Beware unscrupulous lettings agents

Tom Copley’s London Eye

Around eighteen months ago I was going through the process of renewing my tenancy agreement as my flatmates and I had decided to remain in our flat for another year.  Like most tenants in the private rented sector we had a year long Assured Shorthold Tenancy (AST), and the paperwork was dealt with by a lettings agency.

“The landlord wants to increase the rent,” we were told by the agency.

Naturally we were less than overjoyed at the prospect of paying yet more rent.  So we contacted the landlord directly to ask him to think again. We’d been good tenants and would not be able to afford to stay if the rent went up.  Straight away the landlord came back to us: “Ignore the agency,” he said. “I didn’t tell them I wanted to put the rent up.”

Stories like this are far from uncommon.  Both tenants and landlords suffer at the hands of unscrupulous lettings agents, a sector which is completely unregulated.  So I’d imagine I’m not alone in welcoming Labour’s review into private rented housing, launched on Wednesday, the same day that the London Assembly’s Housing and Regeneration Committee, of which I am a member, launched its own investigation into London’s private rented sector.

Once seen as a temporary step on the route to home ownership, renting in the private sector is becoming a long-term reality for many people, including an increasing number of families.

In 2000 the private rented sector accounted for just 10% of housing stock nationally.  That is now 17% – and in London it is 25%.

But this growth is not increasing the housing stock. Private landlords rarely build new homes, so the growth in the private rented sector has come at the expense of owner occupation.

Ironically Margaret Thatcher’s ‘Right to Buy’ policy helped to fuel the boom in private renting during the early 2000s.  Thatcher’s flagship policy, designed to create a nation of owner-occupying Tory voters, has instead led to a huge growth in private landlords as former council homes, bought at a huge discount by tenants, have been sold on by their owners.

The cannibalisation of the owner-occupied sector by the private rented sector was aided by the ready availability of buy-to-let mortgages, which are cheaper than ordinary mortgages.  The result is that owner occupation in Britain is at its lowest level since the late 1980s.  In London the number of owner-occupied homes has dropped by 150,000 while the number of private rented homes has increased by nearly 300,000.

The growth in the private rented sector, and in particular the growing number of families in the sector, means we need to take a serious look at how it operates and is regulated.  In particular, there needs to be a real clamp down on bad landlords.  We also need to look seriously at the soaring level of rents in the sector.  In London, private rents rose by a shocking 12% last year alone.

In his 2012 manifesto Boris Johnson had just three policies relating to London’s private rented sector.  The first was the London rents map, which is very helpful if you want to find out where you can’t afford to live.  The second was his voluntary landlord accreditation scheme, which includes just 10,000 of the estimated 300,000 landlords in London.  The third policy was to simply oppose tooth and nail any kind of rent regulation.

This kind of knee jerk reaction from the mayor against rent regulation of any sort is unhelpful, and demonstrates just how out of touch he is with the growing number of Londoners who rent privately.

Regulation of rents doesn’t mean going back to the system of rigid rent capping that existed in Britain until the 1988 Housing Act abolished it.  Nor does it mean adopting the system used in Manhattan.

Countries like France and Germany have systems of rent regulation that limit yearly rent increases within longer tenancies (three to five years).  This provides stability to both tenants and landlords.  Longer tenancies would particularly help the growing number of families in the private rented sector who want stability for their children.

The mayor advances the usual Tory argument that any kind of rent regulation would cause a massive slump in the number of private rented properties.  Yet with demand for housing vastly outstripping supply it is highly unlikely that rent regulation would lead to this.  Furthermore, in the decade following the abolition of rent controls in the UK the private rented sector grew by just 1%, and in 2000 it was smaller than it was in 1980.  Put that in your pipe and smoke it, Boris Johnson!

Johnson’s stock response when he is challenged to do something about soaring rents and bad landlords in the private sector is that it is not his responsibility.  “It’s up to the government and the boroughs,” he tells us.  Yet the fact that taxation and airport policy are not his responsibility has not stopped him lobbying hard for a tax cut for him and his rich mates, nor has it stopped him from spending time and taxpayers’ money on his barmy scheme for a Thames Estuary airport.

Let’s face it, there’s no way that Boris Johnson and the Tory-led government are going to get a grip on this – it’s going to be up to Labour.  That’s why it’s so important that our national policy review is taking this issue seriously, and that the London Assembly’s Labour-controlled Housing Committee is undertaking a serious investigation into the problems in the private rented sector here.

Tom Copley is a member of the London Assembly. He writes here in a personal capacity