CONSERVATIVE PARTY CONFERENCE: Housing minster Kit Malthouse says the government loves the PRS, and BTR in particular, but is looking to regulate renting further to win the vote of generation rent.
“You will have seen big signals from MHCLG that we love the PRS, BTR in particular. And institutional investment into the PRS is key,” he said.
“[But] we need to get to a situation where such is the reputation of the PRS is that people want to go to it.”
The housing minister’s words will be welcomed from a conference that has focused heavily on home ownership, albeit with a greater focus on social inclusivity.
Malthouse said volume was the first priority, adding: “We are trying to allow a thousand flowers to bloom and all sorts of tenants and holdings to appear.
“If we really want a strongly functioning market that fits the huge tapestry of people we have, then we have to provide a variety of choice for them.
Resentment
“The third thing we are trying to deal with in the short term is the growing resentment from young people who are being excluded from the housing market.”
A key part of the Conservative push for more tenures will be improving tenant rights in the private rented sector.
Douglas Hague, vice chairman at the Residential Landlord Association, said that private buy-to-let market needs to change.
“Forty percent of PRS households now have one child in them, while the average tenure in the PRS is four years. There are people seeing it as a permanent option for themselves,” he said.
But he added that the UK government must “start creating policy on the basis of evidence, rather than on gut feelings about what we think we should be doing.”
The truth is that if we carry on the way we are, generation rent is going to vote for Jeremy Corbyn
Regulating and improving the existing rental system is generally being seen by the government as a short-term fix for some of the longer-terms problems affecting the market, notably new supply.
Malthouse hinted that prime minister Theresa May’s speech on Wednesday could include more on housing and regulation, while MHCLG secretary of state James Brokenshire had already announced the establishment of a housing ombudsman during his conference address.
“Rogue landlords give the sector a bad name, but there is an issue about standards, enforcement and dispute resolution,” said Malthouse. “The truth is that if we carry on the way we are, generation rent is going to vote for Jeremy Corbyn.”
Haig said while landlords must modernise, so too must the regulatory standards for them.
Pointing to three-year tenancies, he says the reason many landlords argued against these is the difficulty and expense of removing tenants when they don’t pay, a process that can take longer than six months.
Housing court
“We would like to see the establishment of a proper housing court though a tribunal system to allow both sides get access to justice quickly and fairly,” he said. “The problem is that the structural changes being made are being done very piecemeal and last minute, and in a way that underminds the ability of landlords to invest in it.”
Previous regulatory levies on the sector – while performing important social or regulatory functions and putting buy-to-let buyers on a parity with owner-occupiers – have acted as disincentives to investors. The government has increased stamp duty and removed tax relief.
These moves have been a boon for owner-occupiers, though landlords have complained that they remove rental product from the market. Famously, the institutional BTR sector was dealt a blow in 2016 when policy aimed at buy-to-let landlords on stamp duty was also applied to them.
Tax relief
Malthouse stressed that there would be no change to tax relief, though he said: “We need to make sure we do not get into a situation where we increase the regulation so that it chokes off investment.”
The Conservatives are hoping to change the perception of renting to make it a palatable approach to those priced out of housing. It is a major switch in narrative from just three years ago, though generating support for the change will be an uphill struggle.
“There are difficulties with the preconception of the PRS among tenants, and a general perception in the country that being a tenant is not ideal, because you are in a position of weakness,” said Malthouse.
“[We should embrace] a regulatory structure that reinforces the idea that this is a contract between equals.”
‘Rentquake’
This in part an answer to the “rentquake” at the 2017 election, where a large portion of the swing to Labour was not made up of young voters, but renters instead.
This, however, could push even more landlords out of the sector, which the RLA cautioned against.
“A lot of landlords feel very paralysed about being able to do anything if there is a problem,” said Haig. “We need to create those structural changes before you can create that consumer-led approach.”
Malthouse said: “We can talk about the structure and finances and the government assistance that is given. In the end there will be investment in the sector if there is strong demand, and strong demand will come from willing tenants.
“If we get that right, it will be good for landlords, tenants and the country as a whole.”
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