Regulating housing: neither new nor radical
Phil Child |
Labour Party Leader Ed Miliband’s announcement that a Labour government would reform the private rental housing sector prompted the Conservatives to warn of “Venezuelan-style rent controls”, a failed socialist policy of Venezuela and Vietnam. Though the internationalism of the Conservative comparison was refreshing, as The Economist pointed out, the response from the political right was ‘so hilariously over the top it reads like a parody.’ The Conservatives did not engage seriously with Labour’s proposals to cap rent increases, make three-year tenancies the norm and ban agency fees for tenants.
This detachment from British realities reflects contemporary policy culture. Compared to the relatively robust legislative environment of the 1950s and 1960s, housing in Britain today is so thoroughly deregulated that any attempt to introduce regulation can be depicted as a foreign act, and therefore the reasons why rent control was required are easily obscured by hostility to regulation.
Furthermore, attitudes towards the landlord in Britain have changed - being a landlord has been legitimised. By contrast, the Labour MP Richard Stokes encapsulated attitudes in the 1950s when he wrote in the Labour Party newspaper, Forward, that landlords should ‘pay for the privilege of ownership instead of allowing them to sweat the workers.’
Meanwhile the post-war championing of council housing by Labour and owner-occupation by the Conservatives has reduced the supply of privately rented housing. The problem was exacerbated by the ‘Right to Buy’ sell-off of council housing from 1980 onwards, which left owner-occupiers by far the largest group within the population. Without a considerable stock of council housing for rent, the rapid growth of private rented housing over the last 20 years has encountered serious issues, not least insecure tenancies and rapid rent rises.
Indeed, it appears no coincidence that the return of private renting as a major housing tenure has coincided with greater focus by the media on landlord abuses. There are similarities with the late 1950s when landlord abuses were the frequent subject of social and political debate, with Labour calling for curbs on ‘landlordism’. ‘Landlordism’ referred to landlords putting profits before their tenants. As Labour observed in the 1956 pamphlet, Homes For The Future, ‘a large proportion were more concerned with making current profits than maintaining the value of their property.’ In particular, landlords operating rent controlled properties were singled out.
Rent control was introduced in 1915, the consequence of severe landlord abuses towards low-income tenants prior to the First World War. Continuing discontent among tenants came to a head in 1915, with protests and rent strikes against rapid rent increases starting in Glasgow and spreading across Britain. In response to public pressure, the government of Herbert Asquith established a system of fixed rents at pre-war levels; this continued throughout the inter-war period, and rent controls were placed on more low-rent properties on the outbreak of the Second World War, fixing rents at 1939 levels. By the mid-1950s, around six million properties remained under rent control, the rent in some cases unchanged since the system was introduced in 1915. As repair bills rose but rents stayed fixed, landlords began to complain about the impossibility of making a profit.
The spectre of the rent-controlled tenant in a decaying, late-nineteenth century house or flat haunted Labour in particular, as this low-income group was a traditional base of support for the party. In a 1955 report for the Labour Party, sociologists Peter Willmott and Michael Young argued that private landlords were not only failing to repair their properties but charging the same rent, despite increasing dilapidation, and also intimidating tenants if they complained. Given that rent controlled landlords could only raise rents through a change in tenancy, a perverse incentive existed to force out sitting tenants through neglect or even intimidation. Labour was averse to private landlords and believed that they maintained housing inequality; according to Homes For The Future ‘slums are a product of private landlordism.’ However, the Party also saw rent control as a problem, acting as a drip-subsidy to landlords with little means of improving the housing stock.
Labour called for ‘municipalisation’, or local authority takeover of all rent-controlled property. In 100 Questions Asked and Answered on Labour’s Housing Policy (1958), the Party argued that ‘the private landlord who owns property in order to make money must be replaced by a public landlord treating housing as a social service.’ The problem was the time and public money required to implement this policy. If serious political pressure was applied to the private rental sector before the public rented sector could be built up to an appreciable level, conditions for tenants could get worse before they got better.
The experiences of tenants in the private sector were exposed by the 1963 ‘Rachmanite’ scandal. Newspaper reports revealed the abuse of tenants by landlords such as Peter Rachman in London. Labour was aware of the activities of Rachman and his peers: Talking Points in 1960 referred to a Daily Herald investigation which found 28 people living in 14 rooms in Paddington, paying exorbitant rent. Labour pledged to crack down on ‘Rachmanite’ practices prior to taking office in 1964, although the Rent Act of 1965 only formalised rent control, with ‘rent officers’ assessing property standards and setting rents based on property values. Regulation was needed to correct landlord abuses, but the underlying cause of poor quality rented housing – the insufficient income landlords received from controlled rents and the lack of compulsion by the state to improve their properties - was not addressed.
Compared to 1950s calls for the municipalisation of private rental property, Labour’s current proposals seem comparatively timid, but sensible. Regulation is not dangerous - a greater problem is the over-emphasis on owner-occupation as the most desirable form of housing, coupled with a diminishing stock of council housing. Labour’s proposals are a welcome intervention in a dangerously unregulated housing sector; if implemented they would help stabilise tenancies and ensure rent rises are gradual rather than sudden. The 1950s experienced too much and the wrong sort of regulation; the early 21st century has too little of any kind. Regulation should cease to be a dirty word in housing policy – and instead be seen as a necessary means of balancing the housing sector.Please note: Views expressed are those of the author.