Why the Greens need radical policies to bring down the cost of rent
Renters in the UK are feeling the pressure of rising rents, falling wages, and an increasingly hostile benefit system. According to the Joseph Rowntree Foundation, by 2040 there will be six million renters in poverty – that’s an increase of 2.6 million people. The same report predicted that children currently in primary school will face rental costs 90% higher than now.
In London, rent can be at – or even above – 50% of wages, and people who rely on state support are being priced out of the capital. This is increasingly becoming the case in the South East of England. On top of rent are often an assortment of fees and charges from lettings agents, masking the real increase in costs to renters.
It’s a system which is almost incomprehensible for older generations. Before 1989, maximum rents were set according to area and condition, and tenants were allowed to stay in their home permanently (unless they broke their contract or the landlord wanted to move back in). This was a system which placed the need of tenants for a home over the need for profit by a landlord.
In the UK, there has been a revival in debate on rent controls, with Labour and the Green Party pledging some form of action. However, Centre-Right Think Tank Civitas described Labour’s proposal to limit rent increases within a 3 year tenancy as ‘not enough’. Labour’s London Mayoral hopeful, Diane Abbott MP, has put together her own proposal to link maximum rents to council tax bands. Greens should be looking to put together their own detailed proposals, both for London, and for across the UK.
So, what would a ‘radical’ policy on cutting rents look like? We should aim to cut the cost of housing to no more than 30% of take-home income. This would mean action to control rents, redistribute housing, and to end the use of housing primarily as a source of increasing wealth through stabilising and reducing house prices.
There are many examples of rent control from other countries: Venezuela links rents to the cost of construction, San Francisco has an annual limit on rent rises, and Germany has a more complex system which takes factors like locality, amenities, and condition of housing into account. Denmark allows local government to set local rent controls.
From a personal perspective, looking at these various systems, there are some key feature that could make for an effective rent control system:
- Linking rent to costs of building or running housing (effectively setting a maximum rate of profit)
- Linking rent to provision of defined services by the landlord
- Transparency of what landlord costs are
- Lay tenant involvement in the assessment of maximum rents or the resolution of disputes
We should be clear on the benefits of rent control. The market is failing to provide a human necessity at a decent and affordable level. Rent controls would reduce poverty. They would reduce the cost of housing benefit – this would also mean less public money going to private landlords and banks. Instead, shifting this money back towards building social housing would enable the UK to reverse decades of under-investment.
It would be naïve to think that rent control wouldn’t have other consequences. Landlords who won’t be able to turn a profit are likely to leave homes empty or sell up, although there are ways to manage this so that more homes do not end up empty. The debate should shift from whether to introduce rent controls, to creating a system that puts the welfare of people first and then looks at how to get there and mitigate negative effects. Otherwise we risk arguing about how to alleviate the worst aspects of a fundamentally bad system.