes have caused a rising rate of people are in high levels of debt. Worryingly, many are taking out bad loans just so they can buy essentials like groceries and toiletries. Young people and ethnic minorities appear worse affected.
The future is uncertain for those in work as homeworking seems to be with us for a long time. Londoners favour working from home more than their counterparts elsewhere in the country. Research suggests that about one third of them expect to work from home more in the future, mirroring the one-third of our working residents who are currently working from home. If workers in the City of London stay at home, there is serious concern for the future of the support economy that services those jobs.
What should policy do?
So what can be done? Employers need supporting to create jobs, and to support young people into the workplace – something that can be more challenging when staff are working remotely or when the economic future is uncertain. Peabody are pleased to be getting involved with the Government’s Kickstart Scheme for jobs and apprenticeships for young adults, which shares many ideas with the Opportunity Guarantee that Peabody has supported.
Given the broader shifts towards homeworking, many of us have taken on new digital skills, some of which we might take for granted. In February 2020, how easily could you share your screen on Zoom or co-edit documents on Sharepoint? For people who have lost their job during the pandemic or been unable to transition to homeworking, coordinated digital skills programmes will be needed to prepare for a future of working remotely. Other people have worked outside the home and developed a range of new skills – from taxi drivers learning new road layouts due to increased pedestrianisation to care staff learning to use PPE, our residents have told us of a huge range of new skills developed. Those not in work may need training to catch up and renter the workplace.
And despite encouraging signs of recovery, we need to make sure the welfare safety net functions well at the time it is needed most. That is why we continue to call for Universal Credit wait times to be reduced and the £20 per week uplift to be made permanent.
Helping social housing residents into work
At Peabody, we try to use the best evidence to help our social housing residents. During the pandemic, this means the evidence must analysed quickly and spread through to our teams. The Peabody Employment and Training Teams have helped 451 people into employment, supported 92 residents to achieve accredited qualifications and a further 103 residents into non-accredited training.
Delivering this support remotely has been challenging. We have developed a mix of online resources, independent training support, and general information sessions with guest speaker presentations. We try to make these sessions well-rounded, with guest speakers from local MPs, GLA Assembly Members and the South-East Chamber of Commerce. We are seeing a rise in those who are self-employed or planning to open a business. Our monthly business forums aim to help people get these ideas off the ground.
Not all work is done online, even during the pandemic. We have supported procurement opportunities and facilitated pop-up markets to provide the businesses with an opportunity to trade during and in-between lockdowns. This year we saw Thamesmead businesses, supported via our enterprise programme, on both the Greenwich and Bexley side win at their local business awards.
More needs to be done as we pull out of this pandemic. So much of the past year has been responsive – trying to make sense of the pandemic and its impacts. Only with rigorous research and evidence-based policies and programmes can we start to shape the future of work in London and the UK.
Greg Windle
Greg is a Research and Insight Analyst at Peabody.
Students often experience some of the worst housing conditions in the country, yet their voices are often marginalised and ignored. The issue has worsened, to the extent that student housing has essentially become a joke, with various popular culture depictions portraying the often disgusting conditions in which students are forced to live.
Fresh Meat provides a prime example of this; while it might seem hyperbolic at first glance, for those who didn’t go to university or who were privileged enough to be able to spend extortionate amounts on purpose-built student accommodation. Even students who can afford this, still face problems with the standard of accommodation and value for money available.
However, slug trails, mould, broken windows, burglaries and malfunctioning boilers are all issues that students are faced with regularly. This is not hyperbole, it is reality.
I have spoken to many of my friends and family members about student housing and nobody was surprised by my experiences of substandard housing and neglectful landlords. Everybody knows that this is happening. In my own experience, I have dealt with broken windows not being fixed for four months, mice, slugs, mould, no heating or hot water for weeks, windows with no curtains that woke me up at sunrise everyday and landlords turning up unannounced during a pandemic without masks.
Throughout this pandemic hundreds of students have posted on platforms such as TikTok, showing leaking ceilings, broken kitchen equipment and rat infestations. So it begs the question of why this is allowed to continue. It is a woeful neglect of young people and it leaves students incredibly vulnerable and living in awful conditions.
This isn’t only a problem with students privately-renting, it is also a problem with student accommodation, whether provided directly through the university or a third party provider. As the Guardian reported, student accommodation ‘doesn’t officially classify as housing…as it falls outside a specific use class, it doesn’t have to adhere to the usual standards associated with dwellings’. It means that student housing is often treated as either a hotel (C1) or residential institution i.e. care home or hospital (C2), because these types of accommodation are not intended for prolonged residence, there are far fewer regulations when it comes to space and daylight.
The responsibility for the poor conditions and facilities that students endure in purpose-built student housing lies directly with universities and third parties. Universities have, or should have, a duty of care to their students and exploiting gaps in housing regulations completely contradicts this moral obligation.
There is a huge divide in student cities, between aging university-owned student accommodation that is in dire need of refurbishment, and brand-new purpose-built accommodation often in city centres. For the majority of students, choosing their university accommodation for the first time they are faced with a dilemma: spend all or the vast majority of their student loan on quality accommodation and struggle with living costs for the year or have more money to enjoy their first year of university life, but live in poor housing.
Most students choose the latter and while it might seem like a good compromise for them, students should not have to choose between having enough student loan to survive, and living in adequate housing.
Part of this comes down to a lack of understanding about tenants’ rights among students. I’d argue that the blame for this lies with the universities themselves. They clearly understand the position that young people are in when they arrive at university. Yet, they don’t provide any real information to students about their rights with regards to renting. The vast majority of young people rent for the first time at university and so this kind of information would be crucial to these students. Why is none provided?
ACORN renter’s union has been working hard in many major student cities to provide students with more information about their rights. Additionally, they have taken action on behalf of students who are struggling with neglectful landlords, such as their recent action in Manchester when ‘over 25 ACORN members marched on the business address of Zear Property who left university student Kelsey in squalid living conditions so bad, that she was forced to move cross-country back to her hometown in the middle of the pandemic.’
While, of course, it is great that students have groups on their side in these situations and this support is clearly needed, it should be the landlords themselves and universities that are taking action. Additionally, it is clear that gaps in regulations surrounding student accommodation needs to be resolved.
It is interesting then, that when young people attempt to make their voices heard about their housing experiences they are often dismissed and deemed irrelevant or naive. The state of the housing market at present means that it will likely be decades before current university students are able to put down a deposit on a first house, and so their experiences of renting are incredibly valid.
Moreover, if young people do not know their rights with regards to tenancies and are taken advantage of during their university study, they will likely continue to be taken advantage of once they graduate. This creates more opportunities for landlords to cut corners, provide substandard accommodation and charge extortionate prices for the privilege.
The government has argued that it has introduced measures to protect students in student housing and this is woefully inaccurate. Although protections have been put in place regarding deposits, and this has been a welcome development, there is much more that needs to be done. This government announcement suggests that more has been done to make sure that landlords resolve problems quickly, yet this is just not being seen implemented in reality.
From my personal experience, I had to wait for three months for our heating to be fixed, despite being in constant contact with my landlord asking them to resolve the issue. Landlords certainly seem to exploit the lack of understanding of the rights of tenants at present and government action has done little to resolve this.
We need real, robust action from universities to provide useful information to students from the moment they apply, months before they will need to choose accommodation. Young people need to be aware of their options, realistic expectations and rights before they enter into any contracts. Some universities provide lists of approved landlords, who do not attempt to take advantage of students, while other universities actively attempt to discourage any such lists being made.
Universities need to be standing up for their student populations and working with local councils to ensure that private student housing is up to scratch. MPs also need to be raising this issue, to draw attention to the increasing disparity between aging student accommodation and modern expensive accommodation, but also to amend legislation to make sure that student housing is adequately regulated.
Greater consultation with students over their housing experiences would help to identify major problems and explore mitigation. Our experiences are valid and they represent a significant problem of landlords having too much power that is present throughout our housing sector.
Amy Dwyer
Amy is the Chair of the Young Fabians Education Network, Founder of the University of Manchester Young Fabians and Co-Secretary for Labour Doorstep.
Alongside this, Amy is also studying for her MA Politics and is standing as the Labour candidate for Longton and Hutton West in the South Ribble Borough Council By-Election.
The UK is in the midst of a housing crisis that isn’t going away anytime soon, with the pandemic only exacerbating this problem and leaving people struggling financially. Whilst we are seeing strong levels of first time buyers get onto the property ladder, simultaneously nearly 1 in 5 (18.7%) of households are occupied by private renters, with a further 16.7% of households occupied by social renters.[1] This is a huge proportion of the population, and whilst we are working to increase access to homeownership, it’s important that those who are currently renting are not left behind.
At MTVH, it is part of our DNA to support people at all levels and provide a quality home. Whilst we offer a dedicated shared ownership through our SO Resi brand, we also support those who are renting. For example, in London we offer London Living Rent which is a form of ‘try before you buy’ and allows Londoners to rent whilst building up savings to buy a home.
But let’s start with shared ownership.
Shared ownership is needed in society, as it provides an affordable opportunity for people to have access to a stable, well-located home. My personal belief in shared ownership is firmly rooted in my own experience – it’s not only how my wife and I were able to buy our first home, but also how my parents were able to get onto the property ladder after moving to the UK in the 1960s. My story is not unique and so many of my colleagues at MTVH have similar anecdotes about how shared ownership has given them the security of homeownership, which we know helps to open other doors to improve overall quality of life.
Our dedicated shared ownership brand SO Resi recently published a research report in conjunction with Cambridge University that looked at the shared ownership market in 2020. Perhaps most significantly, our research showed that since 2015/16, the number of shared ownership completions per year has increased from just 4,084 to 17,021. But it’s important to understand why shared ownership is taking centre stage for young buyers.
A combination of staggering house price growth, increasingly high deposits and a lack of lower loan to value mortgage options has led to aspiring homeowners moving away from the open market and utilising government products such as shared ownership. Whilst the government’s new 95% mortgages may work to address some of these problems, for many people a five per cent deposit on the open market is still out of reach.
Our research also revealed data sets surrounding the proportion of those who staircase each year. There is a misconception that those in shared ownership homes will never staircase, but our research shows that on average between 2-3% of shared owners staircase to 100% ownership each year. Staircasing isn’t possible for all shared owners, but the flexibility of shared ownership means individuals can make the scheme work to suit them – whether that’s living with a 25% ownership or working to increase your shares over a period of time.
Shared ownership has been around for decades, and the government’s plans to amend the product simultaneously presents both opportunities and concerns. Many of those who took part in our research specifically raised concerns around changes that will allow buyers to purchase a minimum 10% share rather than the current minimum of 25%. Housing providers will also be responsible for repairs for 10 years, leading to an increased financial commitment from providers.
There is no denying that these changes are advantageous for the buyer, and will open the doors even wider to homeownership. However, those surveyed believe the shift in responsibility of repairs will reduce the supply of homes that they are able to build. If the level of affordable homes available drops, this will worsen our current housing crisis and plunge more people into difficult situations when it comes to finding a home.
We know that a good home and environment are key in ensuring that everyone has the chance to live well. But homeownership isn’t possible for everyone – and whilst shared ownership increases access, there are still those who rely long-term on renting, whether privately or through a social housing provider.
To solve the housing crisis, we need to offer solutions that deal with different challenges, which vary as people need homes to rent and to buy. Instead of pitting one tenure against another, we need to collaborate and support those who do depend on the rented sector. Rent prices are rising and this is leaving a generation of people locked in paying high rent prices with no possibility of saving, either for a house deposit or to improve their quality of life.
Long-term, we need some clarity on solving the housing crisis as simply launching temporary schemes isn’t enough anymore – we need real policies that tackle the problems faced by young people today to ensure they can continue to get onto the property ladder at an affordable price in their preferred area.
In the current economic climate, shared ownership demonstrates its importance by supporting people to grow and start their families, put down roots and enjoy the benefits of homeownership without having to find the astronomical deposits required to buy on the open market. Like any product, shared ownership isn’t perfect, nor is it the single solution to the housing crisis, but it is an incredibly important offering that bridges the gap between renting and full ownership.
Kush Rawal
Kush is the Director of Residential Investment at Metropolitan Thames Valley Housing
In the last election Conservatives ran on a manifesto targeting the Gypsy, Roma, and Traveller community. They sought to give police new powers to arrest and seize the property and vehicles of trespassers who set up unauthorised encampments – in “order to protect our communities”. But at what cost and where will these families go?
Unauthorised encampments yet another symptom of a failing planning system
The recent Government consultation on ‘Strengthening police powers to tackle unauthorised encampments’ closed on the 4th March. The Home Office is due announce its findings very soon. These callous changes could have far reaching consequences, resulting in persecution for those living with unmet housing needs.
England is already facing a systemic housing shortage where building new homes is illegal without prior permission. On one hand, the heavy hand of the law seeks to punish minority groups whose nomadic way of life our system fails. While on the other, bias, racism, and political failure to tackle the systemic shortages endemic in our planning system.
Current land use regulations leave the travelling community bottom of the list for unmet needs. Both Government and local authorities have failed to address the needs of the Gypsy, Roma, and Traveller community. The proposed criminalisation of their a way of life does nothing to solve the issues.
Consultation on whether to persecute most disadvantaged communities
Former Home Secretary Sajid Javid previously had plans on unauthorised encampments, in particular to amend sections 61 and 62A of the Criminal Justice and Public Order Act 1994. Priti Patel seeks to lower the criteria for police to be able to direct people away from unauthorised sites by changing this legislation.
Trespass is currently a civil offence requiring landowners or local authorities to seek a court order to evict people if they are occupying private or public land. Some describe the process as tiresome and slow. Out of the 23,000 traveller households in England, it is thought that 14% live on unauthorised sites, equating to around 3,200.
Sadly, lowering the criteria for permitting new sites for homes, or pitches for the Gypsy, Roma, and Traveller community seems to be a political hot potato. The recent planning reforms set out to consult on what new criteria might be required.
It could be a missed opportunity for the traveling community as local plans, which could be substantially consulted on, could outline potential pitches for authorised encampments. Instead of futile attempts at persecution.
Solution is to authorise new encampments
Research by Friends Families and Travellers (FFT) shows that 1,035 traveller caravans are located on unauthorised encampments in England, although this is widely considered to be an underestimate. Many have living arrangements that could currently result in them facing prison, a fine, or having their family’s home taken away from them.
Labour’s last manifesto offered nothing to the Gypsy, Roma, and Traveller community. It did not seek to protect the human rights of those who have the “crime” of having nowhere else to go. This is a community who have lived in England and practised a nomadic way of life since before the 16th century. We have witnessed some local authorities buckle under political pressure, having allocated funding for new sites, only to U-turn.
NIMBYism Leading to Local Authority Persecution of Gypsy, Roma, and Traveller Communities
Milton Keynes Council now seeks to extend the town’s two current sites and put any new ones on hold. Our current planning system caters for the ‘Not In My Back Yard’ (NIMBY), rather than those most in need. The recent story of Bethany Rose, who has been waiting for a pitch for over a year, highlights how the “NIMBY culture” has resulted in the West Sussex’s plan for 50,000 new homes being agreed with not a single authorised travelling pitch.
Attitudes need to change on planning, as well as how we accept others way of life. In England only 13 permanent sites have any available pitches for Gypsy, Roma, and Traveller families, out of a total of 59. Almost 1,700 households are on waiting lists for pitches on traveller sites. This illustrates a severe shortage of pitches available of people living on unauthorised encampments.
Manufactured housing: lessons to be learned from the United States
We must recognise that manufactured housing associated with mobile homes on such parks are considerably cheaper to build than typical bricks and mortar. These can be energy efficient and produce much less waste than traditional site-build construction, with considerably less embodied energy. This results in much more affordable rents.
Permanent sites often demonstrate how small lot sizes can result in high population densities. Market urbanism expert, Nolan Gray, has written for Strong Towns on how planners can learn from US ‘trailer parks’. Gray argues that a more permissive approach to such types of housing settlement should be taken. Primarily to not undermine access to affordable housing. But back here in England our planning system is failing to tackle the inequalities faced by these communities.
Tory persecution of the most disadvantaged affects education
We know Gypsy, Roma and Traveller children leave school at a much earlier age than any other ethnic group. They also have worse attainment standards from early-years onwards. Only a handful ever recording having attended university. Shelter’s report shows us the devastating impact of not having a permanent home. In particular on the ability of a child to participate in school successfully.
Government must stop treating low-income communities such as the Gypsy, Roma, and Traveller community as objects of contempt. We cannot continue to subject them to top-down paternalistic planning. It prevents families from putting down roots. Nor can we accept the unjust criminalisation of a communities nomadic way of life. Especially, not without offering a credible preventative alternative to such criminalisation.
Ultimately this is a failure of our planning system to effectively plan for some of the most disadvantaged groups. It comes as no surprise that the Tories have the Gypsy, Roma, and Traveller community in their sights. Simply because they lack political representation. With nowhere else to go, this criminalisation is nothing short of a targeted attack on the community.
Labour must recognise this and commit to ending the shortage of authorised sites, mandate designated sites, and embrace manufactured housing, if we are to truly commit to a more fair and just society.
Christopher Worrall
Editor of Red Brick. He is currently an Investment Manager at Guild Living, a Non-Executive Director of Housing for Women, and is on the Labour Housing Group Executive Committee.
Chris also co-hosts and produces the PricedOut UK Podcast.
In a way, it was almost inevitable that I would develop an interest in gentrification and housing. After all, I am a millennial and I grew up in Zone 2/3 of Inner London. I didn’t just watch my neighbourhood change as I grew up, I watched the door to a future my parents’ generation took for granted close before my eyes.
My parents moved to Forest Hill, South East London in the mid-80s. Even back then my parents couldn’t afford to live in Hackney or Tooting (my mum had been a big Citizen Smith fan). Growing up, South London was the butt of jokes – most of which revolved around it being poorly connected, scary or dull. But by the noughties, my area would start appearing in the aspirational columns about London’s new exciting suburbs. Housing prices rose sharply and continuously. The global housing market crash in 2008 couldn’t stop this runaway train and the last decade has seen my neighbourhood transform.
I noticed the most rapid changes taking place after 2011, when the London Overground was delivered to the area. I was away at university over this period and as I returned each summer, there were new cafes, estate agents and pizza places to replace the launderettes, sandwich shops and second-hand electronic stores. I remember chatting to the owner of Cafe No 41 on Brockley Rise around this period. He had owned Bertie Rooster’s Fried Chicken on the same site and he said he’d noticed the area changing, so he thought he’d better change too. Smart move.
Local NIMBYs, true to form, opposed the transformative rail connections. I remember my dad, who worked in transport, railing against the local opposition to it. He had been arguing for greater capacity for the Overground, for longer trains, and an additional station between Surrey Quays and Queen’s Road Peckham. As the Overground now sits at bursting point — a victim of its own success — he should’ve been listened to. Ironically, the Overgound has been a huge boon to their property-owning NIMBYs that opposed it.
But while I infamously remain sniffy towards NIMBYism, I do understand it. A rapidly changing neighbourhood can be discombobulating and disconcerting. As a strange teenager, I remember pleading with my friends to go to the array of cornershops in Honor Oak instead of the new Sainsbury’s Local if they were buying drinks and snacks before we had a kickabout in the park. Instinctively, I didn’t like what I saw as the homogenisation of my local mini-high street and I knew that Sainsbury’s would destroy some of those independent shops (it did) that I felt I had a relationship with. My instincts were to, in a way, keep my neighbourhood ‘static’.
I’ve been on a journey to try and understand the phenomenon that shaped my home town when growing up and understand my own feelings around it. While at university, I wrote my dissertation on the changing Toxteth and Canning areas of Liverpool. I had grand ambitions to start a university society that would work with the local community to improve ‘Town & Gown’ relationships in the nearby area. Like most of my plans, they crumbled due to a bad attitude and lack of endeavour. The dream ended with me getting into a fight at a Residents’ Association’s ‘cheese & wine’ night and quite literally being thrown out.
However, looking back on the experience, it gave me a good understanding of how gentrification works and was a valuable insight into a world I would later inhabit. Gentrification is an organic process and one seen in major cities around the capitalist world. The cliched but illustrative example is as follows – artists move into an area due to cheap rents and large spaces. They create an artistic community and the area becomes ‘cool’. With it being cool, it then becomes desirable. The greater appetite for the housing then pushes up rents and prices and gradually the area’s demographics shift.
It was once thought that cities would act like a pebble falling into a pond, rippling outwards and decaying inside. Yet from the 1970s onwards the shift has been back into the centre. Some hippies and squatters now own multimillion pound property in areas of our West End. Savvy boomers profited.
The process of gentrification can be sped by developers who see the opportunities offered by a rent-gap to maximise profits. In this, developers are simply capitalising on a saturated housing market and building where demand is. Likewise, ‘gentrifying’ businesses are responding to their new clientele not moulding customers from thin-air and wishes. Cereal cafes and posh chicken shops are a symptom of gentrification, not a cause. Today, many of the anti-gentrification activists I come across are ‘first wave’ gentrifiers themselves, similar if not a bit older than my parents.
While it is an organic process, gentrification does cause profound issues. Sharp rises in the cost-of-living create havoc for low-income families and at its starkest, drives them from their neighbourhood. As I mentioned in my last blog, social homes with secure and affordable rent is a fire-wall against gentrification. But London is increasingly being hollowed out, swathes of North & West London in zone 1 & 2 have become binary and soulless places – the very well-heeled live alongside enclaves of council homes occupying parallel lives. I worry that the evaporation of London’s Little Italy, will eventually happen to our Little Bengal and our Little Portugal.
***
My blood still curdles at a previous generation of local politicians who seemed to actively encourage the gentrification of their neighbourhoods, as a means of improving their patch. Gentrification doesn’t solve poverty, it just kicks it down the road. But for some local politicians, that once seemed enough. Angered by what I saw, I vowed to campaign against it. It signalled my first forays into local politics.
In my last blog, I wrote about Lewisham’s Residents Charter and how we’ve come along way from this era. Like our predecessors, we know that mixed communities are positive for social cohesion and shared uplift. Likewise, we also know that many of our large post-war estates are in need of urgent renewal. However, as an administration led by a new wave of politicians, we’re committed to ensuring that any regeneration produces a net gain in social homes, expanding our gentrification fire-wall in the borough.
Yet I do not remain hopeful for the future. Writing this, I am struck by just how long I was part of the problem and what that says for the future. I was driven into local politics by the anger that while my neighbourhood was being torn up and built back up, none of these homes were for me.
Developers, greedily lining their own pockets, were building ‘luxury flats’. Councils were failing to stand up to them and accepting schemes with pitiful amounts of affordable housing.
It’s been through sitting planning committee as a councillor that I learnt that most of these flats weren’t ‘luxury’. The only thing luxury about them was the unaffordable price. The housing crisis has simply become so insane in London that any market-value home is deemed luxury and therefore out of reach of someone like me — a young person without assets, earning the average London wage.
This situation has bred a culture of cynicism among an entire generation. As we discuss rents at house parties and scoff in frustration at the mere idea of saving for a deposit, we’ve grown suspicious of new housing and growth. Moreover, the council-led schemes of the past have led to a sour taste in people’s mouths. While these schemes, directly reducing social housing, could be an example of top-down gentrification — it would be wrong to view gentrification as a whole, as planted from top-down from developers.
If writing to note to my younger self, I’d be rather pithy. ‘Dear Leo, sick of chain stores and the champagne et fromages under those new flats? Let many, many, more flats just like that be built, so rents and prices round here come down and the demographics that fed those independent shops and the sandwich shop you loved so much, can remain.’ As this article highlights, the forces that drive gentrification ‘do not come from the construction of specific apartment buildings or retail complexes, no matter how many granite countertops or artisanal coffee shops they might contain.’ Increasing supply will lower prices.
***
It is only now that I see how damaging the framing of gentrification as a top-down process, thrusted-upon benign communities by developers, has been.
As a councillor, I have been shocked by the glacial and bureaucratic process of approving new homes in the borough. Not only that, I’ve seen how small interest groups have leant on councillors to reject new homes on spurious grounds.
But this is only the tip of the iceberg. As this Centre for Cities report highlights, our planning system operates like the old Eastern Bloc, rationing supply through a permit system. ‘In both the former Eastern Bloc and the English housebuilding market, firms must apply to planners for a permit, or a planning permission, to get the inputs they need to do business.’
We currently have a system that cannot respond to demand. Developers need to go through the process of receiving planning permission which is slow, often costly and fundamentally uncertain (planners can downsize or councillors can strike down an application, years into the process). This means ‘the amount of land that they can develop tomorrow is fundamentally unknown.’
It is this risk, inherent in our system, that means developers hoard land that has planning permission (or is likely to receive planning permission). As Centre for Cities notes, ‘this ‘hamster-like’ behaviour is rational as it means they will always have land on which those assets can be operating, even if planning permissions temporarily dry up.’ The report also notes:
‘A site that has planning permission or is suspected to have a high chance of receiving planning permission can greatly increase this price, especially near cities and large towns with successful economies and expensive housing’. To illustrative this point, in 2010, agricultural land without planning permission around Cambridge was worth roughly £18,500 per hectare. Once it received planning permission for housing, the value per hectare increased to £2.9m.
Developers must cover these high land costs, and they cannot escape them by increasing production or efficiency as the planning system rations the supply of land they require. They therefore need to pass their land costs onto consumers and sell new houses at high prices.
Developers experience a disadvantage trying to acquire land which can be lawfully developed, they enjoy the advantage of a sellers’ market when selling new properties to consumers due to slow buildout rates. This means that predominantly only big powerful developers can get hold of land which will get large-scale planning permission, and once they have hold it, they can build a slow ‘absorption rate’ keeping house prices high due.
If developers could instead just buy land and develop it without applying for a planning permission, then “planning gain” and thereby the absorption rate would both disappear. The price of land would reflect local demand and, as firms would and could only buy what they immediately needed, they would be forced to build new housing as quickly as possible to outcompete rival firms that could now do the same.
It is our system which creates the circumstances for large developers to be able to buy the rationed land for development and build slowly as they face little competition.
But this isn’t a cry to rip-up the rule book. Local planning frameworks should remain in place and offer clear rules of what can be built and where. However, areas zoned for development should be greatly expanded. As the campaign group Priced Out argues:
‘For the areas that are zoned for development, there should be transparent rules about what cannot be built there — which could include what the developments are used for, and rules on look and feel — with everything that does not contravene these rules allowed. Alongside this we already have extensive national building regulations, rules on the sustainability of developments, and various other regulation which is already in place.’
Priced Out Manifesto | Rules-Based Planning
However, when reaching out to colleagues to express these views and concerns, I receive immediate and blanket push-back. Those I speak to see the bureaucracy of our planning system as a bulwark against lowering standards. They instinctively reject ideas about cutting red tape and increasing competition to raise standards. Developers are the bad guys that need to reined in by councillors, rather than firms rationally gaming a broken system that we uphold.
It has become fashionable across the political spectrum to deny that our housing crisis is linked to a lack of supply. Campaigners against new market-sale homes often point to the fact that the UK has 216,000 long-term vacant homes, which could occupy a sizeable chunk of our 280,000 homeless people, if only they were happy to be bussed to Cornwall or Cleethorpes.
However, rather than suggesting that we do not need to increase supply, our empty homes highlight our nation’s stark housing shortage. In the UK, only 0.9% of homes are long term vacant. In a healthy market, surpluses provide ‘a strategic reserve which they can use to respond to sudden changes in consumer demand.’
Compare our situation to Japan, a nation with an affordable housing market. In Japan, less than 5% of homes are socially rented (here it is around 17%). Across Japan, 5.6% of homes are long-term vacant, while Tokyo the figure is 2.5% – which is a higher share of empty home than in Burnley – other most affordable city in England and the one with the most vacant housing. Suppressing vacancy rates in the UK will only make the situation worse. Instead, we need to build enough to homes to create a healthy surplus.
As I have written previously, the housing crisis cannot be tackled by local authorities building themselves. This blog succinctly nails the issue: The UK’s housing affordability crisis is too little supply, which cannot respond to prices. However, getting Labour Party colleagues and angry young millennials alike to accept that we need developments of market-rate properties on a huge scale in areas of the country where our housing shortage is most acute — will be an uphill battle.
Steam-rolling through reforms won’t work. Instead, we need to start that process of chipping away – gradually building a coalition in support for house building. And maybe one day we can get more people to say yes-in-their-backyard to luxury flats.
Leo Gibbons-Plowright
Leo is a Labour and Co-Op Party Councillor for Forest Hill in Lewisham.
Under Corbyn, Labour announced its bid to combat high rents through old-style rent ceilings. If we look back across history we see these have had many unintended consequences. Often we have found the introduction and continuance of rent controls have done more harm than good. So should Labour continue to embrace such a policy?
We know rent legislation cannot cure housing shortages. Rather, regulations such as rent ceilings merely mitigate the effects by giving comfort to sitting tenants – at the expense of prospective tenants. All too often we see false views on rent control spill over from popular misconceptions into apparently learned debates. It is for this reason why Labour must resign rent ceilings to housing history and focus on the real problems at hand.
History shows Rent Controls are Bad
In Britain we have recognised the damage done by rent controls as far back as The Rent Act in 1957. Where at the time we witnessed expensive properties freed from such regulations. Why? Because old-style rent ceilings foster dilapidation of housing stock, encourage immobility, and distort land-use patterns. It simply makes housing worse.
Originally the introduction of rent ceilings sought to protect tenants from rent rises caused by war-time shortages. Often caused by bombing. Yet many places have seen them retained and enforced ever since. Their perception as a temporary measure were often short lived, almost always becoming destructively permanent.
Late Swedish socialist economist Assar Lindbeck once said “rent controls appears to be the most efficient technique presently know to destroy a city – except for bombing”
An unsurprising statement when the average waiting time for a rent-controlled unit in Sweden is 11 years. In Sweden keeping rents low for a small section of renters sees tenants hold onto property they no longer wish to live in. Rent regulation incentivises lucky rent regulated tenants to sublet in the black market, often for a significant profit. One would argue this is hardly a socialist panacea.
Price Signals Allow Markets to Respond
Back in 1906 an earthquake hit San Francisco. Subsequent fires destroyed thousands of acres of buildings in the heart of the city. It resulted in 225,000 people becoming homeless. The city of 400,000 lost more than half its housing in three days. Yet market driven construction of new homes put roofs over many earthquake victims heads. In effect developers were able to respond to market demand through rising price signals.
Nevertheless, each remaining household still had to shelter 40% more people than it did before the quake. So what do you think the first local paper observed following the earthquake – a huge housing shortage surely? No, in fact the first San Francisco chronicle following the earthquake made no mention of housing shortage at all.
The market had responded and there was over three times more homes available to rent than advertised for sale. Just goes to show what can be achieved by the market without rent controls having distorting effects on new supply.
Rent Controls Deter New Construction
Contrast this to 1946, where the San Francisco population had increased from 635,000 by 200,000. All over a six-year period. By comparison, the number of dwellings had only increased by a fifth. While in 1906 the city had to shelter 40% more people than before the earthquake, by 1946 the city only had to accommodate around 10-12% more than before the war. This did not stop the Governor at the time going on record to describe the housing shortage “as the most critical problem facing California”. But what was so different?
In 1906 higher rents could signal to the market to build new construction. However, by 1946 imposing rent ceilings made this method of stimulating supply for rental homes illegal. The result? 730 houses listed for sale for every 10 homes listed for rent. The absence of a ceiling on selling homes, in conjunction with a ceiling on rents, had considerably distorting effects. It meant that prices were to rise as a large and increasing demand encountered a relatively fixed supply.
This meant many landlords ended up selling at inflated market prices, rather than renting to tenants with a price ceiling. Rentals effectively become almost impossible to find. At least at legal rent levels. Rich people with money still found plenty of homes to buy. Ceilings on rent provide the rich an advantage to satisfy their housing needs. Restrictions on rent only make this condition worse. We must also recognise that during this time incomes in San Francisco had doubled in comparison to levels before the war. This allowed people to pay more in rent even though legally they did not have to, exacerbating the proliferation of the black market.
Rent Controls Reduce Mobility and Increase Unemployment
Research by Joseph Schumpeter on unemployment recognises the correlation between lack of labour mobility and structural unemployment. In turn, rent controls artificially create more pressures on cities, notably because inhibiting rent increases puts a brake on the natural drift out to towns. We know more people leave London for the rest of the UK, than move from other places in the country to the capital. This is primarily due to relative affordability.
Studies from San Francisco by Stanford University shows rent control limits renters’ mobility by 20% and lowers displacement, which comes at the expense of a reduction in rental housing supply by 15%. Rent controls lead to a less mobile workforce, more structural unemployment, and less supply. No doubt hampering the economy and increasing state borrowing unnecessarily.
Rent Controls are Denigrated Across the Political Spectrum
Notwithstanding the above, rent control is considered the least contentious area of economics and is widely denigrated by economists from around the world. The agreement cuts across the political spectrum, from Hayek and Friedman agreeing on the “right”, to architect of the Swedish Labour Part’s welfare state Gunnar Myrdal on the “left”. It has literally been no longer a debate within the profession for a considerable length of time.
Rent Stabilisation is Ineffective
Maureen Corcoran has reflected on Germany’s rent regulation through its local rent index, arguing regulation improves affordability and transparency. But we have seen since Germany has moved to stricter rent control, with a 5-year rent ceiling, finding new rental property has become increasingly difficult. Rent stabilisation typically has more flexibility and freedom around having an ability to change tenant than old style rent ceilings. For example, if you make repairs, you can increase rents. Labour has mooted such types of control in the past, but we know these too still do more harm than good.
In New York rent stabilisation has ‘luxury de-control’, akin to the 1957 Rent Act in the UK. If a rent gets to a particular level, then it can leave the rent stabilisation regime all together. Professor Ingrid Ellen of NYU argues that outside of Manhattan rent stabilisation does not have that big of an effect on the market. She argues apartments can often be as close as $200 a part in terms of median market rental levels, in comparison to rent stabilised rents. This suggests even modern versions of rent ceilings remain ineffective for the most part.
The Evidence is Overwhelming: Rent Ceilings are Bad
Developers essentially end up wanting to build less, which can’t be a good thing. The rules in New York meant you typically did not have rent stabilised levels on new lettings, which was one way the rules tried to avoid such an issue. But still, what you saw in post-war New York was the conversion of a lot of rental apartment blocks into condominiums for home ownership. Once again, resulting in a net loss of rental stock. Lower supply means higher prices.
Thankfully, recent studies continue to put the rent control question to bed. In August 2020 by Thao Le, Edward Coulson, and Lily Shen published ‘Tenant Rights, Eviction, and Rent Affordability’. The paper demonstrated that for every one-unit increase in the toughness of rent control, evictions are reduced by almost 9%. It found rental housing costs becomes 6% more expensive where tenants have more protection against landlords through regulation. While a higher Tenant-Right Index is also negatively associated with a decrease in housing supply and an increase in the homeless rate. When we put ideology before evidence, empirically we see rent controls lead to worse outcomes.
Gauche Caviar?
Hanchen Jiang, Luis Quintero, and Xi Yang recently released their paper ‘Does Rent Regulation Affect Tenant Unemployment? Evidence from New York City’. It found that often the beneficiaries are those who are more well off and such regulation denotes a significant transfer of wealth to those on higher incomes. Rent-stabilised tenants are empirically more likely to be unemployed than private market-rate tenants, particularly if you are white and highly skilled. To what extent this could ever be seen as a progressive outcome still remains to be seen.
If Labour is to continue to encourage the proliferation of rent-controlled property it should achieve this through the construction of new social housing. Not blanket market distorting rent regulation. Rent control is great if you get it. However, it merely comes at the price of greater inequality for future generations.
Rent ceilings offer no cure to the housing shortage, and in combination with a planning system currently disconnecting local housing supply from local demand, demand-side rent regulations merely create more problems than they solve.
Christopher Worrall
Editor of Red Brick. He is currently an Investment Manager at Guild Living, a Non-Executive Director of Housing for Women, and is on the Labour Housing Group Executive Committee.
Chris also co-hosts and produces the PricedOut UK Podcast.
For more than 70 years, between the First World War and the late 1980s, the United Kingdom had a system of rent controls for private sector tenants. The policy was, on almost every metric, a success – argues Nick Bano.
This middle portion of the 20th century stands in stark contrast to the housing conditions of the 21st: unlike today, there was no great housing or homelessness crisis; and the ‘homes fit for heroes’ and mass squatting campaigns of the 1940s and 1950s alleviated the worst of the of the scarcity caused by bomb damage.
In fact, as the brilliant 1939 film Tenants In Revolt shows us, mid-century working class housing campaigners were actively calling for “luxury flats” – a demand that has now become anti-gentrification groups’ ultimate bogeyman. While today’s campaigners are forced to make insipid calls for the barest essentials of homelessness reduction, tenants under a rent control regime had moved on to demanding luxury.
Potted history: a consensus for rent controls
In 1915, reeling from a powerful rent strike movement in Glasgow that held the wartime government in check, Asquith’s administration passed the Rents and Mortgage Interest Restriction Act. While it was designed a measure against wartime profiteering, the spirit of the 1915 Act remained in force almost uninterrupted until rent controls were finally dismantled in 1988. Importantly, the government realised that rent controls have to go hand-in-hand with relatively secure tenancies, to stop landlords from escaping the law by evicting tenants and re-letting at a higher rent. The 1915 Act therefore introduced security of tenure, too.
The rent control mechanism was immediately recognised as being important, popular and successful. Just three years later the 1918 Hunter Committee found majority support for rent control among tenants and – strikingly – among landlords, too. As a consequence, Parliament amended the 1915 Act slightly in 1919, before proper new legislation re-establishing rent controls (the Increase of Rent and Mortgages (Restriction) Act) was passed under Lloyd George’s Liberal-Conservative coalition government in 1920.
Again, Parliamentary inquiries (the Onslow Committee of 1923, the Marley Committee of 1931 and the Ridley Committee of 1937) acknowledged on the broad success of the measures, and recommended the continuation of the rent control scheme (with some adjustments to the mechanics, and an increase in the number and type of de-controlled tenancies). This slight watering-down was then reversed in 1939, as war loomed again.
After the Second World War rent controls remained in place. They continued to function reasonably well for more than 10 years, even after the Blitz had caused a genuine and serious scarcity of homes. Neither the 1945 Labour government, nor the Conservative government that followed, abolished them.
The following Tory government, however, seriously weakened the system under the Rent Act 1957: rent controls were abolished for all new tenancies, and some more expensive existing tenancies. This led to the system of ‘Rachmanism’ – where tenants were bullied out of their homes (or bullied into accepting new rents) – which effectively forms the model of the current oppressive system of ‘shorthold’ tenancies. A new Labour government in 1964, however, re-introduced rent controls in short order.
The high point came in 1974. Following yet another glowing report on the functioning of rent controls (by Hugh Francis QC in 1971), a Tory government extended rent controls to furnished as well as non-furnished accommodation.
The destruction of rent controls in 1988
By the mid-1980s the Thatcher government had decided that it wanted to create a housing market that wasn’t restrained by rent stabilisation measures, the disastrous effects of which we are experiencing today.
The genius of the Thatcher regime was that it never actually destroyed rent controls. They still exist, although the controls are (unsatisfactorily) tied to the market rate: a tenant who disagrees with a proposed new rent is still entitled to complain to a tribunal, and the tribunal will not let the new rent exceed the market value. But the 1988 Housing Act destroyed security of tenure, which is crucial to the functioning of a rent control system. Landlords know that they can avoid the rent control measures by simply demand a new rent – any rent they like – and that they can evict the tenant quickly on a ‘no fault’ basis if they can’t or won’t pay the higher rate. As a result, the formal system of controlled rent increases is almost never used. Rent control was abolished by the back door.
For the last 30 years we have not just had a lack of effective rent controls. Instead, because Thatcher’s aim was to generate a profitable housing market, the current system has rising rents by design.
A second, odd effect of the 1988 Act settlement is that rent controls became controversial. That never used to be the case. For most of the 20th century, opposition to rent controls was the exclusive domain of landlords, war profiteers and hard-line Tories. But since the 1990s there has been a looming sense that we are all Thatcherites now: that anyone who advocates a return to a long-standing legislative programme (propped up by decades’ worth of inquiries and reports) was somehow radical.
A shrinking private rented sector is a victory
The major effect of the rent control regime was the decimation of the private rented sector. By the 1980s it had fallen to just 8% of homes in the UK. This is, for anyone who is not a landlord, a triumph. Privately rented housing is the least secure and most expensive form of tenure, and anyone who is housed elsewhere is almost certainly better off for it.
How does this reduction happen? Rent controls restrain the profitability of landlordism, and some landlords flee the market. But a reduction in the number of rented homes does not, of course, reduce housing supply: ‘disappearing landlords’ do not cause homes to be knocked down or to be left unoccupied. As the Bank of England’s John Lewis and Fergus Cumming explain here:
“Some landlords will sell up as letting becomes less lucrative. But at the end of each sales chain is either another landlord or someone who was previously renting. If it’s another landlord, aggregate rental supply and demand are both unchanged, and so are rents. If it’s a new owner occupier, the supply of rented property has shrunk by one, but so has the number of renters. The tightness of the rental market and thus rents are unchanged”.
Even if this happens on a large scale, the glut of supply caused by retreating landlords will necessarily reduce house prices. It is this policy, rather than the proven failures of help-to-buy, shared ownership and high-end speculative development, that will achieve various governments’ stated aim of increasing home ownership. The contemporary history of the UK shows this to be correct, and no amount of abstract economic modelling can erase that.
There will always be people who prefer to rent privately, of course, and the market has always catered for them. But those generous souls who would prefer to pay off a landlord’s mortgage rather than their own presumably make up a figure much closer to the 7% of the population that rented privately in the mid-1980s than the 20% (4.5 million households) forced to rent privately today.
The Renters’ Reform Bill
In 2019 it became both parties’ policy, and then a formal Queen’s Speech commitment, to abolish ‘no fault’ evictions. In other words, we can expect some form of security of tenure to be restored to private tenants. As set out above, security of tenure is the missing piece of the still-existing rent control framework (without ‘no fault’ evictions, unless the tenancy agreement has a provision for rent increases, landlords will have little choice but to increase rents by the formal, controlled system of statutory notices).
So the good news is that the Tories – whether they realise it or not – have now reverted to their 20th century position: they are now within the consensus that supports rent controls. I, for one, welcome them back into the fold.
