Private Rented Sector Facing Scrutiny

24/07/2012

A Labour MP speaks out on problems in the private rented sector, while his party unveil Policy Review.

Labour MP for Islington North, Jeremy Corbyn, has revealed that he has plans to introduce a Private Member's Bill to regulate the private rented sector.

In his own constituency, he says that 30% of residents live in private rented accommodation, which explains why this is a matter of great importance to him.

Speaking in an adjournment debate in the Commons, Corbyn said, "I wish to draw to the House's attention the huge problems facing people living in the private rented sector in this country. This has to be seen in the context of the overall problems of housing supply and need in Britain.

"In 2010, 102,000 new properties were provided in this country, but every year approximately 230,000 new households are created.

"There are 2.8 million people on the waiting list for council housing in the whole country and 3 million people living in the private rented sector. I want to talk about the private rented sector because it has been the fastest-growing sector. Even if all the council housing I would like built was built quickly, an enormous number of people would still be living in the private rented sector.

"Private rents have risen at double the rate of wages over the past ten years, while people living in the private rented sector are ten times more likely to move than owner occupiers. Furthermore, rents are rising fast despite the low level of wage rises at the moment and the relatively low levels of inflation. In other words, it costs more to live in private rented accommodation."

"The terms of tenancies and conditions for people living in private rented accommodation tell a very sorry story indeed."

He continued, "We have a system of assured shorthold tenancies - which give tenants a guaranteed tenancy of only six months and, after that, a two-month notice period - along with very high rents. In my constituency it is quite normal to find people living in private rented accommodation who are paying half their take-home pay - if they are in work - on their rent.

"We also have a housing benefit system that militates strongly against people in the private rented sector. The Government have introduced the rent cap, which has limited the levels of housing benefit being paid.

"I am now facing the trauma - and it is a trauma - of seeing large numbers of tenants in my constituency who were or are in receipt of housing benefit being forced to move out, because their housing benefit has been cut and their rents have gone up, and because they cannot afford to meet the difference from other benefits, if they are on them, or their wages.

private_rented_sector_facing_scrutiny_400

"There is, in effect, a social cleansing of inner London going on because of the imposition of the housing benefit cap. I stress the point that a large number of people in receipt of housing benefit are working - albeit on low wages, but they are in work.

"The current situation is an utter disaster, but it does not have to be like this, and I hope that things can change.

"Germany, for example, has 60% of its housing provided by the private rented sector. Germany has permanent tenancies and rent controls provided, and a tax regime that encourages good rather than bad management. Germany has a much more stable community and society as a result.

"I hope that the House will be able to return to this issue.
I hope to introduce a Private Member's Bill to bring about regulation, rent controls, decency and, above all, security in good-quality homes for those living in private rented accommodation. This is a serious issue that must be faced for a large number of people in this country."

It's not just Jeremy Corbyn making noise about letting agents, however; the Labour Party has come up with a Policy Review on private rented housing, describing the lettings market as 'broken'.

In the review, it is stated, "The majority of letting and management agents provide an important service and act responsibly, but too many others are engaged in unscrupulous practices, taking advantage of people who work hard and do the right thing. Too often, unjustifiably high charges are applied to both tenant and landlord. Tenants and landlords also have little financial protection and often face difficulties in contacting agents and getting repairs undertaken."

Hilary Benn MP, Labour's Shadow Communities and Local Government Secretary, said, "We need a professional lettings market in which unscrupulous agents can no longer hit landlords and tenants with rip-off charges. The private rented sector should provide stability both for families who want to plan for their children's future and for landlords who want to invest for the long term."

Jack Dromey MP, Labour's Shadow Housing Minister, said, "A million families live in the private rented sector. We want to ensure, particularly in these tough times, that they can be confident their money is safe and that they will get a fair deal. There is no place for unscrupulous agents who rip-off tenants by charging them fees they didn't know they would face and who exploit landlords and tenants alike by failing to protect the money they hold for them."

The Policy Review includes quotes from ARLA, Countrywide, and the Residential Landlord Association, all of which call for regulation of agents. Despite this, the review closes without calling for regulation.

"Labour has been listening to these calls for action as part of our Policy Review and we have been looking at how we could deliver real change and fairness in tough times.

"We will consider different models to improve standards and practices in the private rented sector, with the goal of creating a level playing field for the many responsible operators and basic protection for tenants and landlords. We intend to work in partnership with the sector to develop solutions, and will look at potential measures including a code of code of conduct with entry requirements for letting agents and compulsory business and consumer protection measures. We will consider how compliance could be monitored, for example by a regulatory body with enforcement powers.

"We also want to end the confusing, inconsistent and opaque fees and charges regime:

"We will work with the lettings industry to achieve greater transparency, clarity and accessibility of information relating to fees and charges. We want to see a regime where fees and charges are easily understandable, upfront and comparable across agents;

"We will assess the level and extent of activities that can be charged for, including the size of deposits required in proportion to rent and the level of 'administration' fees for basic services, such as those for swapping, renewing or editing contracts."

The full Policy Review can be viewed here.

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