I wish I knew who was doing the thinking in Labour right now. If I did I might ask them to do better. The latest absurd thinking to come from it suggests that the tenants of private landlords should be granted indefinite tenancies.
Don't get me wrong: I am totally in favour of providing private tenants with better protection. Current tenancies that allow eviction, even after long periods of occupation, are totally unjust. There needs to be significant reform.
But to move to the polar extreme, where landlords can almost never recover a property, will also create an injustice, and even hardship. Think about it. Let's presume the owner of a tenanted property dies and inheritance tax is due as a result. But the tenant cannot be asked to leave to ensure that the property can be sold to pay this. That is utterly unfair. And I doubt that a market in tenanted properties at anything like fair prices will develop: it did not in the past. So the result will be obvious: there will be lack of new properties to let and a disturbing rush of existing ones for sale.
And the resulting fall in prices may not be the panacea it also sounds like: it might leave millions of current property owners with negative equity and that is utterly unfair to them. Such transitions have to be gradual. Like it or not, that's the only way markets can handle such change without too many suffering injustice, many of whom will be far from wealthy because they will simply be existing owners of their own homes, laden with a mortgage they will find is way beyond its value.
So, what would I do? I think three months notice may be fair when the tenancy has been of less than 12 months duration. That should increase to 6 months after twelve months of tenancy, and then to nine months notice after 18 months of tenancy, and a year's notice at two years and so on until, I suggest, that after four years of tenancy notice required from the landlord should reach two years. That, I think, is the limit to what is required. I believe it possible for a person to move with two year's notice. I suspect longer notice than that is not ever going to be necessary. But it does give a landlord the chance to recover their property whilst giving a tenant ample time to reorganise their life. In other words, fair balance is created. That is always the quality of a good law.
What we have is bad law.
But Labour's alternative would also be bad law.
I wish Labour could think these things through. Not doing so will cost them votes.
––––
Update at 8.55am on 10 March:
I was a little surprised to find that this post suffered a furious backlash on Twitter last night. It came from a lawyer who tweets as @nearlylegal and who claims to write law housing policy for Labour and to be the 2018 legal aid housing lawyer of the year. I note that he also blogs. I have little time for those who do so without admitting who they are, which his website does not.https://nearlylegal.co.uk/blog/
The accusation this lawyer, hiding behind his veil of anonymity made was that I was a ‘pillock'. My crime was to believe that Labour meant that when it said that it wanted to oblige private landlords to offer tenancies of indefinite length it meant it.
Apparently I should have known that loopholes to cover the issues I raised, such as the death of the landlord, would be included in such law, even though the briefing clearly said the intention was to seek to protect tenants from arbitrary eviction without having to give a reason. The examples of exemptions given were failure to pay rent or committing an offence in the property. These, as you will note, relate to tenant behaviour. I reasonably concluded that Labour, by announcing indefinite tenancies without hinting at exemptions for landlords, meant what it said. But apparently it does not. Exemptions for death of the landlord and even sale by the landlord may well end up in the Labour plan, apparently. And I can assure you, that from the tenant's perspective these will look like arbitrary events. And they will most definitely mean that indefinite tenancies are not on offer, despite Labour's claim.
But my Labour insider critic - who denied he was responsible for the poor thinking for which I said I was seeking the source - was adamant that I was the fool for not being able to differentiate an announcement of a policy intention from the policy itself. Because, apparently, they are quite different things.
Silly me. I thought that when Labour briefed the press, having had all the time in the world to do so since the government is utterly distracted, they might ensure that what they said might represent what they are going to do. But apparently not. And I am meant to know that. And to realise that the headlines secured as a result have been obtained under false pretences because it does not in any way relate to what Labour will apparently deliver. What is more, and somewhat condescendingly (and so tellingly), I am meant to rumble this but the electorate are not.
This, in my opinion and if it is true, is no way to do politics.
And if it is not true then my critic is dissembling and has not a shred of credibility left.
But either way if there is a patronising pillock here it is not me. I stand by my comments.
Labour needs to do a lot better. And to make sure that what it says makes sense. And is not meant to be read by some in society one way and by others another way.
And maybe it should pick advisers who can think logically and predict the consequences of what it is saying. Which was my original point.
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The German system looks pretty good to judge from the Guardian article. I fail to see why new tenants should have to face this insecurity in their first years (often as families with very young children and in insecure employment too) in order to protect wealthier landlords. It obviously works in Germany – and maybe helps keep down property price inflation. Far from not being thought through, it seems the system is actually tried and tested. (In the long gone GDR housing rent was a very small % of income)
That’s debatable
Maybe all tenancies could be longer
I am open to the suggestion
But in the UK indefinite tenancies will not work
We have a very different, tax, property market and social structure
Shall we do policy for the real world, not make believe? That way we might change it, for the better, and not in theory
I wrote before your update about @nearlylegal which shows how easily things get misreported and misrepresented – even in this case by their owner it seems.
I suppose one benefit of having a parliamentary system rather than rule by edict is that the issues that weren’t covered in the initial press release can be thrashed out before implementation.
“Living in the real world” seems to hark back to the admonishments of the advocates of the household budget analogy, far removed from the real physical world we live in.
One could say that aspects of the policy need refining in the light of this and that, without dissing the electoral hopes of only party with a remote chance of making things better.
(Though I know you’ve been there and been rebuffed).
If the owner of a tenanted property dies, then by definition nothing unfair can possibly happen to them ever again.
My sympathy for landlords — who are rent extractors by definition and so fundamentally bad for society — is limited. My sympathy for their heirs, who don’t even have the excuse of possibly having earned the resources they used to buy the property in the first place, is nil.
With respect, you ignore the fact that someone has to pay the inheritance tax in that case – because the law requires it – and so this is badly thought out
Being crass (which is what you are being) does not constitute an argument
Could you point us to where in Labour’s announcement today it is said that a landlord will not be permitted to regain possession in order to sell the property? You cite this specifically as an example, so of course you will be able to.
You might like to read my update
Then you might like to reflect on the stupidity of your question
Labour announced a plan for indefinite tenancies
It did not announce a plan for indefinite tenancies if the landlord would be so kind to grant one, and the right is theirs alone to decide whether they will or not
What part of that did you not understand?
I think the same thoughts passed through my mind when I read the article. I also thought that maybe their emphasis ought to be on house building rather than rearranging the deck chairs. We’ve come to a strange place when the FT appears to grasp MMT and the Labour Party is defending Osbornomics.
I agree, but only in part
There is a real issue to address here and Labour should be doing it, and well
But this is not the way to do it, and it’s being done badly. See the update
I’m trying to imagine how it would be in a specific case, but there would be many others just as difficult and unjust: a home owner with a mortgage is going abroad to work for a year or two. Decides to let his/her flat to cover the mortgage payments as they have to rent somewhere while they’re away.
On return, finds they can’t get back to their home…
I could think of many scenarios where people who are by no means exploitative landlords or landladies could find themselves in hardship because of the law proposed by Labour.
The only explanation for such a proposal is that it’s going to be popular with tenants…It’s a populist measure, not a practical or fair one.
What will happen longer term as you say, either the landlord will put the place on the market, or once the property is vacated because a tenant decides to move out, as they do… not put it back on the market at all, hoping for a change in the law. What will follow is a lack of places to rent. Great.
Exactly
So we will have properties sitting empty that could be used
It’s easy to see the flaws
But I am taking flak
This is just the latest in a long-list of ill-thought through policy proposals. Most voters pay little attention to the minutiae of these proposals, but, inevitably, those who will be disadvantaged wll make a lot of noise. This invariably dies down rapidly given the rapid churn of the news cycle, but it leaves a lingering sense of incompetence, incapacity and ignorance. Many of us who have supported Labour all our lives and long before this Corbyn surge simply despair. Most of us cling to the aphorism of the late Richard Neville (of Oz fame) – originally coined for his native Australia – that there is but one inch of difference between a Labour government and a Conservative government, but in that one inch we can live and breathe.
It is almost beyond belief that the Labour party, with each passing day, is rendering itself even more incapable of offering to the people a credible and competent replacement of probably the most vicious, incompetent and damaging Tory government that has ever held office in this country.
I’m no fan of Labour, and am only answering because as a private renter and a member of the tenants’ union Living Rent I have done bits of reading on renting. Not able to quote chapter and verse but gather indefinite tenancies are available outside UK ( Germany is one? Japan? ) and when a tenant dies the children can continue the tenancy if they wish.
I’ve, thankfully, always been blessed with good landlords. If that were not the case the stress of wondering when I would be given notice to leave ( three months is really not adequate time to find something suitable in this UK situation of dire shortage of housing ) would probably cause me to be ill.
Since Dec 2017 our tenancies in Scotland *are open-ended. I’m still on an old tenancy so not protected. Would move if I could to ensure a new tenancy but at the risk of repetition -shortage of suitable housing …
I declare an interest I own several rented out homes in inner London. I have some running costs, not mortgages, which if I left the homes empty I would have to cover. I do not understand what would happen if landlords decided to leave them empty. One local authority does take legal enforcement procedures to buy such properties. I am in favour of rent control and longer tenancies which cannot be terminated without reason ever. I would support the approach by Mr Murphy because happy tenants make good tenants. Indefinite tenancies would bring a number of unintended consequences, although inheritance, which i am in principle opposed to, could be legislated for. My own will by inherited by HMG.
I let out several flats in Wales, and also have a son living in Berlin, so I see it from both sides. In principle I am hugely in favour of rent controls. However in Berlin they work for people already resident, but as soon as an apartment is vacated, the rent is hiked up to market levels. Therefore for new renters it doesn’t work at all. My son lived in a tiny one bedroom flat with his girlfriend and they were incapable of moving into a larger flat as the rents had inflated hugely within a couple of years. Rent controls have to be the way forward, but we need to learn the lessons of those countries who already use them, and do better.
On Labour’s indefinite tenancies there are similar issues that need to be thrashed out. I am a huge supporter of the Corbyn government in principle but feel that much of their policy needs to have much more input from a wider circle of people with relevant experience. (A participatory democracy model). Tenants need far more security than they have at present, but to truly work and not just get landlords selling up on masse, we need better legislation for when things go wrong.
I have been a landlord for over 20 years and I long since gave up on using the various clauses in the landlord/tenant acts for non payment of rent or trashing the flat, noise, aggressive behaviour to neighbours (including my other tenants) etc. It is impossible to get an eviction using these clauses and I long since gave up – not least because of the cost of resorting to the law.
Now, if I have a really bad tenant, I don’t bother to use the various clauses. I warn the other tenants who are being inconvenienced that they will have to grit their teeth for three months, and then give the troublesome tenant notice to quit citing no reason which is a much cleaner, simpler process. I have only evicted 5 or 6 tenants in 20 years but without this backstop (to coin a phrase) it would have been a nightmare.
So, to conclude, yes please give tenants more security. They need it. But make the process for evicting problem tenants easier to use so that landlords have more confidence that they can be moved on when the necessity arises.
Richard you say “(a fall in prices) might leave millions of current property owners with negative equity”. In that case the banks overvalued the price of the property and lent too much – tough on them. In that case the the negative equity should be written off. It is what nature does when things get out of balance – it self regulates. I admit to many such a move would be an anathema. To them debt is a deity. Deities require sacrifice and in the system of Capitalism where the worship of money is the overriding imperative that sacrifice is human.
In that case we have bank failure….
Do we want to do that again?
Really?
Can’t we look at this in the round? Or are we now dedicated to actions that kick away all the structures which society work, as it seems the Tories are?
And what do you predict the outcomes to be? Most especially for ordinary people?
I am all for change
Revolution tends to be very nasty and unpredictable
And very rarely good for ordinary people
Richard, I have no wish to see another bank failure, but such a fate is already ordained in the mathematics of compound interest. That’s when debt rises by mathematical rules completely independent of the economy’s ability to pay. There certainly will be another great crash and again because of the way exponential series work when we see the tsunami cashing down on us it will already be too late.
As Michael Hudson writes in his magnificent book … and forgive them their debts (Lending, Foreclosure and Redemption from Bronze Age Finance To The Jubilee Year) debt write downs were a regular feature in pre-classical Suma and Babylonian societies. Far from creating a crisis, such write downs “prevented a crisis from happening and preserved stability”. Violent revolutions and attempts to overthrow the established order as witnessed from classical times until the present day were not a feature of bronze age society. The system of debt forgiveness (regulation) prevented the polarization of society into the 1% versus the 99%. Revolutions didn’t occur because economic governance was judged to be fair.
If the ancient horizon of the bronze age is too far to look then an example in living memory may suffice. In the 1950’s debts incurred by Germany during the Nazis period (except for wages) were written off. Again, no revolution instead the German economic miracle. In sharp contrast to GB’s fate where the debts very much remained in place and as a result, the decline and destruction of our manufacturing base.
“In that case we have bank failure….”
We have a form of bank failure anyway…. banks awash with cash lending on over-priced property, which will have consequences at some stage. As John Adams suggests the market will rebalance. Whether we have a chaotic rebalancing or a more gradual one will be dependent on getting this sort of issue right in terms of tenancy conditions.
I have to say I’m appalled by the cynical assertion of your lawyer, name calling critic, who considers you a pillock for assuming that a policy announcement means what it says rather than being an empty manifesto promise which nobody intends to honour. But, sadly I don’t find it surprising. This is the level that Westminster politics has sunk to.
A gradual rebalancing of the property market could probably be best achieved by increasing the stock of decent public sector housing. This would necessarily be a gradual process simply because it takes time to do it.
There is a balance of public and private sector housing availability which will ‘naturally’ lead to fairer outcomes. Would that someone would try to achieve it rather than jumping on the class warrior seesaw. I wonder if Labour Party strategists have any idea how many of their would-be supporters have their pension prospects tied into the property rental market ? The mess which is the property market is inherently a symptom of the free for all of the privatised deregulated pension industry.
People should not be crucified for having made rational financial decisions, the fault lies with bad government policies and the undesirable effects of these policies will not be rectified by more bad policies.
There used to be a law relating to a tenanted property that the owner could only insist on evicting a tenant if they intended to live there. If they wished to sell otherwise the property had to be sold with a sitting tenant. Does this no longer apply ? I don’t see that needing to pay death duties alters that rule at all. It would be a responsibility of the executors to dispose of the property with sitting tenant in order to settle the estate of the deceased landlord. Does that raise some sort a problem ?
John Adams says:
“Richard, I have no wish to see another bank failure……..”
Prepare to close your eyes at short notice 🙂
May Inenlighten you re banks writing off they don’t have to since the Enterprise Act in 2001 as they seize the property down value it using ‘firesale’ Fast sale valuation techniques creating negative equity on the owner and then set about seizing his other assets and his home.
The law has been screwed since that Railtrack attempted robbery and the likes of RBS Natwest GRG (variously renamed) section and the spawning of the practice to other banks is undermining trust in banking and lending to the great detriment of the country’s entrepreneurial family’s and communities.
With the three headed dog in charge ask the Irish how their Ulster bank loans are being handled. The law needs fixing
Could you avoid the tenant having to be evicted by having some kind of insurance against this? The insurance would work by putting a lien on the property so when it is eventually sold the insurance company is paid back, or else the landlord’s children could pay it off gradually out of the rent money. You’d have to make it the law that this sort of insurance exists and is in place on all relevant properties (ie. ones not owned by a company).
I think the answer to that is no
How much do you think that would cost?
The numbers are not that different from life insurance, with the difference being that the benefit sum is eventually paid back (see my original post), so I guess the premiums would not be greatly different from those for life insurance. However I’m not an insurance expert or an actuary, so I don’t know.
Maybe you don’t then know how much life assurance in big sums in elderly people costs…..
This is a hard one but only made hard because of bad ideas. I work in the social rented sector and can see that giving tenants more security is a good thing. However, to disable any private landlord from having some final say in their property just does not sit right with me at all. There has to be reasonable push and pull in all policies.
This issue is about the supply and demand of housing – not necessarily how tenancies are managed. I think all private sector tenancies could be made a bit more secure and put better safeguards in for tenants so that the ending of a tenancy is more drawn out giving the tenant(s) time to plan and react in order to get a new home. But wouldn’t be nice if there were enough alternatives homes to go and have a look at!?
I think there is more room for improved local state intervention in tenancy management and also more needs to be done to deal with rogue landlords by local housing standards units who often have their hands tied by law that seems to protect landlords too much. So, invest in better tenancy regulatory capacity in each town etc., I say. That is also an investment in jobs and housing quality.
I can think of much better things a Government could do rather than propose bad law like this. Here’s a few:
1) Enforce the building of more affordable homes by:
a) Brown Field Land Remediation Quantitative Easing:- there is so much contaminated brown field land lying around that the crappy markets and greedy developers don’t want to deal with so Government would be better off paying for it to be cleaned up and tying that to the development of new affordable rented housing. The Tories got rid of the last BFR grant scheme under austerity – Great! BTW – using up brownfield would give greenfield development a rest.
b) Increase the grant rates from Homes England for affordable housing to about 30-35% of development costs per unit (the same rate of subsidy you can get by using your RTB receipts).
c) End the stupid rules for Council RTB receipts that means that unspent money has to disappear into Central Government if it is not used within a certain time. It must be put back into building replacement affordable homes by law – no exceptions.
d) Allow Councils to combine RTB receipts and Affordable Housing Grant to build new homes to increase the subsidy per unit. Currently you are not allowed to do this although RTB and AHG funding can be used on the same scheme. WTF? Why?
e) Put a time limit on how long property of any kind in inner city areas can be held unused and then enable a local authority CPO (Compulsory Purchase Order) to get its hands on it and turn it into affordable accommodation. CPO funds could be augmented by RTB or AHG (or both). This is the only time I would seriously think about getting unhelpful property owners by the scruff of the neck and make them do something useful with their asset or make them lose it. Our communities are blighted by their speculative buying and owning and disregard for how it looks or what state it is in.
As for Labour – or should we call them the ‘The Trad Left’ – I am getting a bit sick and tired of them flicking the peas around their plate and not tucking into the main ‘entrée’ so to speak on many issues.
I am losing my patience Jeremy! Are you listening?
Again I will ask – how much does it cost to start a new political party? We need a new Left. That’s what we need.
Your policies make complete sense
I am not the person to found a political party I am afraid….
I know you position on politics Richard and my question was not specifically aimed at you who do enough already. Maybe one of your other contributors do?
Maybe I should ask TIG?!!
The TIG is not on the left…..
‘The TIG is not on the left…..’
Indeed, but they might know a bit about how much money they need to raise to become viable.
I could not work with Chris Leslie
Rarely has a man who knows so little about economics had an economics brief
I’ve been renting for over 15 years and I love long term tenants. The thing is how can I get my property back reasonably easily should the need arise? Section 21 can still take over four months even using the accelerated procedure with no hearing and no cost enforcement against the tenant. In the only case where I have needed to use it in those years, a minor cannabis factory was the reason. The failure to pay rent came next. So the service went in in August 2018 and I finally got it back end of January. The property was out of use for a further month to clear out the filth, and the property is now rented out to a lovely family who I hope will become long term tenants without the use of force on me.
Can we not have a simple low-cost tribunal system similar to that set up for Leasehold disputes?
This kind of playing to the gallery politics smacks of tenant deposit legislation. Before those rules came into force shorter term tenants 1-4 years not only got their cash the same day as their check out but had an added bonus of 5-6% compound interest accumulated in their segregated account. So I stopped taking deposits with all that extra risk, and just increased rents slightly to adjust for no deposit.
Another from former Labour leader Ed Miliband who proposed that rent increases should be capped even between tenancies, and this has resurfaced again. I’m like many other landlords happy with their good long term tenants we tend not to put up rents much or not at all. We wait instead until the tenant decides to leave and then review the market at that point. So this, if enacted, might force a mandatory review at least every year of the rent, instead of reviewing on the re-let.
M
I have to say that I rented long term before I bought and I never had a bad private landlord in York and London where I lived previously. And during both tenures, the rent did not rise – we lived in the same flat in Forest Hill , Lewisham for 4 years. All we did was work with the landlord if there were any issues.
But we were lucky I suspect too. Mind you the the other tenants we lived next to were another matter!
@Marcus Atraius
In Scotland, thanks to the SNP government, we now have a low cost tribunal system which is aimed at simplifying the process.
The tenancy deposit legislation is aimed at those landlords and letting agents who played fast and loose with deposits. Contrary to your point about tenants losing out on interest accrued on their deposit, it was common for interest on deposits (and in some cases the deposits) to be misappropriated by the landlord, or their agent. The new system has been working well in Scotland for some time now, with the best and most used Tenancy Deposit Scheme being operated by a not-for-profit organisation.
The private rented sector will be reduced if sufficient appropriate social housing is built, in which case it may remain to serve an increasing number of of mobile workers.
@George Gordon
Scotland is usually ahead generally in these matters.
I’d love to build social housing and the council where I am based is sitting on a large land bank of 1 – 2 brownfield house plots that are uneconomic for most developers including the council which alas has recently handed back over £80 million in CHS receipts as they didn’t have a housing policy, this must change it’s almost criminal.
M
I think a first public statement of policy might be expected to be incomplete.
My own view is that the owner-occupier of a property who lets a part of it could expect to be treated differently to a buy-to-let professional landlord with multiple properties.
They and the banks have ravaged the housing market for too long.
A property business that becomes unprofitable in a changing market – tough. Does capitalism believe in the supremacy of the market or not?
Rhetorical question – it preaches sacrosanct markets while doing everything possible to beat, play and control them to benefit only themselves – 1% of the population.
Buy-to-letters are as much a scourge as investors who leave properties empty to increase demand or bank land to keep prices high.
A society that doesn’t recognise the basic right of every person to life, shelter and food has no legitimacy.
A pox on the 1% and their enablers.
The amount of legislation that’s come in in the past 20 years is proportionally hardest on the small landlord 1-5 properties who in my opinion care most as their income are so dependent on the few houses. This swing accentuates the house sell offs of buy to let’s into the hands of the biggest landlords who have the skill at stringing out and manipulating tenants in their favour eg soggy flooring due to a leaking boiler that needed restarting each time to get a shower – the corporate is approved by the university etc but will only make a unknown settlement at the end of the 12 month tenancy.
This undermining of the numerous small private landlord sector undermines the stability of the country as landlords are one of the most stable of professions as they are not reliant on a single paidincome.
Landlords also employ the many tradesmen in the loca economy MMT style.
Never have small landlords had so many ways to be put in prison whilst a corporate gets nothing but an excuseable slap just like PLCs. Double standards.