Better quality, cheaper, safer and more humane: How Wales can reform its private-rented sector — Paul Millar
British governments have successively failed to anticipate the tight squeeze the growth of the private rented sector has had on the disposable income of the working poor. Meanwhile, reforms at Westminster will do little to change the quality and cost of renting for people who have to live under greedy and incompetent private landlords.
The Public Policy Institute for Wales and LSE reported in 2015 that the private-rented sector had grown by over 100% in every Welsh local authority in just 12 years between 2001 and 2013. The study concluded that ‘the shift towards private rented is the largest structural change observed in the Welsh housing market for at least two generations’. Yet next to nothing at Westminster has been done to mitigate its malign effects. With housing devolved in Wales, some progress has been made to ensure landlords provide a decent service: nearly all landlords in Wales are registered with Rent Smart Wales as licensed landlords and have received training to pass a “fit and proper” test.
The Welsh Government should continue to lead the way with radical laws to make the housing market more forgiving for those at the bottom. Presently landlords continue to reap guaranteed rewards even if they provide an atrocious service. The reduction in social housing stock and years of house price rises has created an environment in which millions of working people across the UK are trapped in private renting and forced in debt because they are forced to pay exorbitant rents to landlords and fees to agents. The private lettings market is a multi-billion pound industry which pretends to be competitive but is really a cosy cartel. The sector has become one of the primary sources of the stubborn inequality and unfairness in the UK: a licence to print money for a lucky, canny few, and a trap door into a life of poverty for many.
With English Tories have failed to improve this sorry situation at Westminster, Welsh Labour could carry on leading the way and propose more radical reforms to the private-rented sector. Social housebuilding has been so limited with local councils starved of investment until at least 2022. The Tories’ Right to Buy means we’re losing more social housing than we are building. Meanwhile, the Tory Bill to ban letting agency fees in England contains so many loopholes that it will make little difference. Welsh Labour has a strong record of making innovative changes which English Tory Party adopts: from the plastic bag levy to presumed consent for organ donation: Wales leads the way.
And there are few more worthy causes than improving the private-rental market to provide greater dignity and opportunities for tenants who unwittingly find themselves there.
The Welsh Government’s new Bill currently being considered in the Senedd — the Renting Homes (Fees etc) Act — represents the perfect opportunity to change the system radically for the benefit of consumers, not just tinker with it.
First, the Bill must ban fees without exception. Many tenancy contracts across the UK contain nasty Early Release fees for tenants if they have to move out in the middle of their contract for reasons of downsizing or relocation due to work or health issues due at times to the state of disrepair of the home. So, if tenants decide to stay in a home they can no longer afford or in an environment they struggle to cope in, they’re screwed. Letting agents are more likely to take advantage of nasty Early Release clauses after the other fees are banned.
Second, the Bill should contain a duty on landlords to make their homes fit for human habitation, as should be the case n England if Karen Buck MP’s brilliant Homes (Fitness for Human Habitation) Bill makes it onto the statute books. Because letting agencies don’t just charge exorbitant admin fees, they act as a cloak to ensure tenants can’t meet their landlords to get a feel for whether they will be committed to resolving issues quickly, and allows landlords to hide from scrutiny if they’re not doing their duties to ensure a home is in a respectable condition. Letting agents prevent tenants from choosing the right landlord for their needs. And landlords can get away with letting their homes fall into disrepair while the tenant is living in it, only making improvements after the tenant has left or been evicted.
Third, granting tenants the legal right to end their tenancies with three months’ notice at any time in a contract — without early release fees — has the potential to make the private lettings market competitive, cheaper and better quality as Landlords invest more in keeping their tenants happy and comfortable. Sweden has this law and it works well, providing the incentive for landlords to be faster with repairs, and ensure their homes are always kept in a habitable condition, free of mould and damp. At the moment, many landlords don’t care if their tenants are suffering. The current situation traps tenants in situations which can damage their physical and mental health which costs the NHS.
Fourth, the Bill must ensure security deposits are strictly capped at four weeks’ rent so tenants moving between homes aren’t priced out of getting a decent place to live.
Fifth and finally, the Bill should further bolster the remit of Rent Smart Wales, the landlord licensing regulator, for the purpose of blocking unfair rent hikes, stopping no-fault Section 21 evictions and ensuring Landlords and Letting Agents aren’t fiddling their inventories to justify the pocketing of tenants’ deposit money by exaggerating damage and then using the proceeds as they please. A recent National Audit Office’s found that in England the ending of a private-rented tenancy has become the single biggest cause of homelessness. The same most likely applies in Wales.
The private-rented sector is currently a one-way street, and only a radical new approach will be enough to help increase freedoms for tenants stuck in the private market, and many stuck on long social housing waiting lists. Presently private lettings represent a very lucrative investment opportunity for a small group people the vast majority of whom are already comfortably well-off. This powerful lobbying group, which includes a number of MPs, have been for too long allowed to accrue huge profits all the while making life for people at the fringes of society more scary and hopeless. They don’t do this on purpose; their daily lives are a million miles away from those of their tenants. But that doesn’t make it right. Wales ought to show the way and demonstrate what a difference reforming the private-rented sector would make for the millions now renting across the UK.
Paul Millar is a member of the Labour Party and works as an aide to a Labour MP in the House of Commons.