Last updated:2023-09-18
More Irish than Venezuelan
Ed Milliband, the leader of the Labour Party, has made announcements on reforms to offer more protection to tenants. He was accused by the chairman of the Conservative party, Grant Shapps, of wanting to introduce “Venezuelan-style rent controls.” Milliband’s policy owes less to the Latin American socialist state than a country closer to home which is rather more politically conservative-the Republic of Ireland.
Since breaking from the UK in 1922 Irish political life has mainly been dominated by two centrist parties, Fianna Fail and Fine Gael. Under the Residential Tenancies Act 2004, Irish tenants have enjoyed security of tenure for four years after a six month initial trial period. They also have a measure of rent control.
Labour proposes the same probationary six month period as Ireland and three year tenancy agreements. The reform would sweep away the assured shorthold tenancy agreements which allow landlords to end tenancies after six months by giving two months notice. This would prevent, Labour claims, landlords evicting tenants purely to secure an increased rent.
Reforming tenancy law is something LAG would argue is long over due. It is profoundly unjust for the law to allow a family to be evicted from their home with so little protection. Housing practitioners are all too aware of cases in which tenants are too afraid to complain of disrepair or harassment, as they know a landlord can get them out with only two months notice. Creating longer term tenancies, we suggest, would also be beneficial to responsible landlords, as it’s in their interests to have long term tenants providing a secure income stream.
Rent control, as a public policy, has a long history- it was first introduced at the outset of the First World War to prevent landlords from profiteering when housing was in short supply. During the Second World War rent controls were re-introduced for the same reason and stayed in place until a system of fair rent assessments by local authority Rent Officers was introduced under the Rent Act 1965. This system was finally dismantled by the Housing Act 1988.
According to Labour rents have risen on average 13% since 2010. Currently rents are rising, it seems, as house prices increase. The reintroduction of rent control would at least decouple rent rises from house prices and give tenants more security. Labour suggests that annual rent rises should be fixed by a formula linked to inflation and/or average rent rises in an area. A similar system operates in Ireland.
Some on the right of the political spectrum might argue that it is wrong to seek to regulate the market, but this argument is difficult for them to sustain. The shift to greater home ownership in the latter half of the last century was largely engineered by state interventions, such as the discounted sale of public housing stock and mortgage subsidies. The latest, the Government’s Help to Buy scheme, should be seen for what it is- a tax payer subsidised intervention in the market.
After pensions housing benefit, at around £20b, is the largest item of welfare expenditure. The argument in favour of rent control should be linked to the need to limit expenditure on this, rather than putting a ceiling on how much can be claimed by a tenant. This is part of the reasoning behind the Irish government favouring rent control- Ireland has a similar system of subsidising rents through the benefits system.
Labour’s Irish inspired housing policy announcements might well have framed the debate on housing rights and rent controls over the coming months- this was probably their intention. With around 9 million people now renting, including 1 million families, generation rent is potentially a powerful electoral force which political parties will ignore at their peril. A recent YouGov poll indicated 56% of people supported rent controls. Another poll saw 66% of Londoners supporting an increase in the building of social housing.
LAG suggests that once the dust has settled and the Conservative Party chairman’s easy Venezuelan sound bite has been forgotten, the coalition parties might choose to rethink their approach to the issues of security of tenure and rent control. These polling figures suggest that it might well be in their interests to do so.
Steve Hynes.
Director of LAG