A glimpse of Tory tenancy reform?

An intriguing exchange in the House of Commons this week may contain clues about the government's big forthcoming announcement of reforms to tenancies. 

During a debate on temporary accommodation, the backbench Conservative MP Bob Blackman said this:

The greatest cause of homelessness is the end of an assured shorthold tenancy. They usually run for six months and at the end of that period families often have to move. The solution is clear: we need longer tenancies and more security of tenure for families, but also assurances to landlords that they will get paid their rent and that the tenants will behave themselves in accordance with the contract they have signed. I ask the Minister to update us on where we are going with lengthening tenancies, which would dramatically reduce homelessness at a stroke. Perhaps we can do that.

Lots to agree with here, but what's significant is that it's probably the first instance of a Conservative MP going on record in support of longer tenancies. Mr Blackman is also the MP who piloted the Homelessness Reduction Bill through Parliament (we were sceptical of its impact for the very reasons he outlines above), so he's influential too. 

His Tory colleague Kevin Hollinrake then intervened with:

Does my hon. Friend agree that not all tenants want to sign a longer tenancy, as it ties them into something they might not want to be tied into for so long? What we need is asymmetric tenancies, so the landlord signs up to a longer period - three years, perhaps - but the tenant can have a break clause to leave earlier, which would encourage them [tenants] to sign that longer tenancy agreement.

Mr Hollinrake is absolutely right here - promising "longer tenancies" can put tenants off, especially as you really have no idea when you start a tenancy if you will want to be there for longer than a year. Most of the time you will eventually want to stay, but you don't want to be stuck with a landlord who doesn't fix things, or having to pay a penalty to move because of a new job. It must be clear to tenants that they will still have flexibility.

It's especially good to hear all this from Mr Hollinrake - he founded the Hunters chain of letting agents, so you might therefore expect him to resist tenancy reform. But he has form in approaching housing policy with an open mind - back in September he led a debate on the letting fees ban and was generally supportive of the government's proposals.

In that September debate he also called on the government to extend redress schemes to cover landlords who don't use an agent (membership for letting agents is already mandatory). In October, the Secretary of State for Communities, Sajid Javid, announced exactly this.

Whether Mr Hollinrake is particularly influential, or he was floating an idea the government was already considering, we might infer that the government's favoured tenancy will look a bit like:

  • a three-year commitment from the landlord
  • a rolling break clause for the tenant
  • some kind of assurance that the landlord gets the rent (a government-backed insurance scheme to encourage landlords to take on housing benefit claimants?)

This would be a huge improvement on the current system, but there are several questions that remain unanswered:

  • Will rents be capped within these tenancies? If not that still allows unscrupulous landlords to raise rent and price tenants out of a supposedly secure tenancy.
  • Will landlords be allowed to use no-fault evictions? If so then unscrupulous landlords could still remove tenants on spurious grounds.
  • What happens at the end of the three years? We want to avoid disruption to tenants' lives where at all possible.

The other problem is that this won't apply to all landlords - they will get an incentive to offer more secure tenancies. And Mr Hollinrake's comments on Wednesday might indicate the direction the government is heading. 

He suggested that "one such incentive could be to allow some dispensation around the section 24 mortgage interest provisions that have been introduced". In layman's terms, let landlords claim tax relief on their mortgage interest costs.

There are a few problems with this:

  • Only one in three private rented homes actually has a mortgage, and corporate landlords already get tax relief, so most tenancies wouldn't be affected by this incentive 
  • Careful policing is required so that landlords aren't able to abuse the tax relief system
  • Some unleveraged landlords could even splurge again on property, pushing up house prices further
  • It contradicts the government's existing tax policy which is to discourage debt-fuelled investment in the property market, encourage investment in other parts of the economy and level the playing field for first-time buyers, who don't get mortgage interest tax relief. 

All this, like the very worst buy-to-let investments, is speculation. We won't really know the government's plans until the Chancellor opens his red briefcase on 22 November. 

Whatever happens, we will continue to press the government for the best deal for renters. Do your bit by writing to your MP.

Oh, and if you're wondering what the government plans to do about poor quality housing, Kevin Hollinrake also proposed a "property rental standard".

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