The housing white paper – some positives, some missed opportunities, and some confusion!

The Government’s much vaunted and long awaited white paper was published this week, and it seems to signal a shift in Government thinking away from the mantra ‘home-ownership = Good; renting = Bad’ to a recognition that both ownership and renting need to be encouraged.  That is something that I have been arguing for several months.  This shift is to be applauded.

We should also applaud the Government’s desire to protect legitimate tenants from rogue landlords.  However, there is still no recognition of the need to protect legitimate landlords from rogue tenants. 

The recognition of the value of build to rent schemes in our cities is certainly a welcome new innovation, and this should help to meet the rising tide of demand for affordable rental properties.  However, the white paper is mute on measures to encourage smaller landlords to continue to invest to expand the supply of available properties in the short to medium term.

Since the white paper was released, many of the headlines have centred on Government’s desire to promote longer-term 3-year tenancy agreements to provide a more stable environment for young families living in rental accommodation.  However, the Housing Minister has subsequently been forced to clarify that those longer-term tenancies will not apply to small buy to let landlords, who are often unable to offer tenancy terms longer than 12 months due to limitations placed on them by mortgage lenders and insurance providers. 

The measures to ease the bureaucracy of decision making and improve transparency of local authority planning policy is also welcome.  New housing is desperately needed across the UK particularly in larger towns and Cities where under-supply is driving prices above wage inflation.

It seems to me that the Government is too focused on popular measures which it believes may result in votes, rather than taking time to think fully about the market, and how best to improve fairness and supply over the short, medium and long-term.  For example, the proposed ban on fees charged to tenants by letting agents, risks landlord costs escalating and rents rising above trend as a result.  Already rents are proving unaffordable, with growing numbers of tenants being unable to pass credit/affordability checks.  Anything that makes that harder has to be unwelcome.  There is certainly a need to bear down on unscrupulous letting agents charging exorbitant fees, but a blanket ban which stops all fees will have unwanted consequences.  The Royal Institute of Chartered Surveyors (RICS) has warned that following last year’s increase in stamp duty for landlord investors, the forthcoming restrictions relating to mortgage interest rate relief will force many smaller landlords to reduce their portfolios and for many discourage further investment.  This at a time when rental supply is so restricted (as recognized by the Government) also seems unwise.

So, a mixed-bag of measures which are directionally correct, but when populism has trumped analysis and clarity of purpose.   Yes there are 4 million voters living in rented accommodation, and protecting them from exploitation is absolutely correct.  But, basing policy on the assumption that all letting agents, all landlords and most developers are exploitative risks undermining stability and supply over the coming decade.