Over a quarter of all households in London are in the private rented sector, and the proportion is set to grow. A key issue at this General Election is how to deliver the rental homes needed to meet ever-increasing demand.
Politicians owe it to tenants to move on from the discredited and unimaginative policies of the past such as rent controls and more burdensome regulation. Instead of demonising the sector, government should work with the majority of good landlords to provide the significant increase in homes needed to offer tenants genuine choice and to keep rents affordable.
That means a shift away from punitive tax hikes. Two-thirds of RLA members have indicated that the recent tax increases mean they do not plan on purchasing any additional properties and 58 per cent have considered shrinking their portfolio. Former Bank of England official David Miles has calculated that landlords would need to increase rents by 20-30 per cent simply to recoup extra costs from these rising taxes.
Discouraging needed investment based on unproven stereotypes about competition between landlords and first time buyers will not deliver the homes we need.
At most, recent changes to mortgage interest relief should only apply to new borrowing.
Stamping out investment
We should also scrap the three per cent stamp duty levy on additional homes where landlords invest in property adding to the overall supply of homes, be they new builds or bringing empty homes back into use. It is crazy to have a tax that discourages investment in new homes.
Just as crazy would be any form of rent control which does nothing to address the root problem. As Labour’s then housing minister in Wales said in 2015, such controls “reduce the incentive for landlords to invest and can then lead to a reduction in quality housing.”
It is not just quantity that matters, the quality of the rented housing stock is also crucial.
Tangled in red tape
At present, the rental market is covered by well over 400 regulations. The problem is that they are not being enforced as they should be, letting down good landlords and tenants.
For landlords, the average 43 weeks it takes to repossess a property where a tenant is not paying their rent or committing anti-social behaviour is unacceptable. It discourages them from offering long term tenancies.
Tenants too are being let down by local authorities that are poorly resourced and in many cases do not have the will to put the hard work into rooting out criminal landlords.
To speed up access to justice for both landlords and tenants, we are calling for new housing courts, enabling both to enforce their rights themselves without resorting to local authorities.
As welcome as it is, institutional investment, in which all political parties have put so much faith, will only ever constitute a small part of the market, especially outside our larger cities. The next government needs to get behind those individuals and small companies that make up the vast bulk of the country’s landlords.
It is time to see them as part of the solution to our housing crisis and not part of the problem.