Many of us have said repeatedly that we have a major housing crisis and that not only is the Bill a missed opportunity to take the necessary urgent action, but it will make a bad situation worse.
My new clause 39, which I plan to press to a vote, would draw on the work done to establish a nationally agreed living wage level—that agreed by the Living Wage Foundation, not the pale imitation the Government like to call a living wage but which is nothing of the sort—and establish a living rent commission, adopting and linking to the principles behind the living wage commission, to calculate what a genuinely affordable level of rent in different places would look like, bearing in mind other costs of living and wage levels. It could also incorporate other factors, such as tenancy security, by taking into account the average length of tenancy in a given area.
Just as the living wage is demonstrably good for employers, employees, society as a whole and the local economy, so too could a living rent lead to significant benefits for all. To best understand what those might be, I hope the House will bear with me while I remind colleagues of the scale of the crisis in Brighton and Hove. As others have said, the problem is by no means limited to London.
Research released by HomeLet today reveals that tenants in Brighton and Hove, where my constituency is based, along with those in Bristol, suffered the worst rent rises of anywhere in Britain last year. Landlords raised prices by an average of 18%, meaning that Brighton and Hove has become only the second city in the country where rents have passed the £1,000-a-month barrier. These record rent rises mean that a typical flat in the city now costs £1,078 a month and that the average earner has to put aside 65% of their salary just to pay for a typical two-bed flat. That is simply untenable.
Given that Brighton and Hove has one of the biggest private rented sectors in the UK—about 30% of the housing stock is in the hands of private landlords—the impact of such rent rises is widely and deeply felt. High rents in the private rented sector have an inevitable knock-on effect on rents in the so-called affordable
housing sector, too, and the cost is disproportionately borne by individuals and the state. People on low incomes are going without food and heating to pay rents. People who grew up in the city are having to move away from friends, family and communities to afford enough space to have children. A 2012 assessment of affordable housing need identified 88,000 households in Brighton and Hove—72%—that could not afford to buy or rent without some subsidy or spending a disproportionate level of their income on housing costs. The chief executive of Brighton Housing Trust, Andy Winter, has warned that by April 2017, when the local housing allowance changes in the autumn statement come into effect, 75% of its properties will be unaffordable for under-35s, meaning people will have nowhere to go.
New clause 39 would tackle some of those problems head on. A living rent commission would consider the facts and recommend a reliable and fair way of determining an affordable rent level. For example, it would consider whether we need two different living rent levels—one for London and one for elsewhere—as happens with the living wage, or whether, as seems more likely, it should be more localised, and if so, on what basis. It would require the commission to undertake that work in conjunction with providers, landlords and tenants, and then report to the Government. In essence, it commits to nothing other than trying accurately to define the much bandied term “affordable”, which has effectively been rendered meaningless given that council homes have been sold to housing associations, which are now raising funds by increasing rents on re-lets from social housing at a rate of up to 80% of market rates. That is what counts for affordable at the moment, yet it is nothing of the kind.
I add a word of caution: a living rent is not a magic panacea. The underlying reasons for our local and national housing crises are many and varied, and so too are the solutions. We need wholesale reform to address insecurity, inequalities between owners and private renters, decency standards and the better use of public subsidy, as well as affordability. No one measure will work in isolation—it must be part of a broader programme—but the new clause would introduce a solution that could start to have a significant impact on all these problems, and it has not yet been given much consideration in our debates. It goes further than the so-called smart rent controls that some Members advocate. Such controls would link rent levels to inflation and would certainly be a step in the right direction. Capping rents is a step further and is usually linked to local incomes or could be set at a certain percentage more than social rents.
That could help prevent costs from spiralling further out of control, which would be welcomed by the tenants I see in my surgeries who are struggling with the cost of the private rented sector, but given that rents are already so high, even capping them at those levels would offer tenants only limited protection. For the renters in Brighton, Pavilion who are already forced to set aside 65% of their income for rent, it would mean rents not getting any worse, but it would not mean their getting better or becoming affordable or sustainable. They are the result of a market utterly out of control and in need of genuine reform to bring them in line with wages and the cost of living. They need to better reflect what people can afford to pay in rent while maintaining a decent quality of life.
I acknowledge that some see capping and controlling rents as controversial and that there are instances where such policies have had perverse effects, but there are also many instances where they have worked, and a commission would help us learn the lessons from different models to develop one that might work here. Regulators in other countries agree that rent controls can be part of the solution, especially when taken alongside other positive measures. In Sweden, rents in the private sector are not allowed to be more than 105% of rents in equivalent accommodation owned by a municipal housing company. It is a stable private rented sector in which the quality of repairs and maintenance is good and tenants and landlords alike benefit from secure, indefinite tenancies. Indefinite tenancies and rent controls are credited with giving Germany the most stable private rented sector in the world, alongside the US. France, which has rent controls and more secure long-term tenancies than we do, has a growing private rented sector.
Understandably, there will be concerns about the impact on landlords and, in turn, the effect on supply. What happens if landlords cannot afford to take reduced rents, meaning that housing standards plummet or properties are sold out of the rental market? A living rent commission would model all those possibilities and risks and take them into account when making its rent level recommendations. In the meantime, it is worth noting that a recent survey of landlords found that 77% were in employment; that 60% earned more than £2,000 a month from their employment; and that the 79% of landlords who controlled 61% of all privately rented dwelling earned less than a quarter of their income from those rents. In other words, landlords tend to have reliable sources of income other than rent. We also know that many have brought property as an investment or, more commonly, as a pensions supplement.
If Ministers or the Opposition are worried about the finances of those landlords, I humbly suggest they commit to a secure living pension for all that adequately covers the cost of living. The example from countries such as France suggests that to link a particular policy—say rent control—to shrinkage of the private sector is flawed. With the right policy mix, rent controls can be part of a growing private rented sector in which standards are high. As a final word on landlords, I imagine that many of them will be keen to demonstrate their ethics and, just as forward-thinking employers have backed the living wage, many landlords will voluntarily adopt a living rent for their properties.
2.30 pm
To sum up, I appreciate that some colleagues will disagree with the idea that a living rent is a good, let alone the best, mechanism to deliver such benefits, but I say this to them. New clause 39 does not prescribe whether a living rent should be legally enforceable or simply voluntary. What it would do is set up a commission to consult widely, consider the evidence and make a series of recommendations. It will give renters a benchmark against which to compare the rent they are currently charged and start a long overdue debate into how best to balance the needs of landlord and tenant. That is why I hope colleagues will support my new clause, which I hope to press to a vote.