The pendulum of power – landlords or tenants?
Much of the debate, and the subsequent policy that has emerged out of it, is conducted on the basis of landlord vs. tenant.This is no new fad: I’ve coined it the ‘pendulum debate’, because it appears fascinated by the cyclic shifts of perceived power between landlords and tenants over time. And right now, the debate dictates that the pendulum of power should swing back in favour of tenants because landlords have had it too good for too long.
It is true that there have been shifts in power over time. First towards tenants between the 1950s and 1980s – as rent control and security of tenure were progressively tightened – and back again to landlords between the 1990s and 2010s – as tenure legislation was liberalised and buy to let boomed.But the difference is that this all happened not in a time of housing crisis like the one we find ourselves in today, but instead against the backdrop of a combination of:
• high rates of housebuilding
• the ready availability of council or other forms of social housing
• increasingly accessible mortgages
…all of which cushioned the impact significantly.
Appealing to the masses
All the political parties make an effort to win favour with renters across the UK in their manifestos. There are more voters renting than in any Election in recent memory and this undoubtedly concentrates the minds of politicians. After all, renters could well be today’s ‘Mondeo men’ and ‘Worcester women’ and they outnumber landlords six-to-one.
But I worry that the accepted way to improve the lot of one group is to attack the other. And here’s the problem: framing the debate on this basis may produce a short-term electoral gain, but in the long run will always be futile. If we want a private rented sector to work for everyone in it, then it has to do just that. While big, bold and potential vote-winning policies like rent capping and lengthy tenancies sound great for tenants, they scare the living daylights out of landlords – the majority of which have just a single property, make a modest return and do a good job. Such policies give little thought to the impact and response in the round, or the consequences that will follow, despite the accumulation of evidence from around the world of what happens when these policies are introduced.
A market that needs to mature
The Private Rented Sector (PRS) is still an immature market, little more than 20 years old. It needs to be nudged toward maturity, adapting to the changing demographic of renters and their diverse and differing needs, without destabilising its general growth and development – not reformed or regulated to the hills.
Private individual landlords put £26bn in to providing homes last year, a contribution we can ill afford to lose as house building stagnates and the housing shortage continues to bite. It’s too simplistic to assume that if all those landlords were pushed out, their tenants would all be able to become owner-occupiers.
The key to a better and more effective PRS is a genuine balance between those in the market and a partnership between the market, regulators and government. That requires policy developed from an understanding of all perspectives, not least the economics of supplying housing to rent, the diverse and complex range of people living in the rented sector and what truly motivates landlords. But instead we get policymakers taking a particular side, making commitments which demonstrate their lack of a broader understanding of the private rented housing market, oblivious to the full consequences of the changes they propose. Why? Because their policies might just tip the Election in their favour and they can provide a convincing enough argument on the surface that won’t be interrogated by a media circus too preoccupied with pitting the villains (landlords) against the victims (tenants).
When will it stop?
In 30 years’ time, the 2015 General Election will be a subject for history books and politicians’ memoirs. But today’s children, too young to vote now, may still be dealing with the consequences of the pendulum renting policies for years to come. My fear is we’ll still be having the same arguments, swinging back and forth, watching the pendulum debate play out. It doesn’t have to be like that, but it’s hard to picture it any other way. The pendulum may never stop swinging.