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| Theresa May visits a Barratt homes development. ‘There may now be some investment in housebuilding but why has it taken so long for Conservatives to grasp this nettle?’ Photograph: WPA Pool/Getty Images |
If you want to see cognitive dissonance in action, watch the Conservative party try to develop popular housing policies without contravening its loyalty to developers, landlords or free market fundamentalism. For years, experts from across the housing sector have called for investment in social housing and proper regulation of the private rented sector, so it was entirely predictable that Theresa May’s flagship policy at this year’s conference was a £10bn boost for the housing bubble in the form of the Help to Buy scheme. There may now be some move towards investment in housebuilding – albeit in partnership with large corporations – but the problem remains that the Conservatives are unwilling to confront the origins of the UK’s “great housing disaster”.
This apparent inability to understand root causes is a tendency that has afflicted successive governments. In 1989, as Margaret Thatcher’s government finalised the deregulation of the private rented sector, it was put to the then housing minister, Sir George Young, that some tenants might struggle with rents that would inevitably rise once rent controls were lifted. “If people cannot afford to pay that market rent,” Young assured, “housing benefit will take the strain.”
Fast forward to 2010 and the coalition government’s decision to cap housing benefit because its expenditure in the private rented sector was “out of control”. No one in David Cameron’s government mentioned deregulation, but to anyone who knew the history, the connection was clear: private sector tenants were now to be punished for the consequences of Thatcher’s reforms.
Jeremy Corbyn’s recent announcement that Labour would reintroduce some form of rent control has prompted landlords to warn that such a move would be a “disaster” for tenants. Landlords often claim to be acting in the best interests of tenants, yet cases in which tenants themselves laud the merits of uncontrolled rents are rather more difficult to find.
A year ago, I wrote about the experiences of Gunita, an evicted tenant who lost the right to be housed by her local council. Today, her situation is typical of the millions of low-income private renters who find themselves squeezed between insecure work, a punitive welfare system and rents that are completely out of sync with their earnings. After narrowly avoiding street homelessness, Gunita managed to find a “studio flat” at the local housing allowance rate of £1,040 per month. This so-called studio was essentially a room in a shared house that had been subdivided into four flats. The lock on Gunita’s door was completely inadequate and the electricity meter had been illegally rewired, yet the landlord was earning over £4,000 a month from the combined rents.
Gunita has been in and out of work over the last year, largely due to the insecure nature of her job with a cleaning contractor. Even though housing benefit covers most of her rent, she covers a shortfall out of her wages. This usually leaves her with around £30 a week for food, travel and other bills.
For someone like Gunita, lower rents would dramatically improve her quality of life by freeing up disposable income for something other than survival. The campaign group Generation Rent argues that a living rent should be no higher than 30% of the average income, and propose that controls could be set according to council tax bands. By capping rents at 50% per month of the home’s annual band, they would be brought more in line with people’s earnings. In a London borough like Croydon, for example, a bedsit with a band of £780 per year would mean a monthly rent capped at £390. Landlords would still have the option to charge higher rents, but those who chose to do so would be subject to a 50% surcharge. This money could go into a ringfenced housing fund.
The argument commonly made against rent controls is that they stifle investment and reduce supply. In this country, opponents often point out that prior to deregulation, the UK had a relatively small private rented sector. This much is certainly true: in the London of 1981, the sector accounted for just 16.6% of homes. But this was largely because most people could either afford to buy or had access to council housing, so there simply wasn’t a great demand for private rented properties. That demand had to be artificially created – largely to the benefit of wealthy investors, certainly not in favour of the state or the tenants.
Since deregulation, there is little evidence that the lifting of rent controls has improved either supply or standards. In a city like London, the combined effects of speculation and the decimation of social housing have produced an oversupply of properties at the high end and a chronic shortage at the low end, generating the perfect conditions for the grotesque exploitation of renters like Gunita.
It is clear that the UK needs major investment in social housing, but regardless of what May announces today it will take time to build the number of homes needed to have a knock-on effect on prices. In the meantime, there are various models of rent control that have been proven to create more secure, affordable and sustainable rented sectors in other countries. Adopting a model such as that proposed by Generation Rent above would improve the lives of millions of renters in the here and now.
The truth is that the UK’s housing crisis is not merely a problem of supply and demand, but of class inequality being reproduced through property relations. Perhaps it is the prospect of the present system being curtailed that some find so terrifying.
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