The housing problem. Tenants’ rights reforms are at best a form of electoral palliative care, not a cure.

28 Jun

Housing is probably the single most important strategic policy area facing the Conservatives. Decisions made, or not made, in the next few years may end up shaping the Party’s electoral coalition for decades to come.

This is very unfortunate, because Conservative MPs make a good political going out of championing the interests of one extremely fortunate generation, for whom a ‘property-owning democracy’ is a lived reality rather than a dream, at the expense of everyone else.

Even with an overall majority of 80 at the start of this Parliament, Boris Johnson was unable to deliver even middling planning reform, squeezed between this NIMBY tendency on his own backbenches and opportunistic ‘progressives’, especially the Liberal Democrats, who are quite happy to take up the torch of the vested homeowner interest when it suits them.

The result, not uniquely for this Government, is that ministers are stuck trying to get something done without actually getting all that much done. Michael Gove’s proposals for reforming the private rented sector are a case in point.

Our columnist Peter Franklin and Lord Frost disagree on the subject. The former sees them as an important assertion of conservative principle against the strictures of libertarian landlordism; the latter as the first step on a familiar road toward counter-productive overregulation.

Franklin is right that there is a limit to the extent which landlords can pray in aid of free-market principles whilst profiting from a housing market which is, overall, extremely restricted in a manner which greatly benefits them. Even those who firmly believe that the Conservatives should be free marketeers must concede that “a free market for me, but not for thee” is neither a just nor an electorally saleable proposition.

However, Frost is right that it has historically proved extremely difficult, if not impossible, to satisfyingly fix the distortions of a fundamentally broken market such as housing for any length of time, and there is a tendency for politicians and regulators to start chasing the proverbial dragon with more and more rules.

This has happened before. One interesting lacuna in the White Paper on the reforms is that it makes no mention of Regulated Tenancies, the old system which was gradually replaced by Assured Tenancies and Shorthold Assured Tenancies in the 1980s and 1990s. Features included: rent increases only every two years; ‘fair rents’ set by the Valuation Office Agency; and eviction only by court order.

Gove is obviously not recreating this system; new regulations guaranteeing the right of landlords to evict in the event of sale mean there should be no return to the absurdity of ‘sitting tenants’.

But it would have been informative, before setting out on a path towards more regulation, had the Department for Levelling Up, Housing, and Communities (DLUHC) addressed the question of a) why and how that highly-regulated private rented sector came about and b) why successive Conservative and Labour governments worked so hard over two decades to dismantle it.

The regulation that Frost is worried about bans on properties sitting vacant. But the best example of trying to fix a regulatory distortion with even worse regulation in the housing market is over-hyped claims about ‘land banking’, to which Franklin refers in his piece.

This is often dressed up as dastardly developers sitting on plots with building permission to regulate prices. But whilst there may be an element of truth to it, it is also simply a rational response to this country’s insane discretionary planning system, under which a proposal can fail at almost any stage in the process – even being ‘called in’ at the last moment by a Secretary of State who’s been nagged by local Tory councillors.

Construction firms need a stable supply of work to operate, and the only way to guarantee that in our system is to keep your options open and bid for more work than you can do. That it is easier to lapse into conspiracy theories than confront the need to reform the planning system is precisely the phenomenon that has Frost so concerned.

Likewise, we should not forget that even the most well-meaning regulation does not necessarily help tenants.

In particular, minimum space requirements and strict rules governing Houses of Multiple Occupancy (HMOs) – i.e. the sort of house share a lot of young professionals end up in – often end up penalising people trying to live away from their families and taking perfectly good rooms off the market.

The place I currently rent is just one example of this trend, and it’s a shame that the White Paper seems to have forgone the opportunity to apply some deregulatory medicine to the problem – perhaps by banning councils from gold-plating national minimum requirements – alongside the new regulations for landlords.

We should not, of course, allow the smoke from Frost and Franklin’s ideological showdown to obscure the practical reality of the Government’s proposals, which seem innocuous enough on their own and are hard to resent, given how heavily the deck is currently stacked against renters and towards owners.

But nor should we forget that no volume of tenants’ rights reforms will place the Conservatives ‘on the side of first-time buyers’. They are at best a form of electoral palliative care, not a cure.

Without a big (and sustainable) increase in supply, all the evils of our broken housing market, both great and small, will persist, and in the long-run the party of aspiration and property-owning democracy will pay a terrible price for that.

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Reviving Right to Buy for social housing leaves private tenants out in the cold

4 May

Welcome to the second instalment of ‘Small Solutions to Big Problems’, where we take a look at steps the Government is taking to address the cost-of-living crisis.

This isn’t a formal series, of course, and ministers have not officially adopted that slogan. But it nonetheless seems to be the spirit in which the issue is being approached.

Last week, for example, we looked at how deregulating childcare is a worthwhile enterprise but only a small step towards tackling the deep structural issues which make it so expensive to start a family. (Ryan Bourne has much more detail.)

We might say much the same thing about the revived proposals to give social housing tenants the right to buy their homes.

To be clear, that does mean that it is better than nothing. As Robert Colvile explains, this is in fact merely reviving the right that state tenants had before council housing stock was transferred over to housing associations.

The plan set out in 2015, and since piloted, also involves compensating HAs and building new stock, which puts to bed the old argument about the original scheme running down the supply of social housing (although as Colvile again points out, that supply remains much higher than average).

But as Polly Mackenzie of Demos points out, on its own the policy is clearly inadequate to the crisis in home-ownership facing the country.

It creates a huge disparity between the support offered to people who have ended up in social housing (“a subsidy of up to £100k”) and those in the private rented sector (“a tiddly Help to Buy ISA and equity loans that have to be repaid”).

It also distributes the subsidy on the basis of historic rather than current need – those social tenants in a position to buy will most likely be those who have been in social housing a long time, stabilising their situation and benefiting over a long span from paying lower rent than their counterparts in the private market.

Meanwhile, as I have written before, those vehicles which have been set up to support first-time buyers outwith the social housing sector all feature arbitrary limits on their purchasing power which aren’t even index-linked:

“The £450,000 limit has been in place ever since LISAs were first introduced. Yet according to the ONS, between December 2016 and December 2021 the average house price in England rose by more than 24 per cent. The purchasing power of a LISA is falling every year.”

It is a sign of how totally the Government seems to be ignoring the rented sector that index-linking or better yet scrapping these caps, which seem to serve no obvious purpose and would cost the Government next to nothing, doesn’t appear to have been even considered yet.

Even then, there is only so much that fiddling with demand can do when the underlying cause of the housing crisis is decades of supply restrictions. And Boris Johnson has abandoned planning reform, so he clearly doesn’t intend to do anything about that.

It’s the same in so many areas of policy – here’s a cheery thread of just a few, to which we should definitely add our woeful record at building infrastructure – Grant Shapps’ decision not to proceed with the underground station for HS2 at Manchester being just the latest example.

These problems are not all this Government’s fault. Many of these problems are long in the making and have deep structural roots which long predate Johnson’s premiership or even David Cameron’s. Arguably the Party’s relatively weak position in the House of Commons from 2010 to 2019 was a barrier to tough action, as when Nick Clegg blocked sensible childcare reform.

But the Government has a handsome overall majority now. It must do better than even the most worthwhile technocratic tinkering.

Ryan Bourne: Ending no fault eviction is no cure for the UK’s housing woes

9 Feb

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

To say the Levelling Up white paper was broad in scope is an understatement. We expected details of how the Government would seek to reduce geographic economic inequalities. We were not anticipating a history of cities since 7000 BC, nor the bundling of policies as seemingly unrelated as ending “no fault evictions” in the private rental market.

This latter idea is not new, of course. Back in 2019, the late James Brokenshire announced “the biggest change to the private rental sector in a generation” as the government pledged to eliminate Section 21 of the 1988 Housing Act. Currently, landlords can remove tenants and repossess properties with just two months’ notice after a tenancy’s fixed-term ends.

But that means “millions of responsible tenants could still be uprooted by their landlord with little notice, and often little justification,” as former Prime Minister Theresa May claimed back then. Following a consultation and manifesto commitment, the Government now appears to finally be ready to deliver the policy under the “levelling up” banner.

And it sounds like a reasonable idea. Who could object to more security for tenants if the reform is coupled with exemptions for landlords seeking to sell property or wanting to move in themselves? Well, a moment’s reflection indicates that this really creates effective indefinite tenancies as standard. That’s a significant reform in principle, but the worst form of gesture politics in practice – a symbolic way for politicians to show that they care about renters’ plight that substitutes for the urgent need for more homes.

Putting aside Covid-19 emergency measures, Section 21 today does mean landlords can evict tenants without justification after the tenancy contract’s “fixed term.” Unless you wilfully damage the property, refuse to pay rent, or engage in some other breach of contract, tenants are “protected” during their contracted term, which is usually one year. Section 21 essentially codifies landlord property rights beyond that, confirming it is in landlords’ gift to decide whether and how long to continue any open-ended tenancy deal, provided the landlord follows the set-out process and gives tenants two months’ notice.

With a near doubling of the proportion of housing tenures that are private rentals in recent decades and with more families and older households now renting, tenants are becoming an increasingly powerful lobby. And why wouldn’t they demand more security, if they believe it will come at landlords’ expense? For most people it’s not nice knowing you can be evicted with just eight weeks notice. Rental campaigners’ message has therefore been simple: let landlords bear more risk!

Would abolishing Section 21 be a big win for tenants, as campaign groups imply? I doubt it. What we have here is an example of people wanting more of something – security – without being willing to pay for it. In these scenarios, basic economics tells us that mandating benefits will lead to a waterbed effect of other margins adjusting, as landlords seek to protect themselves against the new higher risks of lock-in that such tenancies entail.

One consequence would be more extensive vetting of tenants or renting to friends and family. The LSE’s Christine Whitehead believes those on housing benefit would find it hardest to gain access to properties. In short, landlords would seek to insure themselves against an inability to remove certain tenants. One way to avoid being stuck with tenants who won’t budge is to more carefully select them upfront.

A second potential “margin of adjustment” is landlords using rent hikes to enforce economic evictions. If someone won’t move, why not jack up the rent and force them out? Indeed, this policy would inevitably heighten calls for rent controls outside of the fixed term to avoid such a “loophole”, with all the destructive consequences that state attempts to control rental prices bring.

But the third and biggest impact of this semi-nationalisation of the private rent sector will surely just be fewer landlords willing to enter and make property available overall.

The birth of fixed-term “assured short-hold tenancies” from the late-80s onwards led to a huge growth of individual landlords owning a small number of properties. In London, in particular, many small-scale landlords rent out basement flats, rooms, or unused properties, with their decision to do so often a finely balanced one.

Without Section 21, they would actually enjoy less control over a tenant’s departure than the tenant themselves. Given the norm of short-term tenancies, we must presume landlords desire the current flexibility. Though the Government has promised a quid pro quo of broader, clearer Section 8 alternative procedures for reclaiming properties for certain reasons, landlords have long bemoaned how this route entails greater evidentiary barriers and the potential for large legal costs. Whatever the eventual details of these proposals, marginal landlords will face higher risks if Section 21 is abolished.

And that means we will see fewer landlords putting rental property onto the market, particularly if the measure is perceived as the thin end of the wedge for rent regulation. If you’re risk averse and looking to make a modest rental income, you might be better off considering AirBnB, or other forms of investment. Exits will push overall market rents up somewhat overall as the availability of private rented accommodation is reduced.

Who will suffer most from this? Well, although renters are becoming older, they still tend overall to be younger, more mobile, and without much in the way of savings compared to the rest of the population. Those harmed most by limited rental options will be the poorest, those without deposits for owner-occupied housing, and those for whom accessing new private rental accommodation is a route to a better job or life. The beneficiaries will be those who want to stay in a property for years and years.

This really highlights why fiddling with landlord-tenant relations is no alternative to major planning reform. In a world with an abundant supply of homes of all tenure, landlords would have to be more discerning about deciding to eject tenants. Even if their tenant was a pain in the butt, a world of abundant properties would mean greater vacancy risk if a landlord opted to remove them.

That, sadly, is not the world we live in. High housing costs and an unresponsive supply of homes in areas where people want to live has created much resentment to those who do own properties and rent them out.

Well-intentioned campaigners also mistake the trigger of no fault evictions for the broader structural causes of homelessness. And now, unwilling to deliver really substantive planning reform, the Conservatives even claim that fiddling about redistributing risks between tenants and landlords represents a means of “levelling up.”

Theresa May: The pandemic has shown how urgently we need to fix the housing crisis

1 Dec

Theresa May is Member of Parliament for Maidenhead.

Of the many lessons the pandemic has taught us, one is surely the importance of home. As Covid forced us away from our favourite haunts and meeting places, our homes took on a new meaning altogether – becoming classrooms, workplaces and fortresses against the virus almost overnight.

Yet the varying experiences of lockdown over the last year and a half reflect concerning disparities in England’s housing stock today.

For example, the instruction to ‘stay at home’ in March 2020 meant something entirely different for the 820,000 households living in cramped, overcrowded conditions. The closure of outside spaces disproportionately affected the one in eight who lack access even to a shared garden. And the thousands of children locked down in one-bedroom flats alongside parents and siblings undoubtedly found the move to online learning all the more challenging.

In short, our vulnerability to the social impact of Covid – and indeed the virus itself – was unavoidably shaped by the places in which we live. Yet the truth we must face up to now as politicians is that, while the pandemic shone a spotlight on many of the injustices in housing, these are not new. Building back better must include staring difficult problems in the face.

As Prime Minster, I made it my personal mission to address the inequity in our housing market. We knew we simply could not carry on in the same direction – and I am proud of what we achieved.

We put generational reforms in motion to improve housing security for renters. We tightened up the planning system to ensure developers meet their obligations to deliver more affordable homes. And we abolished outdated restrictions on local authorities to help build the new generation of council homes we desperately need.

It has been encouraging to see the Government advance on these reforms, including through the increased allocation for new social rent in the £11.5 billion Affordable Homes Programme, and the forthcoming Renters Reform Bill.

But let’s be clear. The dysfunction in our housing system is deep-rooted, having developed over multiple decades and under governments of all stripes. Addressing it fully remains one of the fundamental public policy challenges of our time.

And so it is welcome that the Centre for Social Justice has set out to develop a new vision for truly affordable housing in England. Because, as the CSJ expose in an important interim report published this week, there remains today a ‘hidden housing crisis’ that is exacting a huge toll on our nation’s collective health, wellbeing and finances.

Millions of renters are seeing the gains of work undermined by exorbitant housing costs, with over two-thirds of private renters in the bottom two income quintiles seeing more than 30 per cent of their disposable income eaten away by rent.

According to one recent study, it is estimated that nearly two million couples have delayed or chosen not to start a family because of their housing situation. Some 124,000 children will go to sleep tonight in temporary accommodation, facing significantly hampered educational prospects as a result.

Taxpayers are now picking up the bill for decades of too few truly affordable homes being built. Next year, housing benefit expenditure is forecast to exceed £30 billion – and then to double again in the 30 years thereafter as more (and older) households see the more expensive private rented sector as their only option.

We must put this right.

For as I argued while in Downing Street, the focus on helping the ‘just about homeowners’ onto the ladder – vital though this is – has at times distracted from what should be our overwhelming priority as Conservatives: ensuring that everyone has a decent, affordable and secure home in which to live, work and build strong families.

Of course, this argument is not a new one. The Conservative manifesto of 1951, on which Winston Churchill sought his second term in office, was resounding: “Housing is the first of the social services . . . [t]herefore a Conservative and Unionist Government will give housing a priority second only to national defence”.

He was elected on a platform which recognised housing as “one of the keys to increased productivity.” Overcrowded and unsuitable homes were rightly identified as the enemy of work, family life, health, and education.

Margaret Thatcher, similarly, saw the immense potential of social housing as a springboard into home ownership. Indeed, what is often forgotten about the introduction of the Right to Buy is that, in the early years of the policy between 1980–85, more than 250,000 new social homes were built to replenish the stock – giving thousands more families a path to realising the dream of ownership.

Rediscovering our tradition of truly affordable housebuilding for the 2020s is what is needed if we are to address the social, economic and fiscal costs of the hidden housing crisis. Moreover, as polling evidence presented by the CSJ suggests, this would be in tune with the views and desires of the new electorate as it has realigned in the years following the Referendum.

So now I call on Conservatives to let us make it our shared mission, once again, to fix this hidden housing crisis as a central plank of our levelling up agenda. And even as we hope to have put the worst of the pandemic behind us, we must never forget just how much home matters.

Luke Stanley: Ending rough sleeping will require building a better understanding of its causes, not just more homes

29 May

Luke Stanley is Policy Adviser to Lord Hague of Richmond and Senior Parliamentary Researcher to Anthony Mangnall MP. He writes in a personal capacity.

“How did this person end up sleeping on the street?” is a question that most of us will have asked ourselves at some point in our lives, walking past homeless people bedding down for the night. While it seems a straightforward question, the underlying factors that result in someone sleeping rough are anything but.

Boris Johnson’s One Nation Conservative Government is making encouraging progress in supporting rough sleepers to rebuild their lives, with street counts down three years in a row.

Their landmark Rough Sleeping Initiative, which funds accommodation and health services for rough sleepers, has been found to reduce rough sleeping by one-third and received a £200 million boost earlier this month.

But if we want to end rough sleeping for good, we need to do more than support existing rough sleepers. We also need to prevent vulnerable people from ever reaching the streets.

Writing for this website last year, Robert Jenrick, the Housing Secretary, rightly described rough sleeping as being “as much a health issue as it is a housing issue”. As with most health issues, the conditions that can eventually result in rough sleeping are far easier to treat, but much harder to detect, in their early stages.

Ramping up early interventions to prevent rough sleeping will require a forensic understanding of the long-term process by which a vulnerable person ends up on the street, a depth of knowledge our society currently lacks.

Existing research suggests there are two broad groups of factors that can contribute to rough sleeping.

First, there are structural problems in our society, such as levels of affordable housing and insecure tenancies. Second, there are individual problems that make certain people more likely to end up on the streets, like poor mental health, addiction, and relationship breakdown.

These often fuel one another, for example, untreated mental health problems fuelling addiction, resulting in vicious cycles that leave people with broken lives, unable to hold down a home.

To try and get a deeper understanding of this issue, the May Government commissioned a Rapid Evidence Assessment of research into the causes of homelessness and rough sleeping. This agreed that both structural and individual problems were factors, but that the latter played a larger role in explaining rough sleeping than it did in other forms of homelessness.

That general conclusion aside, the report highlighted a number of gaps in the evidence base.

First, there is a lack of robust data on the immediate causes of rough sleeping. The report noted that much of the third-party research in this area uses simplistic surveys which have limited use for informed policy making. For example, one such survey had “Asked to leave or evicted” as the top reason for rough sleeping, but sought no information on the context behind this. A greedy landlord increased rent; someone with mental health problems was unable to hold down a job; a gay person was rejected by their bigoted family. Three wildly different scenarios, each of which would be captured as the same by this survey.

Second, and more crucially, there is a lack of evidence on the long-term causes of rough sleeping. As discussed above, many of the individual problems linked to rough sleeping exacerbate one another. Understanding this process is key to improving early interventions and preventing people from becoming rough sleepers.

Ultimately, we can build as many houses as we want, and introduce as many restrictions on landlords as we please, but until we’ve untangled the causes of the chaotic lifestyles that drive vulnerable people onto the streets, we will never end rough sleeping.

This can be achieved through more qualitative ‘pathway’ studies, which seek to map individuals’ journeys into rough sleeping. As the report noted, pathway studies are especially important for designing preventative policies but many use small samples, limiting their usefulness. In their words, more pathway studies, with larger samples, would help us “further understand both interactions between causes and the order of events that can lead to homelessness”.

Third, we need a better understanding of rough sleeping risks for different demographics. The factors behind rough sleeping are complex and affect different people in different ways, rendering one-size-fits-all approaches unhelpful. To its credit, the Government is already undertaking research to better understand the causes of rough sleeping for one specific demographic: gay and trans people.

But going further, the Government could also consider commissioning research to gather robust evidence to plug the first and second gaps on the causes, both short-term and long-term, of rough sleeping. With their landmark ‘Everyone In’ campaign housing over 26,000 rough sleepers and homeless people at risk of sleeping rough, there is a golden opportunity to explore the causes of rough sleeping. For the first time, we have a large number of people with lived experience of rough sleeping in secure accommodation, where they are far more accessible to researchers.

We should seize this opportunity to better understand how to help vulnerable people, use this to develop stronger preventative interventions, and confine rough sleeping to the history books.

Adrian Lee: Rent to Buy could allow the Government to revive the dream of a property-owning democracy

28 May

Adrian Lee is a Solicitor-Advocate in London, specialising in criminal defence. He served as a London Borough Councillor for 20 years and was twice a Conservative Parliamentary Candidate. Between 1994 and 1995 he served as Chairman of the National Young Conservatives.

Whilst we await the publication of the forthcoming White Paper, the Government’s “Levelling Up” agenda is currently focused on increasing state expenditure on a range of public services and urban infrastructure, establishing a series of freeports and promoting adult re-training. All very costly, but potentially highly worthy.

However, nothing much there to grab the imagination of the voters and turbocharge their drive to the polls. Likewise, the impact of “the offer” could be even less if underlying economic circumstances conspire to reduce the levels of intended expenditure.

I believe that the Conservatives need to take a more radical step. Since the era of “Villa Conservatism” under Lord Salisbury, Conservatives have realised that there exists a correlation between the ownership of property (and the realistic ambition of owning property in the foreseeable future) and voting for our Party.

The Conservatives alone are indelibly associated the policy of wider-spread home ownership. The Labour Party traditionally favours collectivism to enforce economic equality. The Liberals had no ideological objection to private property, but in practice they did little to encourage the spread of home ownership amongst the working classes. In the early Twentieth Century.

Later, the Liberals were obsessed with outbidding the infant Labour Party, and after the Second World War they supported the mixed economy consensus and restricted their idealism to dreams of a federal Europe.

In contrast, the Conservatives proudly attached themselves to the housing construction boom of the inter-war years that resulted in ‘Metroland’ and the building of millions of still enduring semi-detached homes. By the 1959, they were showing the archetypal nuclear family sitting around the family dining table beneath the slogan “Life’s Better with the Conservatives”. The message of both comfort and aspiration was transparent.

The Conservative identification with home ownership reached its peak with Margaret Thatcher’s Right to Buy legislation in the 1980s. Since then, with the notable exception of a few discounts and subsidies, the Conservatives have left general housing provision to the market whilst supporting housing associations in the public sector.

A combination of internal population growth, paucity of development land, large-scale immigration, and enforcement of strict planning controls has resulted in insufficient homes being constructed. Unsurprisingly, demand outstripping supply has led to an astronomical increase in prices over the past three decades, often to the point where the average double-incomed middle-class family can no longer contemplate home ownership without parental assistance.

Failure to recognise the extent of this problem led to the near catastrophic blunder in the 2017 Conservative election manifesto of linking payment of social care bills to the sale of existing family homes.

Many middle-class children, fast approaching middle-age, are left banking on their inheritance as their only guarantee of property ownership. In effect, the message that the Conservatives inadvertently sent out was that, with salaries relatively stagnant, henceforth property ownership was only for the wealthy and many of those raised in privately-owned homes would just have to get used to living in rented accommodation for the foreseeable future.

Instead of raising themselves up higher, this generation were faced with sliding down the social scale. This often was a particularly bitter pill to swallow as the younger members of the family were often better educated than their forebear,  and had been reared on their parent’s belief that hard work and qualifications would secure their future prosperity.

No wonder then that the Conservatives have increasingly lost support amongst graduates in the 30-40 age bracket. We often attribute this phenomenon to their indoctrination by socialist academics in student years, but it is arguably just as dependent on the decline in property-ownership, with all the insecurities that this brings with the approach of old age. Many now possess the education of the middle class, but none of the means to support their desired lifestyle.

If future prospects of home ownership are daunting for the middle-class, they are far worse for the working class. Here the notion of property ownership is little more than a fantasy. The private rented sector is increasingly expensive due to over-regulation and the only alternative held out by Labour is a lifetime on a council estate. Council and Housing Association homes provide immediate security, but, in practice, the quality of life is always dependent on the housing allocation policies of the local authority.

Into this already problematic situation one has to factor the impact of continuing population growth and immigration. Last year the Government issued an invitation to British passport holders in Hong Kong to come to live in the UK. This was a noble gesture, but with a maximum entry of up to three million people it is obvious that it could have a massive impact on home ownership.

I believe that the Government can turn this situation around and make the resulting policy the flagship of “Levelling Up”. Conservatives must oversee the construction of millions of attractive, high-quality family homes, and be prepared to heavily subsidise this programme. The drab municipal uniformity of the consensus years has to be replaced by innovative design and physical individualism of each new home. Prince Charles’s Poundbury should provide inspiration.

However, this is not a plea for the government to construct more state-controlled houses. These homes are not intended to be operated as “social housing” in perpetuity.

The Party must adopt an ambitious Rent to Buy policy. The state will assist with the cost of construction and overseeing of the project, but the people who move into these properties do so with the intention of purchasing them by paying a higher level of rent over a 30-year period. Conservatives can both relieve overcrowding and extend home ownership simultaneously, without the beneficiaries being burdened by the prohibitive cost of deposits and the banks having to issue unstable mortgages. A successful Rent to Buy scheme holds out the prospect of a tangible material improvement in the lives of people throughout England.

When a councillor, I used to discuss this concept with colleagues, but, ironically, it was the Liberal Democrats who first officially adopted the policy in 2017. Foolishly, they never developed or sold the concept and instead defaulted to plugging their European obsession to the point of electoral destruction.

However, the Liberal Democrat policy was, in my opinion, rather too cautious. They envisaged that it would only be open to those who were already able to attain a conventional mortgage and stated that it was not intended as a replacement for social housing. Conservatives have to go further. If we want to live in a society where the majority own their own home, we need to be prepared to give every assistance to working families to do so. That will be costly, but it is infinitely preferable to blustering into a massive emergency programme of council house building, which could be the consequence of continued inaction.

Rent to Buy provides a route out of dependency and towards a future private ownership. There is no doubt that a huge amount of research will have to be done into the potential benefits and pitfalls of such an ambitious scheme, but this process must start now and the final policy must be settled and adopted before the next general election.

The constituents of Hartlepool showed recently that they were fed up with Labour’s socialist offer and were looking for an alternative Conservative proposal to improve their lives. Rent to Buy might just be the jewel in the crown of Boris’s agenda and the signature policy for which he will be known by future generations.

Nick Bourne and Ros Altmann: Ministers must take decisive action to support the rented housing sector

1 May

Lord Bourne of Aberystwyth is a former Housing, Communities and Local Government Minister. Baroness Altmann of Tottenham is a former Work and Pensions Minister.

The number of private sector tenants now in rent arrears has increased threefold as a result of the pandemic.

With ministers having pledged to a tapering down of emergency restrictions in the rental market from the start of June, it is vital that a proper plan is put in place to address the debt crisis affecting many tenants and landlords alike. Otherwise, many tenants will find themselves forced to leave their home through no fault of their own.

According to recent Government figures, nine per cent of private tenants were in arrears at the end of last year, up from three per cent in 2019/20. This aligns with survey figures showing some 800,000 tenants behind with their rent solely because of the impact of the pandemic.

Whilst we welcome the support that has been put in place to support tenants, including increases in the Local Housing Allowance and Discretionary Housing Payments, the figures speak for themselves. The number of tenants in rent arrears is getting worse, not better.

The Government’s main approach to the sector has been a series of short-term restrictions on the ability of landlords to repossess properties and extending the notice periods they have to give in such circumstances. This has provided security to many tenants throughout the pandemic but has enabled debts to accumulate, in many cases to a level where they have no hope of being paid off in the short term.

However, the sector cannot live in a state of emergency forever. These restrictions will need to be lifted eventually, and ministers have indicated that extended notice periods will start to be tapered down from June. The question is what then happens to those tenants who have built rent arrears through no fault of their own.

We cannot expect landlords to shoulder the burden of rent debts. As Alex Chalk, the Justice Minister, has rightly noted, it is vital that we “avoid falling into the trap of assuming that those in that situation are somehow vastly wealthy and have numerous other sources of income to draw on.” The Government’s data shows that 94 per cent of landlords rent property as an individual, 45 per cent have just one rental property and 44 per cent became a landlord to contribute to their pension. A survey by the National Residential Landlords Association of its members has found that 60 per cent had lost rental income as a result of the pandemic, either through lost rent or properties being unexpectedly empty.

The Government needs to step in and develop a financial package that helps tenants to pay off arrears built since lockdown measures started last March. For those in receipt of benefits that would need to include looking at increasing the amount available to councils in Discretionary Housing Payments and re-considering the wisdom of the decision to freeze the Local Housing Allowance in cash terms.

Another package is needed to help the majority of tenants in arrears who, the Resolution Foundation has found, are not in receipt of benefits and do not qualify for emergency housing support.

One option would be to provide grants. However, this has the potential to raise moral hazards. How would grants of this kind be fair to those tenants who have struggled to get by, but worked hard to ensure they meet their full rental payments each month? Likewise, how would it be fair to have grants available to the albeit small number of tenants who have purposefully not paid their rent in the knowledge that they could not be evicted during the pandemic?

This is why we are calling for the development of a hardship loan scheme for tenants, similar to those in Wales and Scotland, and supported by organisations representing debt advice services and landlords.

The hardship loans should be provided interest free, and guaranteed by the Government, with repayments linked to the recovery of a tenant’s income following lockdown measures easing. This would help to ensure they are not saddled with a repayment that they cannot afford. The loans would be paid directly to the landlord so they get immediate relief and takes the pressure off them having to consider action they might otherwise need to take against the tenants to recover their income.

Most landlords would prefer to keep renting their property to a long-standing tenant wherever possible. But of course, many landlords rely on their rental income as part of their pension and cannot afford to act as housing benefit or social housing providers. It is in the interest therefore of both landlords and tenants to ensure support is in place to pay off rent arrears that may have built.

The Housing, Communities and Local Government Select Committee estimates that a financial package to cover rent arrears as a result of the pandemic would cost somewhere between £200 and £300 million. This would be tiny in government terms but would offer a significant return on investment when compared to the costs of dealing with homelessness.

For those who might not be keen on the idea of propping up tenancies that might have no hope of being saved anyway, tenants with Covid-related arrears will struggle to move on to new housing when faced with landlords who feel their only option is to seek a County Court Judgement against them which would damage their credit score.

The Government seems to have ceded the principle of loans to help in this way. It announced in the Budget that it would provide up to £3.8 million of funding to deliver a pilot no-interest loans scheme in order to “help vulnerable consumers who would benefit from affordable short-term credit to meet unexpected costs as an alternative to relying on high-cost credit.”

Its approach to the rental market during the pandemic has been a classic one of short-termism, which was maybe justifiable at the time, but there has been no thought to the longer-term consequences. As the country emerges from lockdown, this now needs to be addressed if as many tenancies as possible are to be sustained.

Mark Bridgeman: If Ministers really want to build back greener, they need a sceme to help homes that works

18 Apr

Mark Bridgeman is the President of the Country Land and Business Association, and is a Northumberland farmer.

When the Government announced recently that it was ending its much vaunted £2 billion ‘Green Home Grant’ scheme with just 10 per cent of funds actually distributed, rural communities felt let down – as Government once again over promised and under delivered on infrastructure investment.

Homes in rural areas face particular challenges, so the scheme designed to contribute towards the cost of installing energy efficient improvements in people’s homes – provided the opportunity to reduce their bills and minimise their environmental impact.

As the only significant action to date following from the Government’s vow to ‘build back greener’, these grants of up to £5000 should have represented the start of a process which created real change.

Instead, the scheme was hamstrung from the beginning, and failed to deliver even on its limited scope, being shelved after six months, with thousands of applications for funds left unfulfilled.

The Green Home Grant Scheme failed to make an impact for two key reasons.

First, red tape. Builders complained of having to jump through hoops just to become accredited to carry out Green Home Grant projects. This was a particular problem in rural settings where these firms are typically smaller, and often do not have the scale and financial cushion of bigger urban businesses to gain accreditation. Lack of certification led to a massive backlog of applications, meaning that, even if people wanted to join the scheme, they would have to wait months.

Second, time. With the scheme set up for an initial six months and a one-off payment of up to £5000, few homeowners or construction companies thought it was worth taking on the huge financial and time commitment that rural home improvements require in exchange for this limited government support , against the backdrop of Covid controls and uncertainty,

By proposing that all privately rented homes may need to reach an Energy Performance Certificate rating of C by 2028, the Government has failed to consider the differences between urban and rural housing. EPC ratings are a different beast when it comes to rural homes, many of which were built hundreds of years ago, and rarely have access to mains gas.

One CLA member spent some £40,000 to improve a home’s energy efficiency, only to reach a band E rating, which is the current legal requirement. The shortcomings of the existing EPC system mean that many rural houses will never be able to achieve a rating of C, irrespective of huge investment.

The consequences of pulling the rug out from underneath rural property owners will be severe and far-reaching. For many rural landlords, these mean being forced to sell off property, since they will not be able to recoup the huge expense that bringing their property into line with regulation will entail through rent increases. For many homeowners, it’s a missed opportunity to make a difference to their carbon footprint and reduce their heating bills.

Ultimately, this insistence will see a decline in the rural private rented housing supply, and will push out of the countryside people who are the backbone of the rural economy and are an important part of the social fabric in rural areas.

The failure of the scheme in its current form also slows progress on climate mitigation. More than 800,000 rural homes are heated by oil, and will need to transition to cleaner sources of power in coming years, such as heat pumps. But the Energy Saving Trust estimates that it costs £19,000 to install one pump, with the annual bill saving of using the technology just £20 a year. If Government do not help bring about a green transition for rural communities – which so often are first to suffer the impacts of climate change in this country – then we risk it never happening at all.

We need a new Green Home Grant made available without delay. Significant improvements should be made to its scope and the help available. The amount available from the failed scheme was £5,000. Taking into the account the huge extra costs with upgrading rural homes, this should be doubled to £10,000 for rural properties.

Some £2 billion was initially promised from the scheme, with £1.5 billion part of the Green Home Grant voucher scheme and the remaining £500,000 for the local authority delivery scheme. We believe this amount needs to be doubled, and spread out over five years, giving builders and homeowners the confidence to take part in a scheme that could revolutionise Britain’s homes.

The idea of a grant to directly support ‘building back greener’ is a fine one. But the Government’s willingness to throw in the towel after six months raises more questions than answers. A new, reformed scheme, properly thought through and adapted to serve the whole country, is required if the Government is serious about embarking on a journey to net zero carbon emissions.

I love my new flat. But I’m also sick of moving. We renters need a Greta Thunberg of the housing crisis.

16 Apr

Last week, I moved into a new flat in London. I love it and feel lucky to be able to rent a place that ticks so many boxes, from its location to its comfortable size. I can’t wait to start my “post lockdown life”.

But as I unpacked, and looked at all the heavy furniture I’d carted up the stairs, along with my huge to-do list of administrative tasks, I confess I also thought “I can’t do this again”. That is, move flat (although I won’t have any choice!).

It’s a feeling that so many people have experienced – and not just the young and youngish (I’m 32) – because their housing situation has no permanence. Life is a series of moves with no end date, along with tens of thousands of pounds spent on rent.

Sometimes renters are having to tolerate terrible conditions. Yesterday, for instance, ITV published an investigation into people living in damp and mould-infested council housing. There’s also the news that an estimated 700,000 renters have been served with “no-fault” eviction notices since the start of the pandemic. These are awful events, yet I have to say that nothing surprises me any more.

Indeed, during my flat hunt I stumbled on some real horrors, which estate agents had insultingly claimed to be fantastic. There was the flat with a shower in the bedroom, and one with the kitchen pretty much next to the bed. Take your pick!

The most common escape from renting is parents who can help with a house deposit. But why should you need Mum and Dad to come to the rescue in “meritocratic” Britain? And what about those who don’t have that option?

The Government needs to wake up and do something about the situation, not least because it has introduced policies that have implications for housing demand, such as scrapping the net migration target.

Similarly, it was the UK’s moral obligation to offer citizenship to up to three million Hong Kong residents. We should welcome them as much as possible. But part of that welcoming process has to include thinking about where they’ll live. I have seen few, if any MPs, discuss how they will accommodate a growing population.

Robert Jenrick, to his credit, has been working hard to get planning applications through for housing – as my colleague Henry Hill has written for ConservativeHome. This is fantastic news, and I have no doubt he realises the seriousness of the problem.

But I also get the sense that many MPs just think “well, it doesn’t affect me, so I’ll think about it later” when they hear another complaint from Generation Rent.

Recently, I watched one MP make a passionate plea in parliament about why we need to protect the green belt. Fair enough, but it would be nice if someone could get as animated about the hundreds of thousands of people nowhere near home ownership. How are people supposed to start a family? Or save? Or cope with taxes going up?

I imagine one reason MPs don’t move on this issue with the same urgency they apply to say, climate change, is because they earn just over £80,000 per year. It takes you out of the most competitive parts of the market, and many also do not live in the South East, where demand is especially high (because so many jobs are there).

Some of the current problems will be fixed by the working from home revolution. It means people can now move out into areas with better housing supply. The Government is also moving the Treasury to Darlington and “levelling up” the North. These are all fantastic steps, as a lot of the issues are to do with an imbalance in supply and demand for properties across the country.

But we seem to have stalled on other matters. There was the Government’s housing algorithm, which was meant to increase the supply of properties. Even if this had been allowed to go ahead, it would have resulted in 300,000-a-year level by the middle of the decade – no way near enough to make Generation Rent “Generation Homeowner” instead.

Another issue, of course, is NIMBYs, who have too much power over housing. Recently locals managed to block a £1 billion Kensington hotel and housing complex. I don’t know the intricacies of why it was stopped, but it’s hardly the first time this has happened. It’s hard not to stereotype these people. Are they the types that sing the praises of free movement under the EU – while stopping any efforts to accommodate a growing population?

I’ve never really wanted to write about or research housing. I have no idea what a good planning policy would be. I’m just someone who thought as a child they would grow up and live in a nice house. I feel lied to in a way, as I expect many other people my age do, when we were told that “hard work pays off” at school. Actually, it just goes towards landlords.

Frankly, no one seems to be taking the issue seriously enough. It’s called a housing “crisis” for a reason. Renters need to channel their “inner Greta Thunberg” to get the issue prioritised. Our futures have been “stolen”, after all, by the inability of policymakers, including Labour, to think about where we’ll all live. A Conservative promise to “Get Housing Done” can’t come soon enough.

Chris Town: It’s wrong for Ministers to shift the responsbility for renters in need onto landlords

7 Sep

Chris Town is a landlord, a Conservative Party member and a former Vice Chair of the Residential Landlords Association.

In July, the Housing Minister assured MPs that the end of the pause on possession proceedings by private landlords on 23 August would ensure that: “all people – landlords and tenants – have access to justice.”

Instead, just two days before the ban was due to be lifted, the Government U-turned, and decided that tenants and landlords should continue to be denied access to justice. In doing so, they have lost the trust of a large number of natural Conservative supporters.

Banning repossessions has not been without its victims. By the time the courts open to hear cases on the Government’s new date of 20th September (if, this time, Ministers keep their word), it will have been six months since the original repossessions ban was introduced.

That’s six months without landlords being able to take action against tenants committing anti-social behaviour, thus causing misery for fellow tenants or neighbours. It is six months without landlords being able to draw tenancies to an end where doing so would enable victims of domestic violence to be separated from their abusers. It is six months in which landlords have been unable to reclaim possession of their own home where they have rented it out whilst working elsewhere such as those in the military or diplomatic service.

And it is six months in which landlords have been unable to take any action against those tenants whose rent arrears have nothing to do with Covid-19. This includes those who were building arrears prior to lockdown, and those who are deliberately not paying their rent even where they have the means to do so.

Although the Government has now announced that landlords will be required to only give anti-social tenants four weeks’ notice of their plans to repossess a property, this does not include long, drawn-out court processes where tenants contest such notices.

This will be of no help to landlords facing rent arrears where the courts will only prioritise cases of tenants who have built debts totalling over a year of unpaid rent. Taking the Government’s average for weekly rents across England of £200, this could amount to a lost income to a landlord of over £20,000 when you take account the notice period required to a tenants the average six months for the courts to process a case from an application for repossession to it actually happening.

It is completely unacceptable to expect landlords to undertake the responsibility of the state to subsidise those who are struggling to pay their rent. I might expect Labour to have no sympathy for landlords, but I would hope that a Conservative Government would show some understanding that most landlords are not wealthy, and cannot afford to forgo rent for long periods of time.

A massive 94 per cent of private landlords let property as an individual, with many renting out just one or two properties as a pension or for their main income. The average gross non-rental income of landlords is £25,000 a year. About four in ten report a gross non-rental income of less than £20,000.

The repossession ban is a sticking plaster to the fundamental problem that, unfortunately, some renters have been badly hit by the economic impact of the pandemic and can’t afford to pay their rent. This situation will only get worse with the ending of furlough. The best protection for these renters and for landlords is to enable them to pay off their rent arrears.

This should be done through interest-free, Government-guaranteed hardship loans for tenants in England to cover Covid-related arrears. The money would be paid directly to the landlord, and the immediate future of their tenancy secured. Where tenants refuse to seek a loan, or where they might not be best suited to them, income support is needed for landlords to cover income lost as a result of coronavirus.

Similar schemes have already been developed in Scotland and Wales meaning once again that the UK Government is on the back foot, rather than taking the initiative to support renters and landlords.

A cast-iron guarantee could then be given that the courts will open again to hear possession cases from 20th September, with priority being given to cases related to anti-social behaviour, domestic violence and rent arrears unrelated to Covid.

The courts would operate under the rules already agreed, meaning that landlords would need to set out in their claim any relevant information about a tenant’s circumstances, including information on the effect of the pandemic. Where this information is not provided, judges would be able to adjourn proceedings with all the costs involved having to be met by the landlord.

This would be a good incentive to ensure that they had done all they could to work with the tenant to find a solution, which is what the large majority of landlords have been doing. They deserve some recognition for this and some support where it is needed.