Could more social housing ease pressure on landlords?
Smith was more engaged by Burnham’s recent emphasis on social housebuilding, which he argued could benefit rather than threaten the PRS. “My view is it’s quite a good thing, because the reality is we’ve asked the PRS to do lots of rather disparate and odd things over a long period of time, which it’s not really very well suited to doing, and might be better done in the social sector,” he said, pointing to the sector’s current role housing asylum seekers, students and benefit claimants alongside conventional tenants.
He also argued fairness demands social and private landlords be treated differently on rent-setting, given the tax treatment each receives. “You’ve got a real problem if you turn around to private sector landlords and say you also should not take a full market rent, but we’re not going to give you any beneficial tax treatment. In fact, we’re going to give you a negative tax treatment as a result. That doesn’t seem tremendously fair to me.”
Layering reform onto the Renters’ Rights Act
The Renters’ Rights Act saw its main tenancy reforms take effect on 1 May, part of the government’s phased implementation roadmap for reforming the private rented sector, and Smith questioned whether further intervention so soon afterwards is wise.
On the mechanics, he pointed out rent increases already run through the First-tier Tribunal, meaning a cap could be added without new primary legislation. “All increases have to go through the First-tier Tribunal now, and you could simply say that the First-tier Tribunal couldn’t increase rents by more than a certain percentage. But I don’t think you achieve that much, because in practice at the moment, most landlords tend to increase rents more dramatically between tenancies and don’t go for massive in-tenancy rent increases.”
On timing, Smith set out two competing views within Labour, also pointing to Burnham’s landlord licensing record as Greater Manchester mayor as a guide to his instincts. “The alternative view is that you’ve done this, it’s really destabilising to go in and start making further alterations just a relatively short time after you’ve brought this into effect. And it’s actually going to make things much worse, because people who are already a bit nervy about the situation will become completely turned off, and that’s a bad business environment that impacts all the way through.”