Are landlord incentives the answer to tenant insecurity?

Today's Observer declares that the "home-owning democracy", that elusive vision beloved of the Conservatives since Thatcher, is finished.


Ahead of next week's Housing White Paper, Communities Secretary Sajid Javid says, "We understand people are living longer in private rented accommodation", which is the closest the government has come to admitting that their policies to help first-time buyers can only go so far.

On that basis, the Observer’s big scoop is news of “incentives to encourage landlords to offer ‘family-friendly’ guaranteed three-year tenancies”, which aim to reduce the instability created by short term contracts, a particular problem for the growing numbers of families and older renters.

Whether the policy will work depends on the details, but it shows that fears of renters that they will be stuck in a precarious housing system forever are getting through to ministers – and our campaigning is paying off.

It hasn’t quite come out of the blue. The White Paper is the first time the government has set out its strategy for housing since the coalition, and with fixing the housing shortage a decades-long effort, renters need something more immediate.

The basis for longer tenancies has already been set out in the Model Tenancy Agreement that the government put together in 2014, but whose impact to date is unknown. In spite of landlords’ preference for longer term tenants, letting agents often have an incentive to keep tenancies as short as possible.

And tenants are less likely to demand a longer fixed-term tenancy than simply the expectation that if they uphold their responsibilities, they can stay. The ability of landlords to evict without reason denies tenants that certainty.

The government has already taken bold action on the rental market, using the tax system to deter speculation and, following a shift in rhetoric under Theresa May, announcing a ban on letting fees. The Observer’s article alludes to the latter, as well as ongoing efforts to penalise criminal landlords. The problem of crippling rents aside, security is the missing piece of the puzzle.

The big question is what these incentives are and how they will work.

The majority of tenants already have a good landlord who wants to keep them, so the incentives need to target those landlords whose interest is in squeezing as much money out of their property as possible – even if that means replacing tenants every year.

The incentives can’t simply be relief on mortgage interest, which is being phased out for higher rate taxpayers – as only one third of landlords have a mortgage.

One option is the policy floated last year by the Conservative candidate for London Mayor, Zac Goldsmith, who proposed a system of licensing with conditions on tenancy length attached.

Our own preferred incentive is to do away with fixed terms altogether and essentially put a cost on landlords using evictions when the tenant hasn’t done anything wrong. The US city of Portland in Oregon has just passed a law that is eerily similar to our proposal.

This morning’s news is positive, but we’ll have to wait for the official announcement before assessing the real benefit for renters.


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