Towards a real housing revolution: reforming tenure in the private rented sector

In May, Romin Sutherland was one of the winners in the” Top of the Policies” vote at Pragmatic Radicalism’s event on housing, with a proposal to reform assured shorthold tenancies

At a time of economic recession, when social house building is at an all-time low and cheap credit is no longer available for most first time buyers, those groups who in better days would have accessed social housing or benefited from more equitable house price to income ratios will increasingly find themselves locked into a cycle of private renting.  In order to ensure that the private rented sector (PRS) is up to the task of housing a growing and ageing population, I am advocating a reform of the current assured shorthold tenancy (AST), which would increase security of tenure beyond the present 6 month minimum, towards one where most private tenants who pay their rent on time and play by the rules are rewarded with long term sustainable tenancies.

If we were to ensure that the PRS was both an affordable and long term option, there would be fewer reasons for households to hold out for social housing.  This would lower waiting times and allow local authorities to focus their energies on the neediest without the resentment that often comes from those who feel excluded.

Anyone working within the advice or local government sectors will be aware of the dangers inherent within complaining about disrepair and maintenance issues.  Not only is this likely to receive little or no attention from the local environmental health authority, it is also likely to see an unscrupulous landlord claiming possession of the property; the so-called “retaliatory eviction”.

If tenants had increased security of tenure, they could enforce their rights without the fear of being evicted.  As time passed and the worst offenders would realise that they could no longer shirk their responsibilities; they may become more proactive about maintenance and emergency repairs, thus reducing the need for enforcement at all.

As tenants are provided with more of a stake in where they live, I would expect to see an increase in tenants’ rights groups acting as advocates and brokers, and taking the lead on community issues.  As tenant groups grow more powerful, this would increase their collective bargaining power and allow them an opportunity to inform decision making in a democratic way.

It would then be up to the tenants and landlords to decide amongst themselves what they most desired; new windows or cheaper rents.

The arguments against increasing security of tenure are reasonably similar to those against rent controls; that increased regulatory or financial burdens on landlords will drive them out of the market, decrease supply and lead to an increase in homelessness.  However, the number of people living in the PRS has almost doubled since the introduction of the AST, and this is a trend which does not look likely to change.  Although additional regulation is always greeted with dismay by those to whom it is applied, there are ways of mitigating and compensating them, for example, protections for those who need to sell or capital gains tax incentives for investments held for longer periods.

As the PRS is fragmented and made up primarily of small landlord holdings of less than 10 properties, any changes to the market conditions are likely to have unpredictable effects.  However, the movement away from a PRS made up of small time “accidental” landlords to one based around large scale institutional investment should be welcomed.

Not only would this increase supply, thereby making the housing market less volatile, it would also mean more people saving and contributing to pensions, rather than paying off mortgages in order to support themselves in their retirement.  A practice which is unsustainable and will almost certainly require massive spending cuts on areas usually classed as no-go areas, such as healthcare, or massive redistributions of wealth from the rich to the poor through inheritance taxes.

Instead of concentrating on the short term capital gains of individuals, Labour needs to refocus its attention on engaging larger organisations looking for longer term and safer investments.  But this raises serious questions about the role of government; does it exist to provide its citizens with public goods, or merely to maintain the structures necessary for the operation of a market?

Hopefully the next Labour government will remember what I fear the Conservatives never knew; that housing needs to be about collective goods, not just private property.

Romin Sutherland is NextDoor project manager at the Zacchaeus 2000 Trust (Z2K)

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3 Responses to “Towards a real housing revolution: reforming tenure in the private rented sector”

  1. Leon Wolfeson says:

    A complete sideline. It might help a few, but is more likely to increase sub-letting in high demand areas, causing as many problems as it solves.

    What we need is a commitment to say 100k council houses a year for 5 years, then see where we stand. With something closer to sufficient housing, private landlords will be able to be far less abusive.

    (I also back rent caps until we have sufficient housing, and taxation on empty houses and brownfield sites)

  2. david patterson says:

    2nd homes should just be illegal. overseas ownership of homes should be illegal. I used to live in a village of 20 houses, only 2 of which were occupied. the rest were weekend retreats for rich Londoners. houses aren’t like video recorders. if we restrict the production of houses (which we do through planning law) then we have to restrict the ownership too.

    either that or tear up planning law and allow anybody to live, build, occupy any land they have legally purchased.

  3. I am in total agreement with this article about reforming Assured Shorthold.In fact its also absurd that Housing Benefit is used to line the pockets of wealthy Landlords whilst at the same time they kick out tenants who often cannot sfford a rental shortfall.
    In fact as well as making landlords rich the Assured Shorthold creats a burdon on society and also breaches the Human Rights Act.
    Labour need to go further than three years tenancies and make it illegal for tenants without rent arears to be evicted at all.
    I have just come back from the USA the so called home of capitalism there Tenanats are paid substantial compensation when they are evicted for no substantial reason.

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