28 June 2024

Labour’s war on landlords will be a social and economic disaster


Attacking landlords has become the great bipartisan cause in British politics. It is a convenient displacement activity. After all, the real culprits when it comes to high rents are the politicians themselves – for maintaining planning rules which restrict the housing supply.

It doesn’t help matters that much of the media is willing to accept the politicians’ spin at face value. The outgoing government has been seeking to forbid landlords and tenants from signing fixed-term contracts. This astonishing attack on basic property rights and the ability to conduct voluntary transactions was sold to the public as an end to ‘no fault evictions’. Such phrases twist language until it loses all meaning. Would we talk of ‘no-fault vacating’ if a tenant decided to leave despite the landlord maintaining impeccable standards in carrying out repairs and all other responsibilities?

The Conservative attempt to ban ‘no-fault evictions’ fell with the calling of the election, but that is likely to prove a brief reprieve. If, as expected, we have a Labour government next week, they have pledged to be even tougher. Landlord bashing is classic class war messaging. Labour will always be able to outbid the Conservatives in such contests.

Labour’s election manifesto states:

Security also means having a secure roof over your head. That is not the case for too many renting their homes privately. Labour will legislate where the Conservatives have failed, overhauling the regulation of the private rented sector. We will immediately abolish Section 21 ‘no fault’ evictions, prevent private renters being exploited and discriminated against, empower them to challenge unreasonable rent increases, and take steps to decisively raise standards, including extending ‘Awaab’s Law’ to the private sector.

The details are rather hazy. Sir Keir Starmer has suggested an end to ‘bidding wars’ – where tenants offer to pay rent above the advertised level. But if landlords were obliged to accept the first person offering the advertised rent, then would they not set a higher advertised rent?

Why are our politicians allowed to get away with such economic illiteracy? The concept that reducing supply results in higher prices and fewer choices is not all that obscure. It’s not as if we have to rely on graphs in textbooks. There is an abundance of practical evidence.

If you want to see where all this leads, look at what is happening in Scotland. An analysis by Zoopla has found that rent controls introduced in Scotland in 2022 have directly led to rents increasing faster than in England. Last year rents went up by 12.1% in Scotland compared to 9% in the UK as a whole.

More fiddly efforts to ‘fix’ the rental market from Labour will only make matters worse everywhere. Whatever the specifics, landlords will see their property rights further eroded, undermining their willingness to continue. As more landlords sell up and the shortage worsens then there will be pressure for yet more state intervention. We may even see subsidies to try and attract landlords back, since that would be easier politically than withdrawing the damaging policies that drove them away. So it will be like the Three Stooges film about plumbing with ever greater complexity and chaos.

The UK’s 3 million private landlords will be all right. They can sell up and have a comfortable retirement. Perhaps go abroad and take their money with them. But what will be the impact on the rest of us?

For a start, shrinking the private rented sector will cause increased pressure on public spending. Last year the Local Government Association reported that ‘the number of households living in temporary accommodation has risen by 89% over the past decade to 104,000 households at the end of March 2023 – the highest figures since records began in 1998 – costing councils at least £1.74 billion in 2022/23.’

That also means councils will place more families in hostels and hotels, further away from the community they were living in and further away from their support network of friends and extended family. More children will face the disruption of switching schools.

Consider my own borough of Hammersmith and Fulham as an example. In response to an FOI request I sent, the Council told me that ‘564 households have been placed in temporary accommodation outside of the Borough of Hammersmith and Fulham between April 2023 and March 2024’. That included sending them to Slough and Spelthorne. Half were put up in hotels. 

There were also 383 households accommodated within Hammersmith and Fulham – of those 229 were in hotels, with another 40 in hostels.

That is where my council tax is going. It is both expensive and a social disaster. Imagine trying to maintain a normal family life with your children growing up in a B&B. 

London is under particular pressure. But the situation across the country is already pretty dire and getting worse. Increasing supply so that competition can drive up landlords’ standards would be welcome. Instead we have a political consensus to drive more landlords away and make matters worse. If Labour is elected next week, the homeless will be among the greatest victims.

Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

Harry Phibbs is a freelance journalist.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.