Meeting housing need through the Private Rented Sector
May 2, 2013
Labour believes that the Private Rented Sector (PRS) has an important role to play in meeting housing need. There are now 8.5 million people, including more than 1 million families with children, renting privately.
As a result of the biggest housing crisis in a generation it has been predicted that more and more people will be locked out of home ownership and, either through circumstance or choice, live in the PRS; potentially up to 1 in 5 households by 2016.
Labour wants to see a strong and thriving PRS that works for everyone. That means creating the right conditions to attract greater and longer term investment in the sector. It also means ensuring that the sector provides homes that are sufficiently stable, secure, affordable and of a decent standard. But the evidence shows that all too often the sector does not provide the kind of homes the country needs.
That is why, as part of our housing policy review, we have set out to identify measures that will ensure that we have a strong and thriving PRS. This will help to meet current housing needs and tackle the biggest housing crisis in a generation. We need a PRS that suits the needs of those living in the sector, both now and in the future.
Let me start with the letting agents. A good example is the landlord, from Yorkshire, who wrote to me about the letting agent he uses. He told me that the agent planned to charge his tenants, a young couple, £400 to renew their tenancy agreement and to charge him £100 as well. He said the tenants could not afford to renew and therefore he was in danger of losing the tenancy. As he put it “…this is an example of the rip off charges that these agencies charge and the further pressure that this then puts on the housing market in these tough economic times.” But it’s not just the opaque fees they charge, many letting agents are entirely unregulated and provide no protection to their customers whether they are tenants or landlords.
Next, the PRS fails to provide the 1 million families with children, and other tenants living in the sector, with the stability and certainty they need. We recognise that there are tenants who value the flexibility offered by assured short hold tenancies and we believe that this flexibility should remain for those who want it. But, with a greater number of families with children finding themselves in the PRS, either through choice or circumstance, they must have the option to be able to enjoy longer-term tenancies so that they can plan a future for themselves within their community.
The current system is also failing landlords as well. A report by Jones Lang LaSalle, has shown that landlords’ returns and business models are enhanced by longer term tenancies that are linked to indexed rents.
If it is true that the majority of private landlords are responsible and treat their tenants well, it is also true that there are too many rogue landlords who undermine the responsible by preying on vulnerable tenants. This small, but dangerous, minority of rogue landlords can make people’s lives a misery and, despite the increase in the number of prosecutions against these landlords, the problem is getting worse. In a survey carried out by Shelter, it was found that complaints against landlords have increased by 27% in the last three years, rising to over 85,000 in 2011/12.
Reports have shown that standards in the PRS are worse than other tenures. In 2010, a full 37% of all privately rented homes were estimated to be non-decent. Nearly 15% of private rented homes lacked minimal heating in the winter. These poor housing standards have wider cost implications, for the taxpayer as it is estimated that the annual cost of poor housing, to our National Health Service, could be up to £2.5bn.
What Labour wants to see is a strong PRS that is vibrant, diverse and meeting the nation’s housing needs. But if the sector is going to be one of choice, it must change.
That’s why Labour would regulate letting and management agents to ensure that tenants, landlords and reputable agents are protected. We would bring an end to the confusing, inconsistent and opaque fees and charges of certain lettings agents by ensuring transparency and comparability.
We also want to see a light-touch, national register of landlords alongside greater powers for Local Authorities to root out, and strike off, rogue landlords that have been found to have broken the rules.
We want to see increased access to longer-term tenancies allied with predictable rents. Families need stability to enable them to plan where they send their kids to school and a certainty in costs to help them manage their household budgets.
We would take action to ensure that tenants who want to have a longer term tenancy agreement would be able to enjoy them. We would make sure that there is flexibility for those that want it and a security of tenure for those that need it.
Finally, we want to encourage greater investment in the sector, both public and private. We want to see increased private institutional investment, including through the build-to-let scheme and believe that this can happen in partnership with Local Authorities and Housing Associations. Some Housing Associations are already moving into the PRS and we welcome their presence in helping to boost the sector. The Housing Associations, alongside the Local Authorities, will not only boost the PRS stock but also help to raise standards and provide greater stability. There is no contradiction between greater protection for tenants and landlords and wanting greater investment in the sector. In fact, we would argue that an improved sector is a necessary condition of increased investment.
If the PRS is to thrive and become a desirable alternative to home ownership then it must provide tenants with the homes they want, alongside the stability, security of tenure, affordability and decent standards that tenants need.