The case fore rent controls

Dave Hill's blog takes a look at the case for Rent Controls and existing protections under the Rent Act see the case for rent controls and comments.

Camden's motion on Private Rents

Camden's Labour Group will be proposing this motion at the Full Council meeting on 26th June 2012:

The Council notes: 

- Camden has the 4th highest private rents in the country, averaging in excess of £590pw;

- Recent projections by the Resolution Foundation and Shelter that suggests that the number of people renting in London will soon outstrip the number of people who own their own homes and that a third of families will not be able to buy;

- Rising numbers of households on modest incomes are increasing priced out of Camden by high rents caused in part by high demand from investors, and a boom in buy-to-let properties; 

- Camden is already unaffordable for young people and many families;

- that the private rented sector is currently under-regulated and beset by market failures, and that rent controls and rent stabilisation are more often than not the norm in industrialsed cities, such as New York, Paris and other major European cities;

- that the Joseph Rowntree Foundation has suggested that the Government intervenes in the market to ensure more affordable rents with tax breaks for landlords who offer secure tenancies;  

- the last investigation into the Private Rented Sector in Camden was a scrutiny panel in 2005;

- Camden’s private rented sector is larger than other areas of Inner London;

- More than two thirds of privately rented homes in Camden were built before 1919 and less than 20% built after 1945.  Many are in need of modernisation and green improvements, but there is limited or no incentive for private landlords to do this;

- The national Housing Benefit payment scheme is paid to private landlords regardless of whether their properties are of 'decent' standard or not, or whether they have invested in energy efficiency measures to assist in carbon reduction and lower tenants heating and energy bills.

This council believes that national government policies governing the private rented sector offer limited help to a new generation of modest and middle income earners in Camden.  We believe that private renting should be subject to price moderation and incentives just as other fundamentals - water, energy and transport - are.  

It asks the Leader and the Camden Scrutiny system to investigate local policy interventions and develop, in conjunction with representatives from the private rented sector, the key changes in law Camden should lobby for to create a fairer and less wasteful relationship between tenant and landlord.  

Why we need action on London Rents

London has the highest private rents in the country and the situation is getting worse for Londoners who are either on the property ladder or not in social housing.  The problem does look like it's going away anytime soon.  With London population growth projected to rise to 9 million by 2020 and rents - particularly in inner London - predicted to rise significantly over the next decade the issue intensifies.  


The social impact of this is clear to see.  Rising numbers of households on modest and middle incomes are being priced out of areas of London, creating more pressures on property values and public services in outer London and accelerating the 'super-gentrification' of central London.   


Projections by the Resolution Foundation and Shelter suggest that the number of people renting in London will soon outstrip the number of people who own their own homes - and that a third of families will not be able to buy.  The report also projects that more families with children will be renting than ever before. The past five years have seen a massive 86% increase in families with children renting their homes.  Renting will overtake mortgaged home-ownership in London by 2020.

The Joseph Rowntree Foundation estimates that by 2020 the number of home owners under the age of 30 will fall from 2.4 million to 1.3 million, a drop of 46% - creating a new 'Generation rent'.  Today young people locked out of home ownership will spend nearly £200,000 extra over their lifetime by renting rather than owning. 

London's population will grow to 9 million by 2020
(areas of highest stress in red)

The problem is a long-standing one, highlighted by many campaign groups before - but sidelined by politicians during the housing boom. 


Pressure to reform has been checked by years of cheap credit for first time buyers and the promise of a second career in property for the shrewd investor.   Large subsidies in the form of housing benefit ensured low income households could afford to live in areas the market was pricing them out of (paradoxically while at the same time supporting that very market).  


Now both of these supports to the market have  been taken away, and we are in new territory.  Thanks to these changes the high level of rents is now a near universal issue demanding more intelligent action from our politicians.


We need policy-makers who understand London's private rented sector is currently so under-regulated and so beset by market failure that national housing policy solutions won't help - we need specific intervention in the London market to help a new generation of modest and middle income earners in London..  


Unlike other necessities, such as energy and water - there is no substantive regulation in the operation of private rental market.  Why is housing treated any differently?


But it's not just a question of regulation.  Lack of strategic policy direction means that innovative market-led solutions are also not being actively explored.  


London boroughs and the Greater London Authority should urgently investigate new local policy interventions and develop, where necessary in conjunction with the private rented sector, the key changes in law.  


As London Labour examines why it lost in 2012, and looks to the council elections in 2014 - we need to seriously consider action on private rents as a fundamental plank in our platform to Londoners.  This will require concerted lobbying of central government to change the law or devolve power downwards.  


True, 'Living Rents' featured as a Labour manifesto commitment in the 2012 London Mayoral Elections, but the policy had little traction and was shot down quickly because the necessary groundwork had not been done.


To keep this on the agenda, this blog will be pressing for:


- rent controls and rent moderation
- London-wide landlord and letting agent accreditation and registration
- effective policies on rogue landlords
- better market incentives for affordable rents  


Some on the Left have started looking at this seriously, arguing for a new Rent Act or rent controls - but we need to reach out and do more to define this London-specific problem and argue for solutions.   Over the months I hope more contributors will share their thoughts on this issue - from whatever angle.


Labour must develop a credible policy for the next Mayoral elections.  Without action, Generation rent will grow - with London's projected population increases over the next 20 years, the painfully obvious implication is that rents will continue to rise, and rise and rise unless something is done.