Could a housing court fix the UK’s rental woes?

The Royal Courts of Justice, London

Last month a group of tenants in Leeds got an opportunity to do something that most UK renters will never be able to do, and something that they probably wouldn’t rush to do either: they stood in a line in front of the courthouse and posed for a photo opp.

In a housing system fundamentally stacked against renters, the group was celebrating a rare victory, successfully lodging a rent repayment order against their unlicensed landlord. As unpleasant as legal proceedings might be, even reaching the steps of the courthouse is uncommon for most renters looking to address a housing case.

With news last week that the government plans to remove Section 21, the housing clause that allows for no-fault evictions, it’s worth asking whether we’ll see more court cases. Increasingly there are signs that a specialised housing court could be the government’s next course of action. Communities Secretary James Brokenshire has registered interest in the policy, and the government finished a major consultation on the matter back in January.

While various renters associations and landlord groups have expressed support for a housing court, a debate is unfolding about whether a court-based approach is the right solution – or merely a way of dealing with a poor regulatory system.

The background here is the decades-long growth of the UK’s private rental sector. The sale of council homes and the failure to build adequate state-subsidised housing, coupled with a decline in home ownership, have diminished the housing supply and stacked power in favour of landlords.

“Everyone is one bad interaction with their landlord away from an eviction”, says Georgie Laming of Generation Rent, who estimates that there are 240 evictions each week in the UK. For Laming, Section 21 exacerbated the already precarious state of the private rental sector, inhibiting both legal enforcement and dispute resolution. And behind closed doors, they explain, landlords have begun thinking about housing courts as a viable replacement to Section 21, or at least the best alternative they can hope for.

The Residential Landlord Association (RLA) is one  landlord group in favour of the move. “The current situation isn’t working very well, for anybody. It’s slow. Housing generally is quite a specialist subject and judges don’t have the right expertise,” RLA policy director David Smith tells me.

The benefits of a housing court are fairly clear-cut: efficient case processing (right now housing cases get lumped in with criminal and civil cases), and a unified complaint process.

“There isn't a set route for tenants and that can make the process more difficult, trying to figure out what route to take, which measures are necessary, which measures might be a bit too much,” explains Nabeela Mowlana, a representative from the tenants union Acorn. Taking housing issues to court under the current system incurs legal costs that tend to dissuade tenants.

Under the current system, if a tenant wants to lodge a complaint against a landlord they go to their local council. But local cuts have dramatically reduced councils’ capacity to bring action against landlords. “Most local authorities don’t even have tenancy relations officers" says Laming.

But for some, council cuts are only part of the problem. The structure of a complaint system means that the work of going after landlords is offloaded onto tenants, says Julie Rugg, a professor at York University.

“At present, a property can essentially be let in any condition, and the onus is on the tenant to complain about those conditions,” says Rugg, who has been pushing for a different solution: a so-called “property MOT” that would mean starting enforcement proceedings before tenants even move in.

“Properties would be assessed annually, and the inspections would be made by a qualified and accredited professional independent of the landlord or the tenant,” explains Rugg. That would mean a private, market-based solution for confronting bad landlords.

A specialised court system would still mean the onus would be on tenants to pursue enforcement issues. While Generation Rent and the RLA are advocating for changes in enforcement alongside a centralised housing court, critics of a court-based solution say that it will perpetuate the current inequalities.

“We think that housing courts [are] a red herring,” says Joe Lane, principal policy manager at the group Citizens Advice. For Lane, the problem is an uneven balance of power between tenants and landlords. “You don’t want to go to court every time [there’s a complaint],” says Lane, who advocates for a public enforcement body and a mandatory redress scheme on behalf of Citizens Advice.

What’s still missing is a system with the teeth to protect tenants. In part, this comes down to law: property laws tend to be much more effective at protecting property owners than they are at protecting those who don’t own property, and instead need to rent.

Jacky Peacock OBE, director of Advice4Renters, wants to see landlords register as a business. For Peacock the current model of enforcement is too focused on dealing with landlords and buildings, and rarely considers the well-being of the tenant. “It’s worth looking at why tenants are unable to exercise any rights, why they’re unable to use the law. They don’t know [and] they’re too frightened,” she explains.

“If we were having this conversation saying, is it better for people to eat in restaurants to use the court system when they get food poisoning, or to have some sort of mediation system with the restaurant, you’d say that’s ridiculous”

Peacock thinks the law should only come into effect when the system fails, rather than serving as a mechanism to deal with inequalities within that system. Housing courts could be a step in the right direction. But even after the repeal of Section 21, it remains unclear just how far the policy would go to confront the problems of the rental property market.


“Without rent control we can’t hope to solve London’s housing crisis”

You BET! Oh GOD. Image: Getty.

Today, the mayor of London called for new powers to introduce rent controls in London. With ever increasing rents swallowing more of people’s income and driving poverty, the free market has clearly failed to provide affordable homes for Londoners. 

Created in 1988, the modern private rented sector was designed primarily to attract investment, with the balance of power weighted almost entirely in landlords’ favour. As social housing stock has been eroded, with more than 1 million fewer social rented homes today compared to 1980, and as the financialisation of homes has driven up house prices, more and more people are getting trapped private renting. In 1990 just 11 per cent of households in London rented privately, but by 2017 this figure had grown to 27 per cent; it is also home to an increasing number of families and older people. 

When I first moved to London, I spent years spending well over 50 per cent of my income on rent. Even without any dependent to support, after essentials my disposable income was vanishingly small. London has the highest rent to income ratio of any region, and the highest proportion of households spending over a third of their income on rent. High rents limit people’s lives, and in London this has become a major driver of poverty and inequality. In the three years leading up to 2015-16, 960,000 private renters were living in poverty, and over half of children growing up in private rented housing are living in poverty.

So carefully designed rent controls therefore have the potential to reduce poverty and may also contribute over time to the reduction of the housing benefit bill (although any housing bill reductions have to come after an expansion of the system, which has been subject to brutal cuts over the last decade). Rent controls may also support London’s employers, two-thirds of whom are struggling to recruit entry-level staff because of the shortage of affordable homes. 

It’s obvious that London rents are far too high, and now an increasing number of voices are calling for rent controls as part of the solution: 68 per cent of Londoners are in favour, and a growing renters’ movement has emerged. Groups like the London Renters Union have already secured a massive victory in the outlawing of section 21 ‘no fault’ evictions. But without rent control, landlords can still unfairly get rid of tenants by jacking up rents.

At the New Economics Foundation we’ve been working with the Mayor of London and the Greater London Authority to research what kind of rent control would work in London. Rent controls are often polarising in the UK but are commonplace elsewhere. New York controls rents on many properties, and Berlin has just introduced a five year “rental lid”, with the mayor citing a desire to not become “like London” as a motivation for the policy. 

A rent control that helps to solve London’s housing crisis would need to meet several criteria. Since rents have risen three times faster than average wages since 2010, rent control should initially brings rents down. Our research found that a 1 per cent reduction in rents for four years could lead to 20 per cent cheaper rents compared to where they would be otherwise. London also needs a rent control both within and between tenancies because otherwise landlords can just reset rents when tenancies end.

Without rent control we can’t hope to solve London’s housing crisis – but it’s not without risk. Decreases in landlord profits could encourage current landlords to exit the sector and discourage new ones from entering it. And a sharp reduction in the supply of privately rented homes would severely reduce housing options for Londoners, whilst reducing incentives for landlords to maintain and improve their properties.

Rent controls should be introduced in a stepped way to minimise risks for tenants. And we need more information on landlords, rents, and their business models in order to design a rent control which avoids unintended consequences.

Rent controls are also not a silver bullet. They need to be part of a package of solutions to London’s housing affordability crisis, including a large scale increase in social housebuilding and an improvement in housing benefit. However, private renting will be part of London’s housing system for some time to come, and the scale of the affordability crisis in London means that the question of rent controls is no longer “if”, but increasingly “how”. 

Joe Beswick is head of housing & land at the New Economics Foundation.