The ideas come in a piece in business newspaper City AM written by RLA chairman Alan Ward. It’s an interesting read and is reproduced in full here:
A ‘referendum on housing’. That was how Sadiq Khan described the London mayoral contest. Access to housing that Londoners can afford is certainly critical to the future success of the capital, and at the heart of the mayor’s plans are substantial reforms to private rented property.
As the voice of private landlords, we welcome debate about the future of the sector. With predictions that London’s private rental sector will be 60 per cent by 2025, up from 27 per cent today, there needs to be action to ensure that there is an adequate and enduring supply of affordable, high-quality homes.
But it is vital that the mayor roots his plans in facts rather than horror stories trumpeted by siren voices who have a problem with anyone making money out of renting.
The mayor has pledged to introduce a new “living rent”, for example, a proposal that comes close to rent controls. Many will welcome such a move, but the facts do not support the hypothesis that landlords are fleecing tenants for all they can get.
ONS figures show that, in the year to February 2016, London house prices rose by 9.7 per cent compared to a rise of 3.8 per cent in private sector rents. If the mayor doesn’t think house price controls are needed, why are they required for rented properties? The solution is to increase the supply of housing across all tenures, not to introduce some artificial control on rents which would only stifle investment and make it harder for people to find somewhere to live. More housing will give tenants more choice, controlling rents and allowing tenants to avoid crooked landlords.
But Khan can only achieve this by working with the private rented sector.
Encouraging landlords to develop new properties on small plots of unused land across the capital, for example, would make a real difference. Landlords, whether as individuals or as small to medium-sized companies, have a good record of investment in new buildings, including on small plots. These plots are too small to be of interest to larger, corporate developers and they are often left empty, becoming unsightly and magnets for anti-social behaviour.
The mayor must also come up with a comprehensive plan to address the nearly 60,000 empty homes government figures suggest there are across the capital. He might, for example, adopt an idea suggested by Islington Council to introduce planning restrictions on newly-built property to prohibit the deliberate practice of letting properties lie empty.
The mayor is right to want longer tenancies, but he needs to remember that landlords can already offer them. The most recent English Housing Survey shows that the average length a tenant has lived in their private rented property is now four years. In fact, some good agents already offer tenancies of more than 12 months as standard and this is spreading.
Efforts need to be made to create an environment in which it is easier to offer longer tenancies instead of imposing them. Data compiled for the RLA by DJS Research found that 25 per cent of landlords were not allowed to agree tenancies longer than a year by their mortgage lender or insurers. Some less reputable letting agents in London also base business models on tenants regularly renewing tenancies.
And what of regulation? Every tenant deserves to live in a safe, legal and secure home, but the mayor’s plans to help London boroughs set up landlord licensing schemes would do little to find criminal landlords. Analysis by London Property Licensing found that, between 2011 and 2014, of the 10 boroughs with the highest rates of prosecutions against landlords, just two operated any form of licensing scheme.
Rather than creating more bureaucracy for good landlords, and more costs to be passed on to tenants, a more effective solution to identifying bad landlords would be to ask tenants who their landlord is through the council tax registration form. Boroughs already have the power to do this, but usually don’t do so or do not use the data obtained for housing enforcement.
The private rented market has the potential to play a big part in meeting the need for new homes, but only so long as policy is evidence-based and avoids the hyperbole and prejudice that has too often characterised debate on the sector.