6 August 2014

A few weeks ago the Commons debated a Labour motion on the private rented sector of housing: Hansard 25 June 2014 column 318. The private rented houses have grown in number over the last few years and now there area around two million children in England living in them. In Cornwall the 2011 census showed 88 634 people lived in private rented housing, nearly 17 percent of the county’s population (2011 census QS403EW and QS405EW). This is a significant part of housing and affects a significant proportion of people here. The post Hidden housing need in Cornwall discusses some concerns about some of this housing.

The Labour motion called for three year tenancies to replace the present default six-month ones, the banning of letting fees, and the banning of excessive rent rises for people on the longer tenancies.

There is a rational division of thinking on the relationship of regulation, supply, and the level of rents. The prevalent Tory view is that tenants need protection but past experience in England suggests – suggests not proves as there were other reasons why the private rented market shrank after 1945 – that constraints that are too fierce drive away landlords and the sector shrivels; the way to control rents and standards is through competition bought about by increased supply, more building and a larger private rented sector, more choice for tenants. I think a belief in the benign effects of competition is naive. Additionally, the shortfall is so large that I suspect supply would have to be increased vastly to affect rents and the comfortably housed would complain effectively to stop that increase.

The Labour view is that rent regulation is necessary and feasible and would not damage the sector: see the reference to European practice in Frank Dobson’s speech at column 333.

There is a balance to be made between regulations on the private rented sector to protect tenants and the freedoms for landlords that attract investment and increase supply. I think the balance is a practical question.

The lengthening of tenancies is important: the present six-month ones lead to “a lack of stability and certainty” for people, including children, and make it difficult for people to put down roots in a community. They can disrupt family life and children’s schooling as Alan Whitehead showed (column 337). Labour’s proposal includes the right to shorter terms. Predictable and reasonable rent rises enable people to plan their budgets and be financially responsible, sudden and large ones don’t.

Labour’s proposals on letting fees are fine only as far as they go but they have not been thought through; they do not prevent letting agents putting the charge on to landlords who can then add them on to the rent (column 336). It is disturbing that Labour has not apparently seen this unintended consequence or is indifferent to it and its official response to the issue (columns 327 and 370) is lamentable.

The measures called for in the Labour motion strike me as progressive and socially just and financially sensible and balanced. As Mark Prisk, who made the best speech in the debate, pointed out the Labour government’s record in this area is shameful and the I see the motion as a repentance. The Tory Libdem government recited its modest work in the area.

Of course the motion was defeated. The vote was 276 to 226.

How Cornwall MPs voted
Voted against the motion: Andrew George (Libdem), Sheryll Murray and Sarah Newton (Tory). No vote recorded: Stephen Gilbert and Dan Rogerson (Libdem), George Eustice (Tory).

Generation rent has some relevant and first hand comments on the private rented sector.