17 May 2024

Populist legislation is making people homeless


In 2015, Benjamin Lee of The Guardian wrote an amusing piece about how some canny PR flack had spun his two-star review into gold. By carefully positioning it on a poster in the middle of a column of four-star reviews, some of which were partially obscured, it managed to give a very misleading impression without actually lying to the viewer.

One has to wonder whether the paper’s sub-editors decided to file that tactic away for future use, because a recent story about the housing crisis employed a very similar strategy. Here is the headline, as of the time of writing:

‘Landlords selling up leaving 2,000 households a month in England facing homelessness.’

And just below it, the subhead:

‘Four in 10 households seeking council help say it is because property is being sold, amid renting reform delays.’

Clever, no? We have two discrete pieces of information: that people are being made homeless by landlords selling their properties, and that this is taking place ‘amid’ delays to Michael Gove’s promised rental reforms. Both are true. It doesn’t say that people are being made homeless ‘because’ of delays to the Bill – but if you made that leap, nobody could blame you.

The rest of the article is constructed in the same vein. The first five paragraphs expand on the fact that landlords are selling and this is making lots of people homeless; the rest of the article is about how angry various people are about delays to the Renters (Reform) Bill.

Once again, there is no paragraph making an explicit, let alone causal, link between these two stories. The closest we get is this masterpiece of ambiguity: ‘The delays mean ongoing uncertainty about the rules for millions of renters and their landlords.’ 

The one voice making that case (a landlord) is relegated right to the end of the piece, and given less space than any of the three people quoted voicing irrelevant demands for passing the Renters (Reform) Bill. Irrelevant because none of the restrictions proposed would prevent landlords evicting tenants from properties they plan to sell; Gove’s plans aren’t good, but he isn’t so crazy as to redefine ‘sitting tenants’.

The inference the author is all but screaming at the reader to draw is that the Housing Secretary should stop kowtowing to landlords and deliver on his promises in order to stem this terrible tide of homelessness. But they can’t say that, because it’s wrong.

In fact, it’s pretty much the exact opposite of the truth. What we are currently seeing play out is exactly what critics of Gove’s proposals (myself included) warned would happen: that in the absence of other reforms, cracking down on private landlords – however popular it might be – would just make the housing crisis worse. One might even call it ‘populism’.

Now, don’t get me wrong. In the long view, and in terms of ownership, our housing market had definitely become unacceptably skewed. Because landlords have an asset base against which to borrow (on top of more capital to begin with), they can get better terms on mortgages than first-time buyers. 

This gives those able to get on the buy-to-let ladder (by dint of sensible financial decisions, like being born in the 1960s) a head start that compounds over time. Checking that was and is essential to broadening home ownership.

But there was always a tension there, at least in the short term and as long as we aren’t rapidly expanding housing supply: the private rented sector has the highest density. 

Renting a room in a four-person HMO in your thirties might be an immiserating experience, but it is unarguably an extremely efficient way of using limited housing stock. Selling such a property to an owner-occupier, most likely an individual or couple, means decanting two people back into a rental market with four fewer beds in it.

Thus, even if driving landlords out of the market resulted in every instance with their former properties going to deserving occupants (however defined), you still end up making people homeless. 

Contra the author of the article, ‘uncertainty’ is not the problem here – the reforms are. Were the Housing Secretary to commit to passing all of them in full, the problem would accelerate, not diminish. Squeezing the private rental market, absent other reforms to increase supply, was always a bad idea for the exact reason The Guardian put in its headline. 

Sadly, however, this argument fell on deaf ears. Nobody wanted to feel sorry for landlords. At worst, you got senior figures at major think-tanks suggesting that landlords selling up couldn’t possibly matter unless they were physically demolishing the houses – a strong contender, in a crowded field, for 2023’s ‘Worst Housing Take’ award.

Gove’s back-pedalling on rent reform is usually presented as a result of his coming under pressure from landlord MPs. That may well be part of it. But it may also be a product of DLUHC doing the research they should have done to before starting out. 

As I noted two years ago, the White Paper upon which the Renters (Reform) Bill rests made absolutely no mention of either Regulated Tenancies or Assured Tenancies; that is to say, of the fact that this country used to have a highly-regulated private rental market, and that governments of both parties dismantled it. 

Instead, the Bill is just the latest in a long line of measures by which central and government and local authorities lay down ever-higher (or at least, more restrictive) standards that just end up hurting prospective tenants by taking rooms off the market. In my last rental, the council inspector fudged the numbers on the minimum size of one of the rooms – as a kindness to us, not our landlord.

As ever, the best protection tenants could have would be more supply. When buyers have a lot of options, rising standards in large part take care of themselves as landlords woo tenants – and where they don’t, a market where unhappy tenants have options is one where regulations can be properly enforced.

Alas, our politicians are still determined to exhaust every possible avenue of looking busy rather than facing up to that stubborn reality – even at the cost of making people homeless.

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Henry Hill is Deputy Editor of ConservativeHome.

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