Monday, 27 April 2015

Labour’s housing policy papers over cracks but doesn’t solve crisis

This week the housing crisis finally reached Westminster.

Trade Unionist and Socialist Coalition (TUSC) candidates have been calling for rent control and investment in building and refurbishing quality council homes for years.

Now Labour, perhaps at last sensing the public outcry over the housing crisis, are making eleventh-hour attempts to appeal to private tenants by saying they would cap the rate of rent increases. Who wouldn’t welcome even this small concession? But it falls far short of what’s needed to solve the desperate and snowballing crisis. 

TUSC calls for rent control which does what it says on the tin - controls the level of rent. The Labour proposal simply covers the rate at which rents increase within a three-year period.

For most of the 20th century there was rent control in the UK. Until the Thatcher government abolished rent control in 1988, you could take your landlord to a ‘Rent Tribunal’ and have your rent reduced. Tenancies created before 1989 still have this right. Rent Tribunals still operate for them and the legislation is still effective. This means that it would be relatively easy for a new government to extend the reach of tribunals as an emergency measure.

Labour also proposes to introduce three-year tenancies. That will look like an improvement for tenants living in fear of eviction on six month tenancies but before 1988 there were secure tenancies in the private rented sector.

Around 19% (4.4 million) of UK households now live in private rented accommodation – and this figure is rising. They have to try to build their lives in insecure expensive accommodation. TUSC calls for secure tenancies.

It is sometimes argued that rent control ‘distorts the market’. Tenants wanting an affordable home are right to think the current market is distorted but at the same time buy-to-let landlords have a licence to print money – getting returns of up to 1400% since 1996.

There is much talk about the need for cuts to balance the books but almost 40% of the annual £25bn housing benefit bill goes to private landlords. Currently the private rented sector is heavily subsidised to provide insecure accommodation at unaffordable prices.

"These so-called second-generation rent controls are likely to mean that landlords set the rent for three year tenancies at a level that they would have expected the rents to rise over that period. And, indeed, they may also factor in the risk that rents might rise faster than they expect so could add a little on top of that amount as a precaution .... Most housing market experts see high rental costs as the market’s way of screaming that there is simply not enough supply in the right areas to cope with demand." See:
It is true that rent control will not ‘solve’ the housing crisis, for that we need to build more homes.

Labour's ‘target’ is to build 200,000 a year by the last year of a new government. But it is estimated we need 250,000 homes per year just to keep pace with new households – let alone deal with the backlog. So even if their target was achieved, the shortage would still be getting worse. But they don’t propose to reverse the cuts to social housing grant or local authority budgets. Without doing that, even their inadequate target is likely to prove a pipe dream. To really address the crisis we need to break with austerity.

TUSC wants to see investment in a mass programme of council housing building and refurbishment. There is money out there – the Rich List proves that. There is no shortage of cash, it’s just the question of who controls it. When the banks crashed the economy, the Bank of England found £375bn "down the back of the sofa” to bail them out. Let’s bail out all those who need decent homes, and a lot of those unemployed construction workers too!

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