The BBC is currently running an article called “Four ways to fix the rental market“. These are four ideas designed to “make renting more secure and more affordable while maintaining a good supply of homes for rent”. The ideas are a mixed bag, to say the least.
Idea #1: Make renting more secure by extending the length of contract:
In England, about half of renters are on Assured Shorthold Tenancy agreements. This allows landlords to evict them without reason. […] The housing charity Shelter would like tenancies to last for a five-year period – with landlords only having the power to evict their tenants if they break their agreements or don’t pay the rent.
At the last election, Labour campaigned for three-year tenancies.
They don’t point out that this also allows tenants to leave without reason, usually on a month’s notice. For a lot of tenants this flexibility is good, because you can move on a whim. It also ignores the fact that tenants are free to negotiate a longer term lease with their landlord, if this is what they want. They may also be able to secure a lower monthly rent, because for a lot of landlords the knowledge that their tenant is staying put for 3/5/however many years is valuable. It’s expensive to find another tenant.
Idea #2: Limit rent increases. Sigh. The price of a thing is a signal about the relative supply and demand of that thing. High prices mean there is high demand relative to the supply. If you limit the price, then there’s no incentive for people to introduce more supply. You end up with a shortage of the thing you’ve price-limited. It would also cause landlords to skimp even more on maintenance and investment, so over time would reduce the quality of available housing.
Idea #3: Make things easier for landlords. Faster evictions, exemptions from stamp duty, etc. This actually isn’t a terrible idea, but it seems somewhat contradictory to the first two. If you acknowledge that these things would help, then you’re acknowledging that the problem is restricted supply. So why restrict the supply further by making the market less liquid and introducing a price cap?
Idea #4: Built to rent. This isn’t an idea, more an observation that large companies are buying property to let it to people. The article asserts that “the huge advantage from a tenant’s point of view is that the duration of rental agreements is much longer”, but this is only an advantage if you want a long tenancy. A lot of people don’t.
This is all dancing around the issue that in parts of the UK, the supply of housing is constrained relative to the demand for it. There are some ways around this, namely to reduce the centralisation of the economy (and government) around London and to loosen the planning regs so that it’s less expensive for people to build new houses. But although those things have half a chance of solving the problem (along with many more), they won’t get implemented. For one thing, the majority of homeowners see their homes as investments; if the supply of housing increased and property values decreased, then the government responsible for that would be out on their ear sharpish. For another, I suspect that a lot of Londoners and people in government actually quite like centralisation; Londoners because they get more money spent on them, and the government because it means they keep more power in Westminster. Which is fine, but don’t come moaning to the rest of us that you’re paying £1000 a month to live in a room in a shared flat.