Tag: renters rights

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A King’s Speech with hope for housing

2023 State Opening of Parliament by Houses of the Oireachtas is licensed under CC BY 2.0

‘My government’s overriding priority is to ensure sustained growth to deliver a fair and prosperous economy for families and businesses…’

2009

The last time a Labour Government set out its legislative agenda was in November 2009, when Gordon Brown was Prime Minister and the world was reeling from the global financial crash. This was a world before Brexit, when our aspirations included ‘peace in the Middle East’, ‘to improve management of water supplies’, ‘a reformed second chamber’ and to ‘abolish Child Poverty’. The 2010s were indeed a lost decade.

What did not get a mention was housing. The recognition of housing as a key determinant of the nation’s physical and economic health, had still not been effectively made. Arguably, this enabled the subsequent annihilation of social housing grant by Grant Shapps more politically acceptable than it should have been.

Fast forward fifteen years and we are living through a housing emergency the like of which we have not seen since the 1940s. Not one part of the housing system works effectively, be it renters’ rights, the lives blighted by years in temporary accommodation (not to mention the effect this has on local authority finances), the lack of social housing, the scandal of leasehold. Add to that building safety, the need to decarbonise our housing stock and the near impossibility for anyone getting on the housing ladder without substantial help from ‘the bank of Mum and Dad’ and it is a grim picture.

The last 15 years have seen the resurgence of housing campaigns not seen since the 1960s. Organisations like Shelter and Crisis have become the nation’s conscience and they have been joined by newer players such as Generation Rent, Priced Out and the National Leasehold Campaign. It would take a brave politician to say that housing is not one of the most salient issues.

So this morning we heard how our new Labour Government is going to spend its time, and the early political capital that comes with a massive majority. And, unlike 2009, housing was at the forefront of its agenda.

Central to this King’s Speech is a proposal to kickstart homebuilding by reforming the planning system, most notably shifting local input to an ‘how, not if’ basis in areas failing to build enough housing. Doing this marks a considerable shift in the housing debate on the ground, enabling discussions to go ahead on the basis that homes will go ahead, and making it easier for communities to discuss their priorities for new developments, whether these be social housing delivery, greener homes, or infrastructure enrichment.

Reforms to compulsory purchase compensation rules will make it cheaper to build housing, and particularly the social housing which we so desperately need. And simplifying the consenting process for major infrastructure projects will make it easier to ensure that the homes we deliver are well-provisioned with high-quality green infrastructure.

Importantly, its labelling as a Planning and Infrastructure Bill is an encouraging sign that government will increasingly tie together planning for housing and infrastructure, something called for by both sectors for some time.

Meanwhile, the Conservatives’ failure to pass the Renters’ Reform Bill is being remedied with its revival as the Renters’ Rights Bill. Not only will this introduce the long-awaited ban on Section 21 ‘no fault’ evictions, but it will allow renters to challenge ‘unfair’ rent increases, apply the Decent Homes Standard and Awaab’s Law to the private rental sector, and create a digital private rented sector database. These measures will provide certainty to millions of private renters across the country who live in fear of eviction with no warning or reason.

Finally, the King’s Speech set out plans to reform the exploitative leasehold system. While the last Government passed some moderate changes to make it easier for leaseholders to buy their freehold, the Draft Leasehold and Commonhold Reform Bill will introduce the wide-ranging measures of the Law Commission, along with banning the sale of new leasehold flats so that commonhold becomes the default tenure. For the millions living in leasehold properties this will be a welcome relief.

Detail will follow in coming days on what exactly this legislation will look like, but it shows a strong commitment to both providing the homes we need, and ensuring that those living in them have security and dignity in their tenure. 

This King’s Speech is an encouraging start for what a Labour Government can do with a majority in the House of Commons. But key for many of the important measures to fix the crises in social housing delivery, decarbonising homes, and improving quality, require public spending. After clearing this hurdle, the upcoming spending review and Autumn Statement will both be opportunities to show how much money this Government is able to commit to solving these crises. 

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A bold housing strategy means tackling more than building

The UK’s housing crisis is reaching a critical point. Rents are soaring, whilst homeownership remains out of reach for many after years of house price increases outpacing wage growth. In the late 1990s, the average house price was 3.5 times the average income in England – as of 2023, this had more than doubled to 8.2 times, with prices exceeding 12 times incomes in many areas of London. All of this means that homelessness is skyrocketing – with Britain having by far the highest rate of homelessness in the rich world when you include those in temporary accommodation, which is the largest form of homelessness. Combined with decades of declining social housing stock, demand for social homes now far outstrips supply, and local authorities are being forced to spend record amounts on high-cost, poor-quality temporary accommodation from the private sector, driving them into severe financial difficulty. In 2022/23, £1.8bn was spent by councils on temporary accommodation, over double that spent in 2018/19.

It’s in this context that this month, Positive Money and London Renters Union, a grassroots tenants union representing over 7,000 members, brought together parliamentarians, renters unions and policy experts for a discussion in parliament, Beyond Building: Fixing the UK Housing Crisis.

The discussion reflects a growing awareness that addressing the multiple crises that our housing system not only reflects but is exacerbating – from inequity that runs along racial, class and generational lines, to the climate impact of British homes – requires a fundamental shift away from homes from being treated as assets for accumulating wealth. Positive Money’s Banking on Property report sets out why approaching the crisis as a problem of housing supply alone will likely do little to solve it. Available academic evidence (plus UK Government modelling) also suggests that meeting the house building target of the current government is unlikely to bring house prices to an affordable level. As a problem driven by a toxic combination of the weakening of financial regulation and monetary policy, and wider housing policy choices including tax incentives, The Right To Buy and the deregulation of the private rental market, a housing policy agenda fit for the situation we’re in must address these drivers head-on.

Those at the sharpest end of the housing crisis, including private renters, intuitively understand the need to confront the distribution and price of housing. Yet despite an abundance of evidence and the vocal campaigning of those most impacted by the crisis, policy discussions often remain laser-focussed on how to increase the building of new homes. And despite Rachel Reeves’ welcome announcement that ‘a house should be a home not an asset’, Labour has so far announced little in the way of policies that truly reflect this ambition. Doing so undoubtedly requires a bold and multi-faceted policy programme, and a willingness to challenge the interests of those who benefit from our extractive housing system. But with housing costs making up one of the biggest items of expenditure for any household, there is a strong case that doing so would pay off for a future government.

The discussion brought together a range of voices to discuss the solutions needed, focussing on two key policy areas that, in our view, should form important components of a long-term vision for a more affordable, safer and healthier housing system: local authority acquisitions of privately-rented housing for use as council homes; and proper regulation of the private rented sector to provide security and affordability for tenants. As Beth Stratford, economist and co-founder of the London Renters Union, highlighted, the two ideas dovetail well. Since much of the pushback against regulation of the private rented sector cites concern that it could cause landlords to sell properties, acquisition programmes offer an out for those private landlords who may indeed choose to exit the sector, whilst providing the social housing we urgently need.

‘Buy back’ schemes are gaining momentum as a way to take advantage of the recent softening of house prices to rapidly increase the stock of council homes and support the sustainability of local government finances. As social housing expert and crossbench peer Richard Best reflected upon during the discussion, such programmes are not new – in the 1960s and 70s, tens of thousands of privately rented-properties, often ‘entire streets’ of houses in poor condition, were purchased and renovated by local councils. London’s buy-back schemes are key recent examples, but remain limited in scale in comparison, and do not match the ambition of similar programmes being pursued in cities like Barcelona.

Alex Diner, Senior Researcher at the New Economics Foundation (NEF), presented an analysis of how London’s buy-back scheme would more than pay for itself through both directly reducing council payments to private housing providers, as well as indirect benefits from health and earnings improvements. NEF’s proposed reforms, including establishing a national fund to support acquisitions at scale, could replicate such savings across the country whilst providing much-needed social housing. Similar programmes could be designed to support the acquisition of privately-rented homes for community-led housing, like cooperatives and community land trusts. But as speakers discussed, central to this will be a new government setting a goal to actively shift tenures away from the private rented sector’

Whilst acquisitions could offer a rapid route to expanding social housing stock, it’s unlikely that even the most ambitious agenda could alleviate the urgent situation faced by so many renters. As members of the renter unions in attendance highlighted, in the face of record price increases, insecurity, and poor quality of privately rented housing that disproportionately impacts Black, Asian and ethnic minority communities, rent controls in some form are needed.

As representatives of Living Rent, Scotland’s largest tenants’ union, explained, Scotland’s experience – where a temporary in-tenancy rent freeze has led to landlords’ hiking rents for new tenancies – is something that the rest of the UK can learn from. Policymakers should take solace from the fact that far from being put off by such experiences, major unions like Living Rent and the London Renters Union, which organise thousands at the sharpest end of the housing crisis, are instead mobilising members to call for long-term and well-designed policies to get rents under control.

Perhaps the clearest message that emerged is that many of those involved in developing and campaigning for policy solutions to the housing crisis understand that building new homes, while useful, is not a silver bullet solution. We need a suite of measures, which must include reversing financial deregulation and tax changes that incentivised property speculation, which have been major drivers of house price inflation. But reclaiming privately rented homes, and protecting those in the private rented sector, must be key pillars of a progressive housing agenda.

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The renters’ rights movement must look beyond ‘affordability’

As we enter the worst recession in 300 years, renters’ incomes will be squeezed with chances of meaningful wage-increases remote for most. As such, all concerned with safeguarding and improving renters’ quality of life should turn their attention to minimising the cost of living where possible.

Given housing costs are renters’ greatest expense, how rent is determined should be scrutinised closely with rent reduced as much as possible. In addition to benefiting renters as individuals, reductions in rent would serve to fortify aggregate demand during the recession1.

Competing definitions of affordability

In 2011, the coalition government introduced a definition of affordability which provided a rented property would be classified as ‘affordable’ if it cost no more than 80% of the local market rent.

The definition was absurd.

It is impossible to calculate whether something is affordable if the formula you use takes no account of the renter’s income and essential outgoings. In response, various well-intentioned actors, including the Labour Party came up with their own definitions² of affordability focusing on renters’ income and ability to pay.

The limitations of a focus on ‘affordability’

Any suggestion that market forces should not be the sole determinant of renters’ housing costs should be broadly welcomed. However, limiting demands around housing costs solely to those of ‘affordability’ has served to tacitly legitimate the landlord and renter relationship, a relationship that is, at its core, inherently exploitative.

The principle that landlords should profiteer from renters has become locked-in as ‘something that goes without saying’, all calls for affordability demand are that landlords’ profiteering should not be so great as to cause renters excessive hardship. Crucially, a focus on ‘affordability’ for the renter has meant the landlord’s side of the relationship has avoided scrutiny.

Scrutiny of how landlords justify the rent they charge exposes the inherent unfairness of the landlord and renter relationship

1) ‘Supply and demand’ might explain rent levels, but explanation does not equal justification!

Housing costs for renters should be based on the actual cost of supplying the home, not what the market can bear. Sometimes, because of the layout of the plumbing in certain properties, it is impossible for water companies to provide individual water bills for each household. When this is the case, the landlord of the building will receive one water bill for the entire property and then invoice each household for their portion of the bill.

It is unlawful for landlords to make a profit from the re-sale of water in such circumstances as it is recognised it would be morally abhorrent to profiteer from something so necessary to human survival when the water company has already done so.

Given shelter’s own importance to human survival and given that everyone involved in the construction of the home has already been paid for their work and materials, there is no compelling reason why re-sale of shelter should be treated differently.

2) Landlords’ costs of supplying a home, outside of initial acquisition, are negligible compared to the rent they charrge.

45% of landlords own their renters’ homes outright without a mortgage. For such landlords, the ongoing cost of supplying a property to a renter is limited to the costs incurred keeping the property in a good state of repair and fit for human habitation (£73.17 per month on average for a three bedroom home). In comparison, the average rent on a three-bedroom home in Manchester is £895.00 per month.

3) It is unfair for landlords to expect renters to cover the cost of initial acquisition of the home through their rent, unless ownership is transferred in exchange!

As an alternative to pointing to the free market price mechanism, landlords sometimes use their Mortgage CMIs as justification for the rent they charge. It is unfair for them to do so. If landlords want somebody else, i.e. renters, to cover their costs in acquiring ownership of the home, as a basic point of fairness, ownership of the home should be transferred to the ones doing the actual paying in exchange.

Currently, landlords have their cake and eat it, at the renter’s expense.

Moving beyond affordability

If challenges to housing costs focus solely on ‘affordability’ a systematic investigation of landlordism, and subsequent exploration of pathways that could lead to greatly reduced housing costs for renters, such as nationalisation of the private rented sector, become foreclosed.

It is unclear why, historically, supposedly progressive actors have been content only to ask for ‘affordability’ on behalf of renters. There may have been a lack of courage in challenging landlordism head on, or perhaps a latent ‘protestant work ethic’ type notion that it is virtuous for housing costs to be at least a bit of a burden for renters.

Whatever the historic reasons, we are now in extraordinary times, merely asking for affordability is not good enough.

<strong><span class="has-inline-color has-accent-color">Tom Lavin</span></strong>
Tom Lavin

Tom Lavin is on the organising committee of ACORN Liverpool and a Justice First Fellow working in housing law at Merseyside Law Centre. He previously worked for Shelter as a housing adviser.

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1 This argument is made here in relation to rent suspensions but can equally be applied to reducing rent.

² Housing charity Shelter state a rented property should not be considered affordable if housing costs are greater than 35% of net household income: https://blog.shelter.org.uk/2015/08/what-is-affordable-housing/  Manchester City Council came up with a more convoluted formula based on the average income of residents in the city: https://secure.manchester.gov.uk/info/100007/homes_and_property/7638/manchester_housing_strategy/2