What does the government’s longer tenancies announcement mean? (part 2)

What does the government’s longer tenancies announcement mean? (part 2)

The government has announced plans to give private renters longer tenancies. Great news! But as ever, the devil is in the detail.

This is the second of two posts picking through the minutiae of the proposal being consulted on, and looks at how the government plans to implement the changes.

The first part looked at what the government’s new model for renting would be, and found that while it’s a great step forward, there is more work to do.

Implementation

The media coverage set up expectations that the government plans to make three year tenancies the minimum by changing the law. This will now be what tenants think the government will follow through and do.

But three options for implementation are presented in the consultation itself: legal change, tax incentives and voluntary adoption.

Starting with the last option: we know that voluntary measures won’t cut it, because they’ve been tried before.

In 2013, the coalition government launched a voluntary model tenancy agreement, which it said would ‘give tenants the confidence to request longer fixed-term, family-friendly tenancies’.

Did it? Not really. Even if tenants have ‘confidence to request’ something it doesn’t oblige their landlord to say yes.

The result is that, according to government statistics (see chapter three), more than 80% of renters still start on a 6 or 12-month tenancy.[1] Renting families and low-income tenants still have no real option but insecure, short-term contracts.

Tweaking the wording in the ‘how to rent’ leaflet, as suggested as an option in the current consultation, is simply not going to do anything to shift this. If we try the same voluntary approach again we can expect to see the same result.

But hold on – I hear you say – what about tax incentives?

If you’re looking for a fast way of spending bucket loads of cash without achieving much, tax incentives are the way to do it. If you want families and low-income tenants to get longer tenancies, don’t bother.

Why? Families with children and low income renters already face discrimination in the renting market. Tax incentives may encourage a few more landlords to offer longer tenancies to high income, single people, but you can’t target them at those who need longer tenancies most, so they would miss out.

Oh…and they would be crazily expensive. First, the tax break would have a clear heavy cost. Second, in our largely self-assessed tax system, making sure that no one is claiming when they shouldn’t will cost more still.

In other words, to be meaningful this has to be about changing the law, to increase the protections that private tenants get by default.

Hold your nerve

Any change of the law will be fiercely resisted by some. There will be a lot of scare stories and abuse.

For example, we’ve already seen some smokescreen blown up about whether tenants actually want longer tenancies. Some of those who oppose longer tenancies play on worries that they mean tenants get locked-in for the long-term.

But polling for us, by independent researchers, has consistently found overwhelming support for longer tenancies – when the contract is explained in full and renters know they could leave by giving notice. More than 7 in 10 tenants say it would improve their experience of renting for them and their children and would give them a greater sense of control.

Some will also suggest that legal change will make the sky fall in and the market collapse.

The reality is that dozens of other places across Europe and America give tenants a good level of security, and landlords in those places just get on with business. There are even benefits for landlords of having long term, secure tenants.

So, the evidence clearly shows that the scare stories are false.

But the debate ahead won’t just about evidence. It will also be a test of nerve. In the face of fierce resistance, it may be tempting to back away from legislation in the hope of an easy life.

But private tenants are an increasingly important political force. Their expectations have been raised and they’re impatient for change. Anything that under-delivers – like tweaking some leaflet – will leave them disappointed and angry.

So, the consultation marks a major step forward. The model being proposed is a clear improvement on the existing law. But to be truly transformative there is further to go. And to truly deliver and meet renters’ expectations, the only option is for the government to hold its nerve and do it through legal change.

 


[1] Lest it be unclear, the remaining <20% aren’t all on longer tenancies. 4% are on 18 month contracts, and the remainder are described as ‘other’. This is likely to include tenants still have old-school regulated tenancies and those who started renting with no fixed term at all (i.e. on a rolling month to month)

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