Private sector rents and Labour

It's a mad, mad, mad, mad world!

Paul Kershaw, TUSC candidate, Ponders End, Enfield

Labour launched its election campaign with proposals aimed at attracting private renters. There is little detail, but Ed Miliband raises the idea of three-year tenancies, offering tenants a little more security after a six month probation period; a limited restriction on rent increases, and an end to the outrageous fees charged by estate agents.

This doesn't go anywhere near far enough. The Trade Unionist and Socialist Coalition's (TUSC) call for rent controls and a return to secure tenancies has had a massive echo on the doorstep. Crucially, TUSC also calls for building genuinely affordable council housing with secure tenancies.

The Observer's Andrew Rawnsley, no left winger, commented: "Whether or not the Labour plan is good enough... it looks like a canny bid for votes to offer more protection from exploitative landlords and increased security of tenure. There are about nine million people in private rented accommodation and, on average, their rent consumes nearly half of their disposable income".

There has been a hysterical response from landlords and their representatives, with the Tories comparing Miliband's timid proposal to the radical policies to the late Hugo Chavez in Venezuela. Tory London Mayor Boris Johnson warned of 'Mugabe style expropriations', while the Institute of Directors labelled the proposals a 'Stalinist attack on property rights'. George Osborne claimed Miliband had outlined "essentially the argument Karl Marx made in Das Kapital"!

More's the pity! Unfortunately, Labour's protests that it isn't considering a return to 'old style rent control' are all too accurate.

City AM is hostile to the proposals but sober. It points out that they amount to a version of so-called SGRC's (Second Generation Rent Controls) which "...are not really rent controls... They can temporarily decouple the rents paid by incumbent tenants from market rents. But they do not interfere with those market rents themselves."

Timid

The proposals are actually more timid than those advocated by Angela Merkel (the right-wing German chancellor) in last year's elections.

Ian Fletcher of the British Property Federation, noted that many investors were "very receptive to offering longer tenancies". A high turnover of tenants is expensive for landlords to manage, and they are keen to make renting politically acceptable, so they probably think this is a concession worth making to avoid a return to secure tenancies.

The same writer was more concerned about the threat any restriction on rent might mean for profits despite Labour's reassurances. But just a week before the announcement Paragon Mortgages marked the 18th anniversary of the introduction of buy-to-let mortgages by boasting that landlords had made a whopping 16.3% annual return since 1996, dwarfing what they would get from other investments.

Much of landlords' profit comes from housing benefit as the Observer comments: "There is only one word for this: madness." Perhaps it doesn't seem so mad if, like a third of MPs you are a landlord, but Labour's proposals do not address this madness. Even their 'target' of building 200,000 homes a year is less than the number required to keep up with new household formation. And they haven't committed to guaranteeing these are council homes.

The old rent act that gave people secure tenancies and allowed tenants to take landlords to a rent tribunal if they felt they weren't being charged a 'fair rent' is still on the statute books, some people still have pre-1998 tenancies regulated in this way. It wasn't perfect, but it could be reintroduced quickly as an emergency step without any need for new primary legislation.

The benefit cap which drives people to food banks should be immediately dropped. But the key would be a massive programme of building new homes. Instead of the madness of subsidising private landlords to make huge profits out of providing insecure, sub-standard accommodation we need a programme of building public housing.

Many renters may be 'thankful for small mercies' on hearing Labour's proposals but we need TUSC for an alternative to capitalist madness.

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In The Socialist 7 May 2014:

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