Renting is smart

Current thinking about housing is dominated by the political imperative to build more homes, whilst — it is hoped — doing something about affordability. The central focus of the Housing and Regeneration Bill is the creation of the long-trailed new house building agency to replace the Housing Corporation and English Partnerships. The Bill will also transfer the regulatory functions of the Housing Corporation to a new Office for Tenants and Social Landlords, as recommended by Professor Cave’s review of the regulation of social housing.

The emphasis in public debate on seeking new ways to help people achieve what is widely seen as a key aspiration, ownership of their home, is completely understandable. But there is a serious consequence of concentrating solely on home ownership: it sends the constant message that renting is the second-best tenure option, thereby implying  that those who rent are second-class citizens, lacking the resources and ambition to own their own homes.

At a time when the world is experiencing the financial consequences of the collapse of the US sub-prime mortgage market — caused by too many people feeling they had to buy homes which they really could not afford — the time has come to take renting much more seriously. We need to ensure that the right policies are in place to enable renting to make its full contribution to the delivery of housing services, and to give real choice to the consumer.

This is central to the work on housing law reform that I have been leading at the Law Commission for the last six and a half years. Although much of our work has been focussed on detailed rules of law (which tends to make the eyes of politicians and policy makers glaze over), the key prizes for government are clear:

• An integrated social rented sector. At present, local authorities have to use one set of rules and housing associations another. Insofar as both are providing social housing for rent to those in social housing need, a level legal playing field would make it much easier to allocate available housing in the most appropriate way. Offers of accommodation in a housing association would no longer be regarded as inferior to placement in a council house. The commission’s scheme would also facilitate new partnerships between local authorities and private landlords.

• Better consumer protection. One of the key problems of the rented sector is that not nearly enough people — landlords and tenants — understand their mutual rights and obligations.

Tenancy agreements frequently mis-state or mislead. The commission made bold and innovative recommendations for the use of model contracts, written in plain language, underpinned by a new statutory framework. These recommendations were recognised by the Cave Review as important for the Registered Social Landlord (RSL) sector, but they should apply equally to the council and private sectors as well. Indeed they are widely regarded, both by landlords and tenants, as key to dealing with some of the negative reputational issues that still dog the private rented sector.

• Flexibility. Nick Raynsford, the Housing Minister who commissioned our work, wanted a legal framework that offered flexibility for the delivery of housing services. The commission has done just that. While the social rented sector continues to provide primarily for those in housing need, it is inherent in the commission’s scheme that the sector can also provide housing at market or near market rent levels. Many RSLs already do this; there is no reason why local authorities should not have the same freedom.

• Asset management. A further, less publicised feature of the commission’s recommendations is that they encourage better management of social housing assets. At least some of the current shortage of accommodation arises from sub-optimal use of what already exists. Adoption of the commission’s recommendations would facilitate delivery of many of Professor Hills’ recommendations made in his report on the future of the social rented sector.

• Hostel dwellers. The commission’s proposals also offer those who accommodate the most vulnerable members of society in hostels, forums or refuges a workable legal framework that enables them to manage often difficult people effectively, while creating a ladder of opportunity to bring them into the mainstream housing market.

A wide range of stakeholders in the housing market, including the British Property Federation, Shelter, the Housing Corporation and Citizens Advice, have expressed strong public support for the commission’s recommendations and have urged government to implement them. The Housing Minister in the Welsh Assembly hopes to implement them in Wales.

Meanwhile, in Whitehall ministers and their advisers currently have their eyes focussed on the new house building strategy. But developing a broader vision for housing policy requires that ministers take renting seriously, enabling the rented sector to deliver its full potential to the housing market.

In this context, the announcement of a new review of the private rented sector, made just before Christmas is a welcome step in the right direction. The Law Commission’s recommendations offer a clear way forward.

Professor Martin Partington CBE, barrister, was a Law Commissioner from 2001-2005. He is currently Special Consultant to the Commission.