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.