Cost of Living: Private rented sector

Beth Winter Excerpts

Tuesday 18th July 2023 Westminster Hall

[Sir Christopher Chope]

Surely a landlord should have the right to decide whether they wish to rent out a property. If they decide that they cannot rent it at a price that they think is reasonable, they can withdraw it from the marketplace.

The hon. Gentleman raises an interesting point about Members of Parliament and the rented sector. When I was first a Member of the House, we had a system whereby the taxpayer subsidised the cost of Members of Parliament renting a second home. Then the rules were changed, because it was decided that it was very poor value for taxpayers to keep on paying rent for Members of Parliament. The rules were changed to allow Members of Parliament to take out a mortgage on their constituency home or second home, and the interest on that mortgage, rather than rent, was paid by the authorities in Parliament. That was because prices in the rental market could only increase, and it is why, traditionally in this country, most people choose to be owner-occupiers, rather than renters, if they can afford it.

The point was made earlier about the reduction in the number of people who own their home, particularly among the younger generation. It is really sad and a chronic problem. Between 1 million and 2 million more people would probably own their home if we had the same policies in place for home ownership as we had in the late 1980s. The advantages of home ownership include flexibility, and the fact that when someone retires, they will probably have paid off their mortgage and not have any ongoing housing payments. It also means that people can be mobile; if their job takes them to another part of the country, they can move. All the rigidities in the private rented sector were reduced, to an extent, by the 1988 legislation, but it seems that there is pressure, from both my Government and the Opposition, to reintroduce a lot of the controls. That would make it very difficult for somebody to move from one private rented home to another in another part of the country for a job.

The supply of private rented housing is key, and nothing suggested by the hon. Member for Stretford and Urmston would do anything other than reduce the supply of private rented accommodation.

[Beth Winter (Cynon Valley) (Lab)]

The hon. Gentleman is arguing very strongly on behalf of landlords in the private rented sector, but the overwhelming evidence shows that the majority of tenants are on a low income. Their tenure is often insecure, and the properties are often low quality, with damp and mould. Did you consult tenants? Can you speak on behalf of the tenants who are suffering?

[Dr Rupa Huq (in the Chair)]

Order. The “you” should be “he”.

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[Beth Winter (Cynon Valley) (Lab)]

It is a pleasure to serve under your chairship, Dr Huq. I congratulate my hon. Friend the Member for Stretford and Urmston (Andrew Western) on securing this vital debate. We are living through a housing crisis in the United Kingdom, and there is a desperate lack of affordable, accessible, suitable and settled accommodation for millions of people across the United Kingdom. At the same time, we are suffering the greatest cost of living crisis in living memory, with rising rents, extortionate energy costs, food bills rising, below-inflation pay rises and inadequate social security benefits. This is a perfect storm, and nowhere more so than in the private rented sector, as others have commented.

Data from last week shows that private renters are five times more likely to struggle financially than homeowners. The private rented sector is now bigger than the social rented sector, and the demography of the people using the private rented sector has changed quite significantly. They tend to be older people, families and those on low incomes. Private renting tends to be insecure, and the accommodation tends to be in poor condition. If Government Members cared to look at research by Shelter, Crisis and many others—the Chartered Institute of Housing has written a lot about this—they would see that hundreds of thousands of people have been forced to accept properties that are either unsuitable or in poor condition. They are living in damp, mouldy and overcrowded accommodation, because that is all that they can afford. That is a major issue in the private rented sector.

The increasing competition for private rented properties means that there are increases in rents. Private rent prices increased by about 5% last year. Low pay is the cause of housing issues for millions of people, but many of those on low incomes are unable to afford private rent because of the complete inadequacy of the local housing allowance, which has been frozen since 2020. More than half of those receiving LHA have a shortfall. In Wales, during the first two weeks of February, just 1.2% of properties advertised on the formal rental market were available at or below LHA rates. That is absolutely shocking. That is putting unbearable pressure on families. There was an almost 70% increase in repossessions across the UK between January and March last year. Local authorities are doing what they can to help, through the discretionary housing payment scheme, but that is insufficient to meet the shortfall. Wales spent 155% of its discretionary housing payment allocation on support for housing costs. That is much more than any region in England.

The evidence is clear: the Government must restore local housing allowance rates and re-link them to rents, so that they cover at least the cheapest 30% of local rents. As others have commented, we have been inundated by constituents with an array of housing problems, including problems with affordability in the private rented sector. One lady has taken on a kinship caring responsibility, but she is being penalised by the system. She was unable to afford rent; she had assistance via the discretionary housing payment, but it was insufficient, and she is now in arrears with her utilities. That is not acceptable in the fifth-richest nation in the world. The quickest and most effective way to keep people in their home is for the Government urgently to invest in local housing allowance, so that it covers the true cost of rents.

The Renters (Reform) Bill does not address cost issues, so, as my hon. Friend the Member for Pontypridd (Alex Davies-Jones) mentioned, the Welsh Government are leading the way. They have just opened a consultation on fair rents and affordability. They are seeking evidence on defining “local income” and “fair rent”, as well as setting out proposals for fair rent and affordability. ACORN in Wales commented that rent controls are “the bare minimum response”, but it is pleased to see the Welsh Government considering rent controls. Rent controls must be considered. I completely agree with the comments of the Bevan Foundation: it endorses rent controls, but says that we must also increase the provision of social housing, reform the social security system, and take action to improve security of tenure.

To conclude, if we are to address the UK’s horrendous housing crisis, we need a holistic approach that also looks outside housing. We need to challenge the capitalist neoliberal system, which allows the few to benefit at the expense of the many. Housing is more than bricks and mortar; it is a home. We need to look at housing in a different way. Diolch yn fawr.

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[Chris Stephens (Glasgow South West) (SNP)]

I am delighted to see you in the Chair, Dr Huq. I congratulate the hon. Member for Stretford and Urmston (Andrew Western) on leading the debate. I always like and enjoy listening to his contributions. He follows a fantastic former Member of Parliament, Kate Green, who represented his constituency very well. He used his local authority experience, which is very important when discussing such issues.

The related issues of the cost of living and the private rented sector should be of great concern to members of all political parties as they affect the wellbeing of people in each of the nations of these islands. Much of what we are discussing today is centred on the experiences of people in England and Wales, so I will contribute a Scottish perspective. There have been some criticisms, from some sources, of the SNP-led Scottish Government and how they have handled the private rented sector. What Members will hear from me are the views of other interested organisations that contradict those misgivings and are supportive of the stance the Government have taken in Scotland.

We are familiar with the factors that have contributed to the current cost of living crisis, although some might question how much those factors have contributed, or even whether they have contributed at all—for example, Brexit—but no one will dispute that the war in Ukraine has driven up the price of oil, with a consequent massive increase in domestic energy costs. Russia’s de facto blockade of the Black sea has also resulted in Ukraine’s exports dropping to one sixth of the pre-war level, causing grain prices to rise dramatically. We have all seen the effects on the price levels on supermarket shelves. Covid has also played an obvious part in taking us to where we are.

We know that the biggest factors in determining the cost of living are wage rates and housing costs. The limits of devolution mean that the Scottish Government have no real say in private sector incomes, but for many in the public sector—nurses, midwives, teachers, junior doctors—pay awards have been sufficient to avoid protracted industrial and strike action. It is not as much as we would wish to pay, but better than elsewhere and certainly appreciated, which brings us to the major factor in the cost of living crisis: rent prices.

Different legislatures in the UK have taken different approaches to dealing with rent prices. In Scotland there were recent changes to the Cost of Living (Tenant Protection) (Scotland) Act 2022, which took effect from 1 April. With the exception of some defined limited circumstances, those changes have included a cap on most private landlords’ mid-tenancy rent increases at 3%. The enforcement of evictions continues to be paused across all sectors for up to six months and increased damages for unlawful evictions of up to 36 months of rent will continue to apply. Those measures will be in force until 30 September, provided they remain necessary, but there is also the option to extend for another six-month period if required. As previously announced, a social sector rent freeze has been replaced with agreements from landlords to keep any rent increase for 2023-24 well below inflation. That voluntary approach to rent setting agreed with the social sector will equate to an approximate average rental increase of £5 per week. That is still a strain for many, but more manageable than is the case elsewhere.

The legislative approach has had its detractors who suggest that SNP policies have harmed or unfairly targeted the private rented sector. There is, however, no credible evidence for that, leaving the detractors’ motives open to question. For example, concerns are expressed by some private landlord representatives about the different approach between social and private landlords. The Scottish Government contend that a collective approach like that in the social sector is simply not possible in the private rented sector. As a consequence of the policy, the 3% increase in the average rent of a two-bedroom private rented property, which is the most common size, is broadly comparable in monetary value with the average planned increase in the social sector.

The Scottish Government continue to monitor the data and to listen to landlords and tenants, in order to consider whether the measures that are in place remain proportionate and necessary. The recent legislation is time-limited and can only be extended with the approval of the Scottish Parliament, and in any event it cannot extend beyond March 2024 at the latest.

Some have suggested that investors will exit when certain rent-controlled regimes are introduced, and some political parties claim that this has already happened. But, again, there is no evidence to support those claims or suggestions. On the contrary, the chief executive of the Scottish Association of Landlords has stated publicly that

“We do need to have rent control in Scotland. I think that’s where we’re going to be going.”

Let me add a few other views about Scotland and its recent decisions. Crisis Scotland told Parliament:

“We all know that the cost of living crisis is an emergency at the moment, and for those in poverty that’s an emergency as acute as the pandemic. And it calls for emergency measures that at other times wouldn’t be considered. We absolutely support the need to do something to support tenants through that crisis.”

Living Rent said that a rent freeze would have a

“massive impact, as skyrocketing rents continue to pile on top of out of control energy bills.”

Shelter Scotland stated that short-term emergency measures in the Programme for Government

“are great news for tenants and will stop people from losing their homes.”

The Scottish Trades Union Congress said that

“the Scottish Government is to be commended for freezing rents…when used, the powers of our Parliament can bring positive change.”

It is on the use of the powers of the Scottish Parliament that I will now dwell, because Scotland has delivered 10.8 social rented homes per 10,000 population compared with just 1.2 per 10,000 population in England—nine times as many. Spend on affordable housing in Scotland remains the highest in the UK. Since the Scottish National party came into office in 2007, that has produced 14 homes per 10,000 population compared with 9.7 per 10,000 population in England. The Scottish Government’s per capita spending on affordable housing is more than three times higher than that of the UK Government. And in their published 2022-23 Programme for Government, the Scottish Government pledged to deliver 110,000 homes ahead of 2032, of which at least 70% will be available for social rent and 10% will be in our remote rural and island communities.

The Scottish Government have also committed a five-year investment of £3.5 billion to Scotland’s internationally recognised Affordable Housing Supply Programme, which this year’s £752 million affordable housing budget feeds into, despite a 3.4% real-terms cut in capital funding from the UK Government.

The first-time buyer relief, which raises the nil rate band to £175,000, means that the majority of Scotland’s first-time buyers pay no land and building transaction tax, which replaced stamp duty, and all other buyers benefit from a tax reduction of £600.

All that activity can be compared with the work of the Department for Levelling Up, Housing and Communities, which recently handed back £2 billion in funding, including £1.2 billion that was unused from the Help to Buy scheme.

I ask everyone here to ponder on the past achievements and future plans for Scottish housing, and consider whether some of them might also be applicable in some other parts of the UK. There have been several well-documented attempts in recent times to dilute the dissolution settlement and reduce the decision-making powers of the Scottish Government.

[Beth Winter]

The hon. Gentleman is making a very powerful contribution to the debate and the comments with regard to Wales and Scotland show the progressive, more radical policies there. Does he agree that if the devolved nations received fair, needs-based funding settlements from the UK Government, we could go much with those radical socialist policies?

[Chris Stephens]

I absolutely agree with the hon. Member.

In closing, on the cost of living in the private rented sector, the UK Government might do well to follow the policy lead of Scotland and Wales, and I urge the Minister to respond positively to the suggestions that have been made today.

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[The Minister of State, Department for Levelling Up, Housing and Communities (Rachel Maclean)]

It is a great pleasure to serve under your chairmanship, Dr Huq, and to respond to the debate on behalf of the Government. As is traditional, I thank the hon. Member for Stretford and Urmston (Andrew Western) for securing the debate on this important issue, which matters to all of us, including those of us who serve in the Government. He spoke passionately on behalf of his constituents, as did the other Members who have spoken, and I will come on to their contributions before I conclude my remarks.

The hon. Gentleman’s concerns reflect my determination to make sure that the Government deliver a strong, functioning private rented sector. As has been reflected during the course of the debate, private rented accommodation is the second largest housing sector in England, providing homes for 4.6 million households and an estimated 11 million tenants. It plays a vital role in supporting people to study away from home, explore new locations or move to find work, which is why we are ensuring that tenants have the security they need and enjoy a positive experience of renting a home.

As has been alluded to, the Government recently introduced the Renters (Reform) Bill to Parliament. The Bill will help change the landscape of the private rented sector. It is the most significant reform to the private rented sector for a generation, and it will deliver on the Government’s commitment to a better deal for renters. The Bill will make a fairer, more secure and higher quality private rented sector, fit for the 21st century. It will end section 21 “no fault” evictions and move to periodic tenancies, allowing landlords and tenants to end tenancies when they need to. This means that tenants can rent decent, secure homes and put down roots in their communities, while being empowered to challenge poor practice without worrying about retaliatory eviction, or they can leave if the landlord fails to meet their basic responsibilities.

However, we know that the overwhelming majority of landlords provide a good service, and we recognise that good landlords play a vital role in providing decent homes for millions of people across the country. That is why we will introduce comprehensive, fair and efficient grounds to ensure that landlords have confidence that they can regain possession of their property when it is reasonable to do so. We also want to simplify the system for both tenants and landlords, which is why all rent increases will take place via one mechanism. We will allow rent increases once per year in periodic tenancies and increase the notice that landlords must give to two months, giving tenants more time to plan and to seek advice. That will create a fairer system that allows both parties to negotiate rents effectively, while protecting security of tenure. I want to be clear: this Government do not support rent controls. Some Members asked me to set out our position on that. We recognise, however, that most people want to buy their own home one day. We are therefore firmly committed to helping generation rent to become generation buy.

We are working towards delivering on our commitment of 300,000 homes a year. Despite all the doom and gloom that may be reported, we are making strong progress. There is always more to do, but it is important to recognise that annual housing supply is up 10% compared with the previous year, with more than 232,000 net additional homes delivered in 2021-22. That is the third highest yearly rate for the past 30 years. We have also announced £10 billion of investment in housing supply since the start of the Parliament, and the Government are on track to deliver thousands of affordable homes to rent and buy across the country through our £11.5 billion affordable homes programme. A large number of those are for social rent.

I want to address the—if I may put it this way—nonsense stated by a couple of contributors to this debate, who said that money has been handed back to the Treasury. That is simply not the case. The money referred to was re-profiled, which is a normal part of Government accounting —[Interruption.] Opposition Members might want to listen and find out how Government funding and finance work. That money will be recycled and refocused into the 2016 to 2023 affordable homes programme. I hope that we will hear no more of that kind of comment.

A healthy housing market thrives on having a range of tenures. That is why we have launched the £1.5 billion levelling-up home building fund, which provides loans and takes out equity in house builders that would otherwise struggle to access finance. The Government have made a range of interventions to support the sector over the past decade. The construction of new Build to Rent homes will play an important part in helping to ease demand pressures in the private rented sector and is already providing thousands of much-needed new quality homes.

We know that right now meeting immediate housing costs is a huge struggle for some people, and that a higher proportion of income is being spent on rent by those on lower incomes in particular. In April 2020, therefore, we raised local housing allowance rates—a significant investment of almost £1 billion—and that increase has been maintained since then. Where tenants are unable to meet their housing costs and need further support, discretionary housing payments are available from local councils. Since 2011, the Government have provided almost £1.6 billion in discretionary housing payment funding to local authorities. For those who need additional support, the Government are providing another £1 billion of funding—including any Barnett impact, as colleagues from the devolved nations have spoken today—to extend the household support fund in England into the next financial year, bringing total funding to £2.5 billion.

[Beth Winter]

Will the Minister give way?

[Rachel Maclean]

I will not give way, if the hon. Lady does not mind, because I have a lot to get on the record.

Cost of living pressures go beyond housing costs, and that is why we have taken decisive action to support households, totalling £94 billion or £3,300 per household on average, across 2022-23 and 2023-24. We uprated benefits and state pension by 10.1% in April. For 2023-24, the Government are providing additional means-tested cost of living payments of up to £900. We also provided significant support for households with their energy bills, covering about half of a typical household energy bill this past winter. I utterly reject comments to suggest that the Government are not interested in helping people on low incomes. I have set out how we are doing just that with billions of pounds of taxpayers’ money.

I will touch on the Members who have spoken. I thank the hon. Members for Pontypridd (Alex Davies-Jones), for Cynon Valley (Beth Winter), for Barnsley East (Stephanie Peacock), for Birmingham, Erdington (Mrs Hamilton) and for Leicester East (Claudia Webbe), the Front Benchers of the SNP and the official Opposition, the hon. Members for Glasgow South West (Chris Stephens) and for Greenwich and Woolwich (Matthew Pennycook), and my hon. Friend the Member for Christchurch (Sir Christopher Chope).

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[Rachel Maclean]

I refer my hon. Friend to my earlier remarks, which set out that we are building record numbers of houses both to buy and for rent. We will make further announcements on that point in due course.

I gently remind the other Members who have spoken that all of them, I think, represent areas that have Labour-run councils, or else represent areas in the devolved nations. Their own councils have considerable powers, funding and tools, especially in enforcement, to tackle a lot of the issues that have been raised in their casework.

I was struck by the complaint made by the hon. Member for Birmingham, Erdington about the way her own city council, which is run by the Labour party, is allowing HMOs to be delivered. I suggest that she takes that up with her own Labour-run council—likewise for the hon. Member for Stretford and Urmston, whose constituency is of course part of the Greater Manchester Combined Authority, which is run by Labour Mayor Andy Burnham, who has considerable powers, influence and devolved funding from the central Government.

[Beth Winter]

rose—

[Rachel Maclean]

I briefly give way to the hon. Lady, who has been very persistent.

[Beth Winter]

Is the Minister aware that the devolved nations have been underfunded by billions of pounds? Going back to the point that the Minister made earlier, the local housing allowance is a reserved matter, and it has been frozen since 2020, since which time we have had a cost of living crisis. People are struggling. My question, though, relates to the report by the Levelling Up, Housing and Communities Committee, which stated:

“If the Government believes the PRS is the right place for those on the lowest incomes, it should…make sure housing benefit…covers benefit recipients’ housing costs.”

The Committee is still awaiting a response from the Government. When will the Government respond?

[Dr Rupa Huq (in the Chair)]

Order. We need to allow the Minister to respond and Andrew Western to wind up the debate.