Protecting “Generation rent”

by currentaffairsplus

We all know that we are the “Generation Rent”. People in the 25-36 years age bracket who have no help from their parents in saving up a deposit can expect to buy their first house at the age of 42. Many young people still aspire to own property, but have accepted that it will be a long time coming if they have not got the advantages of a windfall from somewhere else.

The people living in rented accommodation, counting nearly 9 million people in the UK, represent a huge group of voters.They are at the mercy of the currently uneven protections and instability that comes from the current laws around tenants and landlords. This is what the Labour party are promising to change.

Ed Miliband launched Labour’s election campaign by laying out plans to increase protections for tenants using various measures. The standard tenancy period is to be increased from six months to three years.A contract cannot be terminated in order to hike up rent; only if there is anti-social behaviour, the landlord no longer wants to rent the property, or the current tenant has run up rent arrears. There will also be a ban on excessive letting agents’ fees, limiting them to a maximum of £500.

So is this policy a good idea?  Regulation of this kind will affect a large amount of the population, and polling certainly seems to show that it is popular. A recent YouGov poll for the Sunday Times shows that 56% support rent controls.  However, the poll does not dig deeper into what kind of controls are supported, and there is definitely more than one way to do it.

The policy is part of the party’s commitment to solving the cost-of-living crisis. Labour will gain approval from a sizable chunk of younger voters who are thinking of trying to start a family, or starting to save for a deposit to eventually purchase a house. I think this is a good move for Labour  in terms of electoral strategy and campaigning.

The other side of the argument comes from the laissez-faire objections to interference from the state – No surprises there! Previous experiences with rent controls in the 1970s led to unintentional consequences with tenants living in prime addresses for amounts far below their actual market value. The Guardian reports of one-bed rent control flats in Hampstead Heath being rented at £348/month, while close by private accommodation goes for £1256/month. Whilst this is obviously not fair, those who bang this drum miss an important point – this isn’t what Labour is proposing. As the new contracts are reviewed after three years, the market still has a hand in setting rents. This is Miliband’s political philosophy in action: a belief that the state has a role to play in regulating markets and protecting consumers from market failure, but through legislation, mirroring the German model, rather than through French dirigisme.

Politics and side effects from market intervention aside, this policy has to be seen as a good idea. There will always be arguments about the way to regulate a housing market, or even if it should be done at all.  Help to Buy, and previous experiences with more strict rent controls in this country have shown this. Since the 1980s, the way in which renters are looked after in the housing market has been asymmetrical in favor of landlords.

At a time when renting for longer periods of time is the norm, especially in the Capital and South East region, there is an imperative for the unregulated market to be guided to a place where those in the most vulnerable position are protected. They make up an increasingly large part of the electorate, and they deserve to be looked after.

by: Anique Liiv