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The private rented sector is blocking aspiration and isolating families

23 January 2013

The private rented sector is no longer fit for the people it now serves. Almost half of those renting are over 35, and the proportion of privately rented homes has rocketed by 69 per cent. As MPs debate standards in the sector this afternoon, we’ll have to recognise that it isn’t just Neil and the Young Ones, but families who typify this part of the market, and it needs to change to recognise that.

The default tenancy is the Assured Shorthold Tenancy, which allows landlords and tenants to enter into short-term agreements with regular rent reviews and the ability for either party to break after six months with one month’s written notice. When they were introduced by the Housing Act in 1988, they were a huge step forward from previously restrictive forms of tenancy. After the horror of rent capping, the new agreements allowed landlords to manage their properties properly, and gave tenants mobility too.

Assured shorthold tenancies were once the hallmark of a mobile property market where young people moved from their rented property to their first home. But they have now become the bane of young families. Anyone who has children knows the difficulty of getting your child into your preferred school. Imagine doing this if you had to move every six to 12 months. People who have mortgages will often decide to fix interest rates for three or four years to give certainty in these uncertain times. Under the current rental system landlords are free to increase their rents every six or 12 months.

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This prevents families from planning or budgeting properly, or putting down roots in their local community. This stands in the way of aspiration and of community involvement. ‘Generation Rent’ needs a change of shorthold tenure so it is more family friendly.

The commercial property sector offers a good example. It has longer tenancies, fixed rent reviews and break dates. A similar change so that tenancies for families in the private rented sector could last for up to six years would offer more security for landlords and tenants. Landlords hate vacant properties as they lose money and attract squatters, while redecorating at the end of a tenancy is expensive. Long-term tenancies would overcome this problem, and for the tenant there is also a real incentive to look after your home if you know you are staying for a few years.

One other change would be for funding arrangements. At present many facility agreements in the private rented sector prevent landlords from granting a lease with a term greater than two years. But this is not commonplace in the commercial property sector, where banks readily consent to longer leases, giving them certainty on interest payments and in most cases increasing the value of the property. The venture that owns the Olympic Village, Qatari Diar Delancey, has advanced plans along these lines.

This change does not require a revolution, but simply an acceptance of both the problem and its solution. When the facts change, so should the way we do business: Generation Rent deserves more.

Jake Berry is the Conservative MP for Rossendale and Darwen. 

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Show comments
  • dalai guevara

    ‘After the horror of rent capping…’

    …followed by a era of unprecedented rent seeking, you mean to say?

  • SimonToo

    The answer is to do away with the Rent Acts and all other artificial controls on leaseholds. Fair dos : leave them so far as they affect existing leaseholds, but abolish their effect on any leasehold created after this coming Lady Day (25th March). It is the gross regulation, downright corruption, of the market that causes the mischief.

  • bb

    To break an AST it’s actually 2months notice after the first 6 months not 1 month. THe practice is still an absolute disgrace leaving low income earners (like myself) to keep honking out several hundred pounds on moving houses. It shouldn’t be this easy to move people out of their homes

  • pigou_a

    Jake – the problem is too few homes in areas that people want to live in.

    More regulations and restrictions on length of tenancies are very unlikely to help increase the supply of homes. If anything it is likely to do the opposite.

    Liberalise the planning regulations, to reduce the cost of land with residential planning permission. This will increase the supply of homes, and increase competition between Landlords. Bad landlords who abuse their tenants will quickly be forced out of the market if there are sufficient alternatives.

    Boles and Osborne are right on this, (and trust me, I don’t agree with Osborne very often).

    Leave increasing counter productive regulations to Labour.

  • andagain

    “The default tenancy is the Assured Shorthold Tenancy, which allows
    landlords and tenants to enter into short-term agreements with regular
    rent reviews and the ability for either party to break after six months
    with one month’s written notice.”

    So what, if anything, stops people from agreeing to longer term tenancies at the moment?

    • The Wiganer

      The banks.
      Mortgages require the use of Shorthold tenancies.

    • SimonToo

      All the various rent control acts. The shorthold tenancy was a specific type of lease devised to cut through all the rent contro; business that bedevilled other kinds of tenancy.

    • Hornblower

      There is nothing to stop an assured shorthold tenancy being written for a longer period than 6 months .in practice it seems the vast majority of landlords opt for an initial 6 months to enable greater flexibility at the end of that period where the tenant wishes to stay.The tenant would automatically have a statutary periodic tenancy which can be be terminated at any time from a rent date by giving 2 months notice by the landlord .
      Should the tenant fail to vacate after the notice period the landord must apply to court for a possession order but this will be automatically granted providing the submitted documentation is correct .But, the judge may grant the tenant a further perid of time (dependant on circumstances) to leave , and the landlord could find himself applying for a bailif if the tenant was still refusing to budge

  • 2trueblue

    One solution would be to ensure that the empty properties that councils have are put back into use more quickly.

    Match immigration to availability of properties.

    When planning permission is given to companies for housing put a realistic time limit on it. Fine companies if they do not build in that time.

    • Tom Tom

      A property has to be empty for 2 years to qualify for 5% VAt on renovations

      • 2trueblue

        Thanks for that. Another thing to campaign about! Another way is to use a builder that is not VAT rated.

  • Matt Sharp

    We need more housing, along with restrictions on who
    can buy them. If someone already owns more than a few properties, they should only be able to buy more if they pay a massive tax.

    This will either act as a deterrent for buy-to-let landlords, thus
    reducing competition for houses and the cost of renting/buying, or if
    they are willing to pay the tax, the proceeds can be used to subsidise
    new house-building (e.g to encourage build-to-let landlords).

    • Rhoda Klapp2

      People live in buy-to-let properties. They are not wicked, they are houses people live in. This is a legitimate part of the housing market. There is not a problem here. Anybody who doesn’t like the terms may look elsewhere. Why would an MP, a tory MP, want to impose rules with unintended consequences on a market that kinda works? Demand with a limited supply is the problem. Only on one or other of those fronts can it be fixed.

      • Matt Sharp

        I agree that “Demand with a limited supply is the problem”. But discouraging excessive buy-to-let would reduce the demand, meaning less competition and hence more first-time buyers could afford somewhere to live on their own. This in turn would mean fewer people competing for rented properties.

    • The Wiganer

      Rather easy to bypass by just starting new companies every few houses.
      How many houses do you need to rent to become evil?

    • Tom Tom

      That is the end of Housing Associations

  • John Moss

    Be careful what you wish for.

    Whilst a tenant can give one month’s notice, two months is needed from the Landlord. This is a fair balance. However, longer tenancies would probably see landlords asking for larger rent deposits and regular rent review provisions.

    What could be considered is something like part 2 of the 1954 Landlord & Tenant Act, (Which governs commercial leases), to allow tenants who want longer terms to get them, but don’t forget that a commercial tenant is liable for the rent to the end of the lease. You cannot simply give notice and leave.

    • SimonToo

      Any tenant is responsible for rent until the end of the term.

  • David

    Whilst recognising the issues described and mostly agreeing with the proposed solution the real problem is a dysfunctional housing market.

    There are not enough houses, there is restricted mortgage availability, prices are too high and the government doesn’t want to see house prices fall significantly.

    Until this is addressed there will continue to be problems.

  • Tom Tom

    “The commercial property sector offers a good example. It has longer
    tenancies, fixed rent reviews and break dates.”…………………………………………………. It is also bankrupting Shops and a major reason for Pre-Pack Administration and vacant High Street locations

  • toco10

    An excellent piece which merits action to provide tenants with more security particularly those with children and who are in the process of creating long term security for themselves and their families.Such action deserves cross Party support to ensure something is done with the minimum of fuss and delay.

    • Tom Tom

      Why wouldn’t a landlord want to offer a longer tenacy without legislation ?

      • Anony-mouse

        It’s mostly to do with mortgage lender criteria. Most BTL mortgages will only allow for up to 2 year tenancies.

  • jorjun

    Labour’s “affordable housing” policy by which I mean looking the other way whilst interest rates descended almost to an EU level. Well that has ended well.

    • telemachus

      so make affordable housing work now
      The poor need it now

      • Colonel Mustard

        Why do you try to drown out every top comment with a pro-Labour/socialist slogan or soundbite? Why not write your own comment? Attaching your tediously predictable slogans to other peoples pertinent comments in every thread is like bullying. It’s like stalking and harassment. The question is why the Spectator tolerate it. Why do they?

        • dalai guevara


          with all due respect: in times of economic growth, the housing market may be left to the general public and developers to grow in line with new expectations on standards – dual flush toilets, solar panels, double/triple glazing, biomass boilers, fitting two dishwashers and so on. In times of economic decline -and we have seen five years of that- it is up to government to provide for those who fall through the safety net. What evidence is there that they are?

      • CharlieleChump

        Central Committee poodle dancing

      • fantasy_island

        Seems to me that your idea of affordable is getting someone one else to pay.

        • telemachus

          We have a duty to our needy brethren

    • eeore

      The answer lies in looking at who the architects of the policy are working for now.

  • LB

    Generation rent has been screwed over by you.

    Student loans. 7,000 bn of government debt.

    Massive taxes.

    Not surprising they haven’t got the money to buy.

    I’m all for longer tenancies. However, you’re going to have to deal with the scum tenant as well as the scum landlord. If you get a 5 year tenancy, how about eviction in a month for non-payment of rent? What about jail for those damaging property?

    You could of course deal with the real problem. It’s demand, and its caused by your failure to control migration.

    • Noa


      Your final sentence is the crux of the matter.

      The rest is simply edging sideways to land and housing control and nationalisation.

      • LB

        The really interesting part, is that whenever they (politicos) post articles about housing, they never ever mention migration.

        Why would that be?

    • dalai guevara

      So what evidence have you seen of a huge increase in the construction of council houses? Yes, council houses…what are those, you might ask – I guess it’s now all down to ‘the market’. Surely, you are usually in favour of that, why not here?

      • LB

        I’ve no evidence of it. I’ve evidence of the destruction of council property.

        If we take Southwark. There’s an estate called the Heygate. Council has evicted the residents, boarded up the estate. One block is a pile of rubble, the rest still standing.

        Nothing is happening.

        That’s council housing for you in lots of places. Poor quality, not maintained, run down, ends up as a sink estate Exceptions to the rule exist, but its pretty much the picture.

        The nice parts, 35% subsidy to the likes of Bob Crowe and Lee Jasper.

        So I’d question, is there a free market for the private sector? Any government restrictions? Hmmm, like planning controls. What about Basel 3? Ah yes, commercial mortgage lending has been ruled high risk. End result, lending has dried up. Regulations. More of an impact, but its a cost government imposes on others, so it doesn’t pay. Other people pay.

        So what about migration? Net migration is high. Increased demand. Never mentioned. Why didn’t you mention migration as a major factor? Without it, would there be a housing shortage? I doubt it.

        Migration itself isn’t all the cause, but its going to be the major one. Other factors.

        1. Marriage later in life
        2. Divorce.
        3. Longevity.
        4. Under use. ie. Big house, one person.
        5. Taxation. If you’ve not got the money because you’re taxed, its always going to be an issue.

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