Ed Miliband has got it wrong on rent reform: he doesn't go far enough

Ed Miliband has got it wrong on rent reform: he doesn't go far enough

In case you hadn’t already noticed, it’s election season. Yes, there may still be (just) more than a year to go until the general election, but the unhappy windfall of a fixed-term parliament is even more campaigning time.

And so any pretence of genuine policy analysis is slowly dribbling out of Westminster.  Both main political parties, schooled in 21st century media strategy, have decided upon their lines, and are determined to drum them into our heads until we are as sick of them as they are.

So if you’re already bored of the “cost of living crisis” and “we have a long term economic plan”, you might consider investing in some earplugs for the next twelve months.

But the pattern isn’t just about mindless repetition: it’s also about attack lines, and when it comes to Ed Miliband, the nature of the Tory assault is quite predictable.

Whenever the Labour leader issues a proposal it is attacked as being one notch short of Communism. That’s what happened when he proposed new regulations on the already-heavily regulated energy companies; it’s what happened when he proposed controlling zero-hours contracts and now it’s happening with his plans to overhaul the rental market.

The problem is that while there may well be elements of socialism in Miliband’s policies (shock horror – left-wing party leader is left-wing!) they are actually, for the most part, rather weak and soggy. Communism this ain’t. In fact, most of his plans tend to involve tightening up existing regulations rather than imposing any new ones. I’m not saying they should be any more aggressive, but please let’s call them what they are.

Take his scheme for landlords and tenants, unveiled earlier today. It has been derided by Grant Shapps as being akin to the system in Venezuela, labelled in the Telegraph’s coverage as “1970s-style” dirigism. Absolute hogwash. On the face of it (and this being election season Labour hasn’t shared the full, gory details of how it’ll work in practice) they seem quite sensible – and probably pretty harmless.

In fact, if I have one criticism it’s that they do not go far enough.

On almost every yardstick one would care to choose (be it lease term length, notice periods or rent price controls) Britain has the least-regulated, least tenant-friendly (or most landlord-friendly, if you want to put it that way) system in the world. Only in Australia are the rules at all similar.*

An example: at the moment landlords have to give tenants a minimum of six months in their property before being allowed to serve them notice. In every other major country around the world, save for Australia, this term is considerably longer. In the US it’s typically a year; in Spain it’s five years, in Belgium it’s nine years and in Germany it’s usually unlimited. In this light, Ed Miliband’s proposal to increase the term to three years hardly looks particularly Communist. Even uber-unregulated financial metropolis Hong Kong has minimum terms of two years.

Rent controls are less prevalent these days, but they’re nonetheless still in place in certain havens of Communism: Switzerland , Austria and New York City to take just three.

In fact, Ed Miliband’s proposal to reform the Landlord and Tenant Act seems pretty sensible. The last time this legislation was changed was back in the 1980s, when home ownership was on the rise and an ever-smaller proportion of people had to rent rather than buy. Today, home ownership levels are falling; an ever-increasing number of people are being forced to rent. There is a serious problem with housing supply.

It is hard to overemphasise the significance of this shift. For the past century one of the primary political objectives for both the Conservative and (to a lesser extent) the Labour party has been to encourage people to own their own home. Up until about 2003 that objective was being fulfilled. Not anymore.

Now that we’re living in a world of falling home ownership, there are two logical solutions. The first is to rail against it, which is more or less what the Conservatives are doing. Policies like Help to Buy are designed to try to reverse the tide, permitting people to own their own home even if the market thinks they shouldn’t be lent the money.

The second, far more sensible idea, is to challenge the notion that home ownership is, in and of itself, a good thing. Many other countries around the world have entirely different attitudes: in Germany many well-off families rent for all their lives. Rather than saving for a house deposit their money goes into pensions and investments, which in turn help support German small businesses.

In Britain, on the other hand, renters are regarded as second-class citizens. Tempting as it is to assume this attitude is somehow intrinsically English and socially-enshrined, in reality it is a product of a century-long governmental push to encourage home ownership. It’s down to tax incentives and regulations over the course of a century. It’s not because “an Englishman’s home is his castle” (by the way, when that phrase was first coined in the 17th century only a tiny minority of Englishmen owned their own home).

That’s why Ed Miliband doesn’t go far enough. Step one might well be pushing the needle of the law a touch in the direction of tenants. Step two needs to be ditching the guiding principle of domestic economic policy since 1918 – that greater home ownership is, under all circumstances, a good thing.

* For more on the international comparisons, read chapter two of this LSE book.