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Opinion: We need a new deal for tenants

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Opinion: We need a new deal for tenants

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Published by Max Salsbury for 24dash.com in Housing

'we must stop social housing being portrayed as an inferior tenure of last resort' 'we must stop social housing being portrayed as an inferior tenure of last resort'

By Kevin Gulliver, research and development director, The HUMAN CITY institute

Labour Leader Ed Miliband is surely right in principle to propose greater regulation of the private rented market. Until housing supply catches up with demand for 250,000 homes annually - and that's never under the current economic circumstances and planning framework - the only way to keep rents down is to regulate.

This approach, like the proposed Miliband cap on fuel bills, is an expedient way of protecting consumers, especially those on low incomes, until structural change to rental and fuel markets can be engineered for the longer-term.

Miliband’s proposal to introduce greater security of tenure is also welcome since it is likely that more and more of our fellow citizens – those not lucky enough to have bought before the long boom in homeownership from 1994 to 2007 or those without a secure tenancy in the dwindling social housing sector – will be renting privately.

A series of short-term tenancies in the private rented sector is not conducive to planning a career or a family even if it benefits private landlords who want to sweat assets inflated by a dysfunctional housing market. This is the political appeal of Miliband’s proposal to swing voters in the ‘squeezed middle’.

Yet the fly in the ointment for Miliband’s proposal in equity terms is that it is likely to appeal mainly to professional people who unable to buy with more affluent households probably preferred by private landlords for longer term tenancies and fixed rent increases. Poorer, more desperate households are likely to be funnelled into the lower end of the private rental market where the benefit cap operates. Miliband’s proposal, then, seems unlikely to tackle tenure-based inequalities that have grown massively in the last thirty years.

As Professor Christine Whitehead of the London School of Economics has observed: “Unhappily, statutory longer term rent stabilised tenancies, while they may benefit the better off tenant, are likely to worsen the position of poorer households looking to rent privately harming the very people the suggested approach is trying to help.”

For those looking back to how we allowed our housing system to get in such a mess, 1979 is a pivotal year. Since then, the right to buy has denuded social housing to such an extent, and the current government has derided social tenants so vehemently, that a Save Social Housing Campaign (SHOUT) has had to be established. Yet we are digging ourselves into a deeper hole with the ‘rejuvenated’ right to buy ‘losing’ seven council homes for every single replacement, stoking a renewed housing bubble in concert with the help to buy scheme.

In 1979, for every £1 spent on rent and mortgage subsidies, £1 subsidised affordable house building by local councils and housing associations. Now the ratio is £10 to £1 and expanding with a £25bn per year housing benefit bill just around the corner.

This transfer of subsidies away from bricks and mortar to support housing costs has allowed tenure-based wealth inequalities to soar: home owners have £100,000 of equity on average whereas two thirds of social tenants have no savings at all or much in the way of other tangible assets.

What is needed is a re-balancing of subsidies - affordable housing cannot be provided without them - back to economically rational house building away and from the pockets of private landlords and City lenders. A larger, better, greener and above all, more affordable, social housing stock is the best way forward for the UK’s housing system. Investment in such an expansion has recognised economic benefits; not least stimulating employment and creating a national asset to sit on the UK’s balance sheet as a counterweight to borrowing whereas a ballooning housing benefit bill is ‘lost’ public spending.

Alongside, we should introduce a ‘New Deal for Tenants’ including the creation of a Tenants Mutual to provide asset accounts for social tenants and to support investment in social housing and community infrastructure. This would not only underscore new social house building but promote social housing as a flourishing, affordable and fair sector of first choice not last resort.

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