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Private renting: Why the new London Mayor needs to act
Two and a half million Londoners now rent their homes from private landlords. They have minimal rights and no control over rent increases. While some privately rented homes are well maintained and affordable, the very worst housing conditions - and the highest levels of poverty - are found in the private rented sector, where private landlords encounter little enforceable regulation yet enjoy huge profits.
The vast majority of London’s private renters do not want to be private renters. They rent privately because they have no choice: the shrinking supply of social housing means a secure, social tenancy is harder and harder to get, while the encouragement of buy-to-let has pushed house prices well beyond the reach of anyone without inherited wealth. ‘Help to Buy’ schemes have inflated house prices further and only help a tiny few: in all but one London borough, first time buyers need an income of more than £50,000 and a deposit of at least £10,000 to be able to use the current scheme.
One in three households living in London’s private rented sector has children. The minimum legal tenancy lasts just six months, and landlords are free to make tenants move on without having to give a reason. So twice a year, these children face the possibility of having to move home and move schools - if the landlord puts the rent up, or refuses to repair something, or if they simply fall out of favour with the landlord. It is not unheard of for landlords to wait until their tenants’ children are settled in local schools, then demand huge rent increases - knowing that some parents will have no choice but to pay. Short-term private tenancies cause neighbourhood ‘churn,’ breaking down community links and putting huge pressure on family relationships.
London needs all its citizens, not just the wealthy ones. It needs teachers, doctors, councillors and social workers. It needs cleaners, care workers, taxi drivers and bar staff. It needs artists and students, musicians and poets. But without drastic action to improve conditions for its private renters, London will destroy the very things that give it life. London needs a bold, brave Mayor who will stand up to private landlords, letting agents, property developers and ‘buy to leave’ investors. It needs a Mayor who will make sure councils get the resources they need to do their jobs properly, and be tough on those who still don’t try. It needs a Mayor who understands what life is like for private renters in this city, a Mayor who is willing to challenge central government when national systems fail to meet Londoners’ needs.
This what that Mayor should do:
Power and democracy
Introduce a London Housing Bill, allowing London to devolve powers over housing. With devolved power to collect its own property taxes, London would then be able to make housing policy that fits London’s unique circumstances. London is unlike the rest of the UK and its powers should reflect this. The London Housing Bill could give the Mayor power to introduce modern, flexible, city-wide rent controls - bringing London into line with other major cities in Europe.
Keep the ‘Olympic precept’ (around £25 per year currently added on to Londoners’ council tax to pay for the Olympics, due to be phased out). This £25 per year could become a housing precept, ringfenced to finance a London housing programme that builds genuinely affordable housing.
Ensure that private renters are consulted when the Greater London Authority and London Assembly make decisions about housing. This could be done through a subscription-based renters’ union, an open forum, or by asking London’s two and a half million private renters to elect representatives.
Abandon the current definition of ‘affordable’ as 80 per cent of market rate. With market rates so high, 80 per cent is unaffordable to the vast majority of ordinary Londoners, whether they’re renting or buying.
Incentivise private landlords to charge the London Living Rent: an amount based on how much money a renter needs to live on (to buy food and cover other essential living costs) after they have paid their rent. It’s not as crude as ‘one third of net earnings,’ but it is based on average earnings in different parts of London, and is calculated according to whether or not a renter has children or a partner. Landlords who charge above the London Living Rent should be heavily taxed on the amount above that line.
There are many successful and modern forms of rent control used in other cities, including:
The Berlin model: landlords can’t charge more than 10% above the median rent for the city
The Swedish model: rents are set using a points system, with points awarded for the size and quality of the home, the features it has, and what amenities are nearby
A flexible model: a cap is set, but landlords are free to charge above it if they want. Any amount they charge above the cap is taxed at 50 per cent. This extra tax revenue can fund social housing in the capital to alleviate the pressure on the private rented sector
Put pressure on central government to end the freeze on Local Housing Allowance - otherwise known as Housing Benefit - which is currently frozen until 2020. If rents are allowed to rise and LHA is not, private renters are pushed into poverty as they are forced to make up the difference, leaving them with less money for food, heating and transport.
Stand up to bullying from property developers. Give council staff proper training in understanding the ‘viability assessments’ that developers use to get around their Section 106 affordable housing obligations. Build the skills and confidence of council staff so they can challenge developers who currently run rings around them. OR…
Abolish viability assessments altogether, replacing them with a more transparent and democratic system
Make the planning decision-making process more transparent and accountable, with genuinely enforceable quotas for affordable housing to rent and buy rather than meaningless targets.
Set up a new GLA agency to encourage public bodies who own land in London to use it for genuinely affordable house building. Transport For London (TFL) owns land bigger than the size of Camden, and much of it is underused.
Explode the myth that developing brownfield sites is more expensive than developing green belt land. It isn’t.
End landbanking by introducing a ‘use it or lose it’ two year limit.
The GLA currently runs a Housing Bank offering low cost loans to speed up housing developments. Currently this is targeted at ‘intermediate rent’ and shared ownership, neither of which offer ordinary London renters a good deal. Instead it should be used to set up Community Land Trusts, housing co-ops and a fund to allow private renters to take their landlords to court.
Around half of London’s boroughs are now planning to introduce some form of landlord licensing scheme to drive up standards and force out the criminals. But some are better resourced than others. Join all the council schemes together and set up a London-wide enforcement team to make it work properly.
Give up on the idea of ‘voluntary regulation’ like the London Rental Standard; voluntary regulation is an oxymoron. Very few private landlords have signed up to the London Rental Standard since it was introduced in 2014 and it only requires landlords to meet minimum legal standards. Replace it with a mandatory London landlord licence, which would demand better standards.
Make energy efficiency measures a compulsory part of a London landlord licence, so that private renters do not have to go without heating in poorly insulated homes.
Decent Homes Standard
Currently the Decent Homes Standard only applies to social housing. Make it a requirement of a London landlord licence that every privately rented home meets the Decent Homes Standard so that all private renters can live in a warm, safe home.
Security of tenure
Currently the only private landlords offering tenancies of longer than a year are those who cater for the very wealthy end of the market (for example, Get Living London in the Olympic Village charges around £400 per week). But Londoners on ordinary incomes need security of tenure, too. Make it a requirement of a London landlord license that landlords offer three or five year tenancies. Landlords can end the tenancy early if they can prove they need the property for themselves or a family member to live in, or if they can prove they are selling it. Tenants can leave at any point with a month’s notice, because in London landlords have no difficulties finding replacement tenants.