Poppy Terry
Poppy Terry

By Poppy Terry

May’s focus on the power of government is an opportunity for private renters

We should employ the power of government for the good of the people.” Extraordinary words from a Conservative Prime Minister? Or, the articulation of a clear vision from a true One Nation Tory? Either way, the tone set by Theresa May’s keynote speech at party conference last week might mean good things could lie ahead for England’s private renters.

More and more of ‘May’s people’ rent

Why? Well firstly, in her conference keynote speech Theresa May reaffirmed her commitment to help struggling, working class people. Back in August, in her first speech as Prime Minister, she vowed to make Britain a “country that works for everyone”. And in Birmingham last week we heard a vision which includes putting “the power of government squarely at the service of ordinary working class people”.

As we outlined on our blog at the time of her maiden speech, more and more of those struggling families the Prime Minister is speaking to are private renters. This reflects a broader transformation of the English private rented sector over recent years – a sector which has doubled in size and is now being asked to do a fundamentally different job.

A recent report by the Resolution Foundation suggested that a quarter of the households that the prime minister has in her sights are private renters. It also shows that of the ‘just managing’ the private renters are finding it most difficult to manage of all, because they’re struggling with the highest ongoing housing costs – as well as extra costs like letting fees.

Any meaningful pitch the new prime minister makes to these families will need to address their housing situation. We know a big part of that will be about new building and trying to meet their aspirations to become home owners. For Shelter, the priority here will be ensuring that the homes built are of all tenure types, with 50% being genuinely affordable. But realistically it will also need to include a focus on the experience of renting itself, because it’s clear that many of them are likely to live as private renters for the long-term.

A determination to reform failing markets

Equally promising were the prime minister’s words on what ‘employing the power of government’ might actually mean. She made a new pitch for a reforming government that’s role is “Supporting free markets, but stepping in to repair them when they aren’t working as they should.”

We know that the private renting market is one of those markets that is failing to ‘work as it should’ because it is no longer meeting the needs of its consumers – those very same working class families.

These renters, often older or living with dependent children, are desperate for a home they can be confident that they’re going to be able to live in for the long term. But the current renting market – which forces tenants into 6 or 12 month contracts as standard – just isn’t equipped to offer them. As a result, 43% of renting families with children worry that they are going to lose the home they’re living in.[1]

To be fair to the last government, they recognized the problem and did take some determined steps towards nudging landlords towards offering longer contracts, like creating a model longer tenancy and getting buy-to-let lenders to change their policies.

But these initiatives don’t appear to have any considerable effect. An increasing number of renters are experiencing a dysfunctional market and it appears that such problems will only be solved by stiffer reform. It is difficult to deny that, in terms of security, the private rental market is not delivering for consumers. It is not delivering for the ordinary working class people the new government is seeking to help. At one end of the market we see private renters with no bargaining power, in no market position to take on the role of tough market negotiator. At the sharper end, we see increasingly more people failed entirely by the system, with the ending of an Assured Shorthold Tenancy currently the leading cause of homelessness.

The private rental sector in 2016 isn’t fit for purpose for the private renters of 2016. And it isn’t working for ‘May’s people’ – the working class families that are the focus of our new government. As Theresa May said last Wednesday: “a change has got to come”. And for the millions of private renters seeking more security, they’re relying on her to deliver it.

 

 

[1] YouGov for Shelter; base: 784 private renters with children in household, England, July 2015, online, weighted.

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