At the Red Brick blog, Steve Hilditch has no doubt that “the private rented sector needs comprehensive regulation of standards, contract terms and management”. He firmly favours the regulation of rents. But he worries about calls for “rent controls”. He is concerned that “some of the more radical policies being advocated will make things worse, not better.” His headline warns: “Be careful what you campaign for”.
Steve is worth paying attention to. He is a core member of the London Labour Housing Group, a former policy head at Shelter, a founding member of SHOUT, a veteran of the famous battle against Shirley Porter’s notorious Westminster Tories and the man who drafted the housing strategy of Ken Livingstone when he was mayor. He is unimpressed by calls for a pan-London private rent cap set not much higher than council rents, and unpersuaded by Generation Rent’s proposal to set rents at half the annual council tax bill per month.
If implemented in London, these policies would certainly drive down rents. They might also encourage house prices to fall. But what other effects might they have? If they reduced the number of private landlords, including good ones, would that be good for London renters as a whole? Where would existing tenants go? Would a sudden plunge in property prices be for the best? Steve writes:
A flight of landlords and a collapse in prices, a property bear market, would create a lot of homelessness, worsen not improve access to rented housing, and create another negative equity nightmare.
You might still prefer those radical options. But no one should imagine that finding the right way to regulate private rents is straightforward, not least because the full effects of different types of action are hard to predict. Steve believes Ed Miliband’s more cautious approach is about right. This would harness rent rises to inflation and have a lot in common with the way they do things in Germany, whose private rented sector is widely praised. Steve concludes: “The economics of private renting are not as easy as people like to pretend, and the search for simple slogans does not always lead to good policy.”
I think his point about slogans goes for quite a lot of what some London housing campaigners and politicians of the left direct their attention to. Much fury is aimed at the existence of empty homes, especially the “buy-to-leave” variety. Quite right too. But there are many fewer empty homes in London than there were and some think the extent of “buy to leave” greatly exaggerated. And even if every empty home were filled tomorrow it wouldn’t begin to meet London’s long-term housing need.
Great indignation - and considerable media space - is aimed at property developers and the “rich foreign investors” to whom they market expensive flats. It is, though, a galling fact that about one third of the homes built for sale or rent for below market levels in London recently are being supplied as a condition of private developments being given the go-ahead, including allowing those luxurious, skyline-pricking, prime site glass towers to be constructed: the higher they rise and the higher they’re priced, the greater the “affordable’ component negotiated might be, even if it takes an unpalatable form. We may recoil from the idea of “poor doors” but they are part of the deal for getting an “affordable” element included and would we prefer Londoners went without the homes they open on to? Sometimes, one way to get more affordable dwellings from the deal is to allow those homes to be built on a separate site, but, hold on, wouldn’t that be segregation? Would it be more or less segregating than a “poor door” on the same site? Discuss.
None of this stuff is simple. We rightly question developers’ appraisals of their schemes’ viability - a form of pleading poverty - which seek to minimise the “affordable” contributions they make through Section 106 agreements (which can take the form of transport and street improvements, schools and other amenities as well as, or instead of, housing). And yet developers have long made one of the larger contributions to London’s “affordable” housing supply, even allowing for how the meaning of that word has become diluted. Don’t take my word for it. Ask “Red” Ken. Here’s what he said in 2007:
The brighter developers will come to me with a well-designed scheme and they will be signed up for a big Section 106 deal. In the old days, they would have gone into the GLC and no doubt paid a big backhander to some planning officer. Now they come in and they pay a big backhander to the city in the form of a Section 106. I think that’s an improvement. And I can get more affordable housing out of property developers than I can out of the government.
There is a strong case to be made for London’s councils and its mayor taking a tougher line with developers - Boris Johnson’s ideological inclination is to give them the run of the place - but they too can dig their heels in and any resulting gains might be fairly marginal. They might also take time to secure. Slowing an already slow house-building process still more would, at least in the short term, also risk slowing down “affordable” supply when what’s required is the opposite. As with the more aggressive models for controlling private rents, there would be downsides to getting tough with property giants. These must be recognised, weighed and would need to be mitigated in some way. Not a straightforward task.
On Saturday, a two-pronged March for Homes converged on City Hall to remind the mayor that the need for genuinely affordable homes in London is acute. In fact, the mayor at least partly took that point some while ago. Like every Tory, he howls against all but the feeblest regulation of private landlords, yet he formally supports the view that London’s councils should have more freedom to borrow in order to build more council homes. In line with coalition policy, he favours “intermediate” forms of affordable housing (including “affordable rent”) aimed primarily at those on lower middle incomes over social housing, but his housing strategy concurs with those who think affordable homes should be regarded as essential London infrastructure, just like railway tracks and schools, and be funded in the city’s - and the nation’s - interests accordingly.
Every housing crisis story in this city is distinctive, yet any search for big solutions tends to end up the same place. The London of the future will work best as a city, economically and socially, if it houses a mix of people across the mainstream income spectrum securely and well. In its high value parts especially, the market cannot and will not do most of that work. Neither can London’s cash-squeezed councils or any better mayor than Johnson on their own. As things stand, only the right sorts of national policy can make a really substantial difference. The next March for Homes should be to Downing Street and the Treasury.
