Intervening in another broken market

I have long said the next election should (and will) be fought on housing as one of the main concerns, an area that has been painfully neglected for far too long. Labour is now making the weather, and the forecast is positive. Mark Ferguson writes: “Ed Miliband is making a major policy move – and it ticks all of the boxes. It’s big, it’s certainly bold, it addresses one of the key inequalities in British society and one of the key drivers of the cost of living crisis for millions.

Under a Labour government, those renting in the UK would have the right to stay in the same home for at least three years, and keep their rent manageable by limiting rent rises by either inflation or average rent rises in that area. Labour sources are saying that it’s wrong to call this rent controls or rent caps, but frankly, whether it’s accurate or not, that’s what people are going to call it. Ed Miliband is cracking down on price gouging in the private rented sector. He’s intervening in another broken market.

Good. That’s exactly where his message is strongest and where his instincts are best.

So call it rent caps. Call it security of tenancy. Call it what you like – this is something that will make a huge difference to the British property market, and enable millions trapped in the private rented sector who can’t afford to buy able to have a “home of their own”, for three years at a time at least.

As our major cities – and London especially – become increasingly unaffordable, millions are finding themselves trapped in the private rented sector, with landlords inflicting eye-watering year on year increases on tenants. The choice all too often is painful price raise, or saving for an equally expensive deposit. Anyone who’ll tell you that’s not the case hasn’t been there – it’s unpleasant at best, and ruinous at worst. And that’s before the estate agent fees are levied on each move (which, incidentally, Miliband is also pledging to remove for those who rent – passing the cost onto those who own the homes).

This is undoubtedly a big policy – and Labour must be careful not to give the soft sell. Trying to argue that this is a small move or a tidying up of a broken market will only backfire. It’s far better to be bold and honest about what this is and what it does – it’s one of the largest shake-ups of British housing ever. It could shift more people towards the security and affordability of long-term rents. It could allow people to stay in their community for longer rather than drifting from home to home year on year. That’s especially important now that the rented sector isn’t just for students and young people – 9 million people now live in provately rented homes. One million families. Two million children. At present they have no guarantee against being moved out of their home, their community and away from their school and their support network.

This policy is big enough to start putting that right.

But Labour must also be prepared for the onslaught that is to come. There are a great deal of vested interests at play when it comes to the rented sector. Banks and buy-to-let landlords are going to attack this (even though landlords could benefit from longer, secure tenancies and without the yearly search for new tenants). The attacks will be as hyperbolic as they are vicious. Grant Shapps has already compared the policy to that of Venezuela (rather than, you know, New York). Even more violent in their imagery were the Adam Smith Institute, who ludicrously suggested that “only bombing would be worse than rent control”.

We can expect more of this kind of violent and thuggish imagery whenever Miliband attempts something radical. Like with the energy price freeze, the millions who are squeezed can easily be overlooked by those who benefit from the status quo.

One person who’ll no doubt be keen to march out in defence of Miliband on rents is his friend Sadiq Khan, who called for “‘sustainable renting contracts” in his Our London Fabian pamphlet last year, followed that up with calling for rent controls in January, and has been agitating internally for the policy ever since. He’ll feel like he’s got a pretty big win – especially for London – which will do him no harm if he ever wants to be Mayor. And well done to Emma Reynolds too, who told me back in January that this wasn’t Labour policy – but who has worked hard behind the scenes to get the detail right ahead of this announcement.

And it’s to be hoped that this isn’t the last of Miliband’s radicalism. Quite the opposite. The rent pledge is the first in what is planned as a “cost of living contract” – rolled out over the coming months – to highlight Labour’s proposed positive message for Britain. As one senior Labour source told me, the key to winning for Labour is “reconnecting with working people”.

The weeks ahead will give us an indication as to whether Miliband will be rewarded for his boldness, as he was last year with the energy price freeze. But first, he’ll need to go out and sell this as best as he can, he’s going to have to face down some angry opponents first. He just needs to remember that if he gets this right, he has millions of people behind him who will benefit.

Update: It’s worth noting that quarter of all Tory MPs are landlords. Remember that when they’re attacking this…” (http://labourlist.org/2014/04/rent-caps-rent-controls-whatever-you-call-it-miliband-is-going-big-on-housing/) See also – (http://www.newstatesman.com/politics/2014/04/milibands-pledge-cap-rent-rises-smart-politics) and – (http://labourlist.org/2014/05/in-the-housing-wars-ed-miliband-has-picked-a-side/) and – (http://www.leftfootforward.org/2014/05/miliband-is-ripping-up-the-thatcherite-model-of-private-renting/) and – (http://www.leftfootforward.org/2014/05/miliband-is-offering-a-radical-and-attractive-alternative-to-generation-rent/) and – (http://www.theguardian.com/commentisfree/2014/apr/29/rent-tenants-private-landlords-power-regulation) and – (http://www.newstatesman.com/politics/2014/05/labour-will-get-britain-building-tackle-high-rents)

 

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