Landlords: Don’t be scared of commitment

Anya Pearson

There’s an ever-growing group of people in Britain who feel that the rental market isn’t working for them.

They’re concerned about securing the right length and flexibility of tenancy to suit their needs; fair rent prices; and an uncomfortable asymmetry of power between landlords and tenants. And they’re worried that the government won’t do anything to fight their corner.

I’m not talking about the 9 million people in England who rent privately, but landlords whose numbers have increased to an estimated 1.4 million in recent years.

According to the Private Landlords Survey 2010, 89 per cent of landlords are private individuals responsible for 71 per cent of all private rented dwellings. More than three quarters of all landlords only own a single property for rent, and the majority work to support themselves while renting out their property.

Of course there are some landlords who are profiteers, plain and simple. My ex-landlord wouldn’t return my calls when a dehumidifier sucking pints of water out of the air couldn’t belay the mushroom jamboree happening on my bedroom walls. There remains a lot of work to be done to deal with poor quality housing.

But the cold reality is that we’re increasingly becoming a nation of renters and while building more social housing and properties to buy is absolutely vital, we urgently need to make the prospect of a life of renting work better for both tenants and their landlords.

Because when it comes down to the crunch, when we talk about renting for the most part we’re talking about millions of relationships between individuals. And we should be focusing on how to make these relationships work better for each party involved so that each tenancy provides a safe and high quality home while providing security for tenant and landlord alike.

At the moment, this doesn’t happen often enough, with contracts typically lasting six or 12 months. Government figures show that in 2010-11, 1.26 million households within the private rented sector had moved within the previous year – the highest in decades. Millions of tenants worry about unpredictable rent increases and their contract ending before they are ready to move. Instability means higher costs for renters, unsettles families, impacts educational attainment and reinforces poor housing standards.

To this end, Shelter has called for a stable rental contract which would give renters five years in their home during which they could not be evicted without a good reason, and allow landlords to increase rents annually by a maximum of CPI during the five years.

Many landlords are perfectly happy with this idea – the National Landlords Association, Genesis and Qatari Diar Delancey East Village Operations have all been supportive. Ed Miliband has also spoken in favour of this idea and the Labour policy review explores both tax incentives for landlords and the possibility of giving local authorities the power to implement longer contracts.

However, though built on strong foundations, the stable rent contract is currently missing a supporting wall. A report published last month on behalf of the Residential Landlords Association attacks the case for longer-term rents.  The RLA represents 20,000 landlords in the private rented sector, who manage between them over 250,000 properties across the UK.

The report argues: “Uncertainty is rife in life. Why should privately rented housing be any different?” It’s hard to agree. Almost a third of renters are families with children. Teresa Pearce MP recently wrote about the school children in her constituency at their fourth school before the age of 10 due to multiple evictions in a short lifetime.

The RLA argues that it is “by no means clear” that a substantial proportion of families with children want to settle down for a long time in their current rental homes. In fact, Shelter found that 62 per cent of renting families would like the option of longer term tenancies.

Whatever your thoughts on the RLA’s concerns, the report is an eye-opener. There is a delicate balance to strike in the renting market and perhaps surprisingly, both tenants and landlords feel they are the underdog. In order to make a success of the stable rent contract, we need to accept that the renting market is broken for landlords, too.

So the left must argue the case that long term contracts can deliver better returns, and avoid the expense of void periods and re-letting costs.

More than anything, instead of demonising them, we need to work hard to persuade sceptical landlords not to be commitment-phobes. The trusting relationships built by longer term rents can benefit them too, and in turn will create stronger, more stable communities.

2 Comments:

  1. AnyaPearson

    Thanks for reading, Martin. It struck me when I was researching Britain’s landlords for this article that demonising them as all ‘rogue landlords’ or money-hungry was completely useless – even if the temptation is there. It’s in everyone’s interest to bring them on board with progressive policies that give a fairer deal for tenants.
    I’m not convinced that encouraging an even greater takeup of buy-to-let properties would help, though it would increase supply, as the problem is compounded by a lack of social housing, and not enough houses being built in the first place. However I agree that incentives for landlords could come in the form of tax breaks more generally.

    Reply
  2. Martin Grubb

    Dear Ms Pearson I am writing as a member of the Institute of Fiscal Studies, though of course as a private individual, to say that your article on landlords was as balanced and economically sound as I have seen for some time. Drawing attention to the frequent personal relationship between owners with single properties to let and their tenants is spot on and rarely acknowledged. I was an international property manager and am aware that incentives to landlords and greater security for tenants can work together (e.g. France and Germany). However in the UK and especially London we do have to get over the economic illiteracy of blaming the market mechanism which merely identifies the extraordinary high levels of rent but does not cause them. The rental market is just like the second hand car market—thousands of individuals on both sides striking a deal, what economists call a ‘perfect market’ If only the help to buy monies could be directed at buy to let landlords plus tax incentives (which many of us think would have the support of Mark Carney) we might be able to increase supply. In the meantime I will write to Sadiq Khan asking how nationalising second hand car dealers would bring down the cost of cars.

    Martin Grubb

    Reply
  • (will not be published)

Please read our community standards