Alan Ward: It’s time to move on beyond the landlord bashing

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THE private rented sector is a great success. It is the fastest growing sector of the housing market, having overtaken the social sector in size, and is expected to more than double over the next two decades.

Growth is needed to keep up with increasing demand, as renting has become a genuinely popular choice. Figures show that the vast majority of private renters are happy with their home, with 84 per cent ‘satisfied’ compared with 81 per cent of social renters.

Yet despite these significant achievements, many are calling for further regulation. Councillor James Alexander, the Labour leader of York Council, has criticised the ‘huge sums’ in housing benefits being paid out to private landlords, arguing that tenants’ taxes are being used to “subsidise their landlord’s mortgage” and called for a cap on rents. It should be remembered that local authorities across Yorkshire work in partnership with the private landlords to provide homes which councils are unable to supply.

Contrary to popular opinion, official figures from the Office for National Statistics show that rents across the country are actually falling in real terms. In this region alone, private sector rents increased by just 0.4 per cent in the 12 months to June this year during which time, inflation, as measured by RPI stood at 2.6 per cent and 1.9 per cent on the CPI index. During the nine years between June 2005 and 2014, private sector rents across the region rose by 7.9 per cent compared with RPI of 33.4 per cent and CPI of 13 per cent.

Rent controls of the sort called for by Coun Alexander would inevitably lead to cuts to investment in new homes to rent.

As the Communities and Local Government Select Committee chaired by Sheffield MP Clive Betts concluded, capping private sector rents “would serve only to reduce investment in the sector at a time when it is most needed”.

Its own report on the private rented sector said: “We agree that the most effective way to make rents more affordable would be to increase supply, particularly in those areas where demand is highest.” In essence, rent controls would be the equivalent of using a plaster to treat flu.

The Select Committee is right. It is time to move the terms of the debate away from the kind of populist landlord bashing that has all too often driven political arguments and towards a sensible and constructive dialogue on how we boost the supply of homes to rent. Boosting supply is, after all, crucial to securing greater competition in the market, keeping rents affordable and ensuring that accommodation is maintained to a high standard.

To date, all parties have remained wedded to the idea that institutional investment is the best way to secure the new homes we need. However welcome this might be, the kind of renting revolution we need will only ever be achieved by encouraging the almost 90 per cent of the country’s landlords who are individuals renting out just one or two properties to invest in new homes.

That means a tax system that encourages rather than deters investment. Top of the list must be an end to the absurd situation that means that VAT can be reclaimed when constructing a new home to live in, but cannot be reclaimed where the house is intended to be rented out. The failure by the Government to recognise the business of renting as a genuine trading activity is at the heart of the problem and is in desperate need of reform.

It means a planning system that encourages smaller scale landlords to access small pockets of unused land to build the smaller homes that Housing Minister Brandon Lewis has urged.

It also means a welfare system that supports and encourages tenants and landlords alike. Many tenants on benefits would much prefer to have their housing costs paid directly to their landlord, yet the Government refuses to allow this. How can it be right to stand in the way of tenants making logical decisions based on what is best for them?

And it means a system of regulation that supports rather than hinders growth. Too often, local authorities have focused their efforts on smothering the good landlords in red tape because they are easy to find. Let’s free councils up to use finite resource to find the minority of landlords bringing misery to their tenants’ lives.

Let the good landlords operate under an industry-run accreditation scheme.

The private rented sector is ready and eager to fill the housing gap that we as a country have so far failed to fill.

Renting both can and should be seen as a tenure of choice rather than second best. What is needed, however, is the will and encouragement of politicians of all colours to make this happen, to engage in sensible debate and to end the divisive debate that says you can be on the side of the landlord or the tenant but not both.

Alan Ward is chairman of the Residential Landlords Association