Last week saw the Second Reading of the Renters’ Rights Bill. It seeks to shift power from landlords to tenants. It is no surprise that such ideas are popular. There are more tenants than landlords. It is also hard to dispute that rents are very high. If anything, the problem most people will have with the Labour Government’s plans is that they don’t go far enough. A poll in June, for instance, found that “seven in ten people in England support introducing rent controls in England for the private sector so that rents do not rise by more than the national inflation rate.” Under this Bill, landlords will supposedly be able to charge a “market price for their properties” but an “independent tribunal” will decide what the market price is. This is sophistry. If state officials impose a price it is not a “market price.”
The previous Conservative Government was planning legislation along the same lines. The language was similarly misleading. A contract voluntarily entered into between landlord and tenant for a fixed period of time was to be prohibited. This was presented as an end to ‘no fault evictions’. One might call a tenant deciding to leave ‘no-fault vacating’ if the landlord was blameless.
So it is brave and welcome that the Conservatives are robustly opposing the Renters Rights Bill, a thoroughly socialist piece of legislation. Conservatives believe in property rights and freedom of contract. So far as public opinion is concerned the Conservatives must now start to state that case. But Labour will be judged on the outcome of what they are doing. We know from Scotland that this meddling drives away landlords and so pushes up rents.
The Government can’t say they weren’t warned by the lettings industry. Gareth Atkins, Managing Director of Lettings at Foxtons, says:
“The scrapping of fixed-term tenancies is a move which could destabilise the living arrangements of renters across the nation.
“As it stands, any tenant currently contracted to a fixed-term tenancy will not only have certainty over their living situation, but also clarity on just how much they are going to pay in rent.
“This figure is often fixed for an initial term of three years or more, but under the proposed Renters’ Rights Bill, this certainty would vanish and over the space of three years the same tenant could see their rent increase on multiple occasions.”
Sam Reynolds, CEO of Zero Deposit, adds:
“Whilst improvements to tenant welfare are positive in theory, it’s clear that the Government has so far taken a head in the sand approach to the bigger picture, with little consideration afforded to the nation’s landlords and the consequence of deterring them from the sector. In doing so, they could well cause more harm than good when it comes to rental market affordability and a tenants ability to actually secure the rental property they so desperately need to keep a roof over their head.”
The Director of Benham and Reeves, Marc von Grundherr warned of “potential rental market Doomsday” of fewer landlords and higher rents.
Those are the big firms. For the small independent landlords, without legal teams, it is even more daunting. So more sell up. So the true market rent goes up. If an “independent tribunal” stops the rent going up then more landlords will be driven out and the shortage will get worse. If the “independent tribunal” seeks to stem the exodus by allowing big rent increases what has been achieved? You might feel it unreasonable that some landlords will not accept tenants with children or pets. This legislation prohibits such mean-spiritedness. But if these curmudgeons exit the market, grumbling about who they can or can’t have in their property, the perverse outcome is a greater shortage for all tenants.
Moralising Labour MPs at Westminster might shrug all this off. They might think there will be winners and losers. Some tenants who want to stay put might get a lower rent and be less likely to be turfed out. If some landlords sell up that increases the supply on the market for those wanting to get on the housing ladder. But what about their Labour councillors back in the constituencies faced with a shrinking private rented sector?
The latest homelessness statistics from the Ministry of Housing, Communities and Local Government show 26,320 households became homeless last year due to their landlords deciding to sell. That means that councils are increasingly meeting their statutory responsibility to accommodate them by putting them up in hotels. I have written before about the example of Redbridge. Those relying on the Council for housing get sent to Slough, Thurrock or Sandwell – often in hotels. So it is easier to understand why some put up with the mould and ant infestations of being tenants of the local Labour MP.
But Redbridge is not an exception. I have also covered the awful housing record in Camden, Sir Keir Starmer’s borough.
To give a broader picture I recently made some enquiries, via FOI requests, of the total spending on hotels as temporary accommodation for homeless households in the last financial year 2023/24. This shows it is not just a London problem. Here are some of the responses:
Leeds City Council, where Rachel Reeves is among the MPs, spent £1.77 million on hotels last year. For Haringey Council, where the Foreign Secretary David Lammy is an MP, the bill last year was £3.3 million. Then we have spending of 2.72 million on hotels last year by Tameside Council. Angela Rayner, the Deputy Prime Minister and Housing, Communities and Local Government Secretary is among the MPs.
These are huge sums being spent to achieve a disastrous outcome. Staying in a hotel might be a treat on holiday. But imagine trying to bring up a family in a Premier Inn?
Part of the cost is met by central Government (for instance via the Homelessness Prevention Grant), part by the Council Taxpayer. For example, my local council Hammersmith and Fulham spent £28.9 million last year on temporary accommodation (including £7.24 million on hotels.) Hundreds are placed outside the borough – as far away as Slough or Spelthorne. A lucky few might get a council flat locally – but as Hammersmith and Fulham has been ranked as the worst Council for dealing with damp and mould the celebrations might be a bit muted. Central government funding to Hammersmith and Fulham for temporary accommodation came to £18.64 million. That left £10.3 million to come from Council Tax payments (or Business Rates).
According to my Council’s Statement of Accounts, the total revenue from Council Tax last year was £73.9 million. So that is a significant chunk of the budget going on hotels. By the way, another £11.1 million went on debt interest. I do think people would be angry if they knew where their Council Tax money goes. So much money is spent on items like keeping children in institutional children’s homes or taxi fares taking them to school rather than on cutting the grass in parks, or sweeping the streets or emptying the dustbins.
Anyway, the Renters’ Rights Bill is not just a disaster for landlords and tenants. It will also increase the burden on Council Taxpayers. It is so important to open up and expand the housing market. This sanctimonious legislation will, instead, just pile on the misery.