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The private rented sector is blocking aspiration and isolating families

23 January 2013

3:15 PM

23 January 2013

3:15 PM

The private rented sector is no longer fit for the people it now serves. Almost half of those renting are over 35, and the proportion of privately rented homes has rocketed by 69 per cent. As MPs debate standards in the sector this afternoon, we’ll have to recognise that it isn’t just Neil and the Young Ones, but families who typify this part of the market, and it needs to change to recognise that.

The default tenancy is the Assured Shorthold Tenancy, which allows landlords and tenants to enter into short-term agreements with regular rent reviews and the ability for either party to break after six months with one month’s written notice. When they were introduced by the Housing Act in 1988, they were a huge step forward from previously restrictive forms of tenancy. After the horror of rent capping, the new agreements allowed landlords to manage their properties properly, and gave tenants mobility too.

Assured shorthold tenancies were once the hallmark of a mobile property market where young people moved from their rented property to their first home. But they have now become the bane of young families. Anyone who has children knows the difficulty of getting your child into your preferred school. Imagine doing this if you had to move every six to 12 months. People who have mortgages will often decide to fix interest rates for three or four years to give certainty in these uncertain times. Under the current rental system landlords are free to increase their rents every six or 12 months.

This prevents families from planning or budgeting properly, or putting down roots in their local community. This stands in the way of aspiration and of community involvement. ‘Generation Rent’ needs a change of shorthold tenure so it is more family friendly.

The commercial property sector offers a good example. It has longer tenancies, fixed rent reviews and break dates. A similar change so that tenancies for families in the private rented sector could last for up to six years would offer more security for landlords and tenants. Landlords hate vacant properties as they lose money and attract squatters, while redecorating at the end of a tenancy is expensive. Long-term tenancies would overcome this problem, and for the tenant there is also a real incentive to look after your home if you know you are staying for a few years.

One other change would be for funding arrangements. At present many facility agreements in the private rented sector prevent landlords from granting a lease with a term greater than two years. But this is not commonplace in the commercial property sector, where banks readily consent to longer leases, giving them certainty on interest payments and in most cases increasing the value of the property. The venture that owns the Olympic Village, Qatari Diar Delancey, has advanced plans along these lines.

This change does not require a revolution, but simply an acceptance of both the problem and its solution. When the facts change, so should the way we do business: Generation Rent deserves more.

Jake Berry is the Conservative MP for Rossendale and Darwen. 

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