Housing: What Crisis?

street scene (2099)Last Friday evening I took a trip out to Coalpit Heath to talk housing at a meeting of the newly constituted South Gloucestershire Liberal Democrats. The title I was working to was Housing: What Crisis?. The talk was followed by a Q&A session in which members of the audience asked some cracking questions touching on a wide range of issues. We could have continued our conversation for much longer than the time available, which is always a good sign.

Below the fold is a modified version of what I said on the day. It is also available via my Scribd.com site. [Read more…]

Policy unpacked #9 – Housing and the General Election

Policy UnpackedFor this podcast I am joined again by Ken Gibb to discuss housing policy ideas emerging from the political parties in the run up to the General Election. We review some important discussions over the future direction for aspects of housing policy in Scotland, and reflect on the development of policy competition between the Edinburgh parliament and Westminster. We also consider one or two policy proposals emanating from other commentators.

(Running time: 50′ 05″) [Read more…]

A bit of substance on housing to end the season?

House being builtWe’re most of the way through the Party Conference season, with only the Liberal Democrats left to play. So far it’s been a bit underwhelming on the housing policy front.

Labour offered a number of proposals. Some of them had been announced previously. Many of them were rather vague and aspirational.  Some of them looked kind of familiar – the Mansion Tax proposal most specifically. However, the proposal that many were hoping for – the big prize – relaxing the fiscal rules so that local authorities were allowed greater freedom to borrow for new development – was squashed by Ed Balls. Labour housing colleagues are now looking towards the Lyons Review – which is alleged to be emerging soon – to add a bit of ballast to the policy position.

The Conservative conference was rather short on specific housing policy announcements. Most of the announcements relevant to housing were focused on curtailing benefits to various groups deemed undeserving. I imagine one or two social landlord CEOs will be having sleepless nights worrying about their cashflows should the Conservatives be elected to govern alone come May 2015.

The eye catching announcement at the Conservative conference was the proposal to deliver 100,000 homes to first time buyers under the age of 40 at a 20% discount, with the homes to be cheaper because they’re built on brownfield industrial land. [Read more…]

Tax off for good behaviour

Over the weekend the CIH and the Resolution Foundation released a useful briefing called More than a roof. The focus is largely on the way in which financial incentives could be used to improve standards in the private rented sector.

The briefing provides a brief overview of the rapid growth of the private rented sector over the last few years. It then provides a decent summary of the key problems facing the sector, particularly the bottom end of the market where unscrupulous landlords lurk.

When the briefing moves on to policy it reviews what is currently being doing about standards under four headings – statutory obligations, licensing schemes, accreditation schemes, encouraging competition – before going on to look at what more could be done. Here there is an argument that modest and targeted increases in regulation are justified – in particular there is seen to be a strong case for creating greater transparency and uniformity in the standards that form the basis for licensing/accreditation schemes, more effective enforcement targeted at the worst landlords, and the greater regulation of letting agents.

However, despite noting the growth of direct regulatory intervention – notably in the devolved administrations and some London boroughs – the general tone of the report is rather sceptical. Greater regulatory intervention is not seen as the key to solving the problem. [Read more…]

Ed’s brave housing proposal

Rent House Showing Rental Property Estate AgentsRent regulation and three year tenancies. That’s Ed’s big housing idea for the private rented sector. It is what the people wanted. Well, quite a lot of people appear to support the idea.

But even before the formal announcement has been made it is apparent that some are vehemently against. The initial voices of outrage were those one might have anticipated. The incorrigible Mr Shapps and the Adam Smith Institute, ably supported by that other cheerleader for deregulated markets City AM were quick off the mark in condemning Labour’s proposals for ‘rent control’ in lurid terms. It is little short of socialism, red in tooth and claw. Assar Lindbeck’s famous quote about rent control being the best way to destroy a city apart from bombing was dusted off and given another airing.

Those in the red corner were supportive of the initiative as a follow-on to Labour’s energy price freeze. Mark Ferguson at Labour List welcomed the move and argued that Miliband needs to stick to his plan in the face of the inevitable criticism – this is a bold move and should be proclaimed as such.

Ferguson finishes his post by noting that a quarter of Conservative MPs are private landlords. Which is no doubt a useful piece of information when interpreting the howls of outrage which will inevitably follow today’s formal policy announcement.

But are rent regulation and longer tenancies a good idea? [Read more…]

A voyage of rediscovery

street scene (2099)Today’s papers bring us further news of the sickness that afflicts our housing market.

On the front page of the Telegraph is a piece focusing on St Vince of Cable’s warning that the housing market is exhibiting all the signs of overheating and that Mark Carney is considering stepping in on the lending side. He fears we’ll repeat the mistakes of the benighted Brown. The story takes the usual form – there are references to the danger that the market ‘may be heading for a bubble’, never the suggestion that there’s already a problem. There is no real appreciation of the lags associated with these types of macro-relationships. The market has already been given a big push, which hasn’t worked its way through the system yet. And nor, of course, is there a discussion of the difference between a boom and a bubble.

In my view Vince is right to be worried, but I don’t suppose it will have much effect. Yet by the time it becomes hard to dispute a boom is in progress it’s already way too late to act.

Over in Graunland private renting is described as the “social scandal that is being ignored”. And there is a piece about our old friend Mr Fergus Wilson, Britain’s biggest buy-to-let landlord. It reports that Mr Wilson has decided to evict the 200 of his 1000 tenants who receive housing benefit. The argument here is that rents are increasing while benefits are being eroded. Benefit-dependent households are therefore more likely to be in arrears, even before the arrival of Universal Credit. Mr Wilson considers he’d be better off reletting the properties to Eastern European migrants because they are more reliable. [Read more…]

Tenants uniting?

8949165923_4d16093596For a long time we have thought of the private rented sector as the most disorganised part of the housing market. Most properties were let by small landlords who owned one or two properties. Very few landlords belonged to any form of trade association, although around half let their properties through letting agents. On the demand side, most tenants held six month tenancies and many tended to be young, mobile and poor. Quite a lot of tenants lacked familiarity with their rights or the incentive to enforce them, particularly in the absence of any legal barrier to retaliatory eviction. A few localities had established groupings of private tenants, but such organisations were most notable for their rarity. Information was relatively sparse and circulated with difficulty: so reputation effects, on either side of the market, were weak.

These characteristics present considerable regulatory challenges. The levers for enforcing rights and obligations are weak. The consumerist model is most inadequate in precisely those subsectors of the market where rights are most likely to be violated. Command and control regulation around standards relied upon local authorities for enforcement, and this function was perennially under-resourced.

Yet we are witnessing a reconfiguration of the landscape of private renting that has the potential to completely transform the nature of the game. [Read more…]

Regulatory possibilities for private renting

Water damaged and moldy basement wallLast Thursday I went up to That London to take part in a seminar on Alternatives to regulation.

I made a brief, somewhat speculative, presentation around the regulation of private renting, in the light of current debates about behaviour change and behavioural economics. Some of the ideas need plenty more thought and working through in more detail.

You can find the text to accompany my presentation below the fold. [Read more…]

Retoxifying the rentier

caras apretadas1The resurgence of private renting is perhaps the biggest transformation in the UK housing system over the last decade.

Indeed, if you put it into a longer historical perspective it is quite remarkable. In the 1970s, in the face of seemingly inexorable growth of owner occupation and local authority renting, housing commentators seriously forecast the imminent demise of the private landlord. The decline of private landlordism went into reverse under the later Thatcher government, but its revival has been propelled more rapidly since the early 2000s by the engines of Buy-to-Let funding, affordability problems in owner occupation, wage stagnation, high household debt, and poor economic prospects.

The change in the scale of the sector has been accompanied by an equally important rehabilitation of its reputation. The 1960s brought us the word Rachmanism to signify exploitative and intimidatory landlordism. In the 1970s those on the political left contemplated the prospect of the extinction of the private landlord with enthusiasm: the landlord was an anachronism of the Victorian age – profiting from basic needs and misfortunes – that had no place in a modern civilised society. Yet from the 1980s onward there has been a continuous flow of policy statements aimed at rehabilitating and legitimising private landlordism.

The current government has sought to stimulate the sector through a range of funding mechanisms. It has sought not only to increase the scale of the sector but also raise its reputation further by encouraging institutional investors to enter the market. Institutions with valuable brands to protect are not, in theory, going to risk engaging in the sort of poor landlord practices – neglect of physical maintenance, harassment, unlawful eviction – that have been seen as endemic in the sector.

It may look like private renting is therefore very much back in business. But there are problems ahead. [Read more…]

New housing ideas from One Nation Labour?

street scene (2099)Under the heading A One Nation programme with new ideas to begin turning Britain’s economy around yesterday Ed Miliband outlined six bills that would appear in Labour’s alternative Queen’s speech. It is good to see him offering some policy detail, at last, but to what extent are we being offered new ideas?

The focus of the housing component of his statement was the private rented sector, which in one sense is new. The idea that the political battle to be fought over housing was going to be fought over private renting is one that would have made no sense a few years ago. And whether it is the biggest problem facing the housing system at the moment, given the broader context of poor affordability for a nation of frustrated aspirant home owners, could be debated.

Leaving that to one side, what did he offer? [Read more…]