25 Years ago this month, parliament voted to abolish rent-control in private rented housing. Hated by many, and loved by few – it’s time to take a look at what we’ve lost and gained since 1988.
Rent-control actually dates back to the First World War – a time when 77% of people were private renters.
Rent control – the beginning
In Glasgow, people rapidly moved into the city to work in the munitions factories. Housing was in demand, and landlords took their chance to make a quick profit.
However, the tenants grew tired of rising rents, evictions, and the poor conditions they were living in. A Rent Strike was organised across Glasgow from 1915-16, led by women tenants, involving up to 20 000 tenants..
The rent strike soon escalated into a strike in the factories, as workers downed tools. The Liberal-led Government of Lloyd George wouldn’t have any disruption of supplies for the war effort. Rents were controlled and rolled back to pre-war levels until the war ended.
Rent control and Rachmanism
Through the century, acts were passed amending and modifying controls. Decontrol in the 1950s led to the rise of Rachmanism.
Rachman figured out he could hike rents for new tenants if he could only ‘persuade’ (often violently) his current tenants to leave. This led to the protection from eviction legislation we still have today.
The results of rent control?
Critics of rent-control point to how, since it’s introduction, the private rented sector shrunk down to a rump by the 1990s (around 9%) as landlords preferred to leave their properties empty.
Social-policy types (like me) would also point out that the 1920-1980 period was also marked by the rise of social housing.
Housing and health
Back during the 19th Century conscription revealed the terrible health and physical condition of the Victorian working population. This became known as ‘The Condition of England Question’.
By the start of the 20th Century housing was recognised as being key to health. The niche and nascent social housing created by the Rowntrees and the Peabody Trust became the model for council housing, enshrined as a duty for councils to provide under Lloyd George in 1919.
The Council housing stock grew to a peak of 32% by 1981 before Right to Buy moved much of this into owner-occupation. Tenants, when given a choice, opted for social housing over private renting.
So, what happened after 1988? Well the law came into force a year later in 1989.
The effect of the Housing Act 1988
Private renting started to grow. Again, it’s fate was linked to social housing, which declined in the 1980s under Right to Buy, and then was not replaced one for one by new Council or Housing Association building.
By the 2011 census, the unthinkable had happened. Private renters outnumbered social renters.
Renting has got more expensive. The average rent in the UK is now £743 a month – there is also the growing divide between increasingly hyper-expensive rents in London (and places like Oxford, Cambridge etc.) where most of the jobs are, and the rest of the UK.
A report earlier this year found that rents were unaffordable in a third of the UK for a household (two adults, one child) with an income of £22 000.
In 2008, the cost of owner-occupation was around £4200 a year more expensive than renting. Now renters pay £875 a year more than owners .
Lettings agents, relatively unknown in the late 80s, are also around to add extra fees and charges as landlords become less directly involved in their property.
Renting has, in general, become more profitable. The average return is up to 10%, plus any rise in property value.
So, now that the number of renters is growing and the alternatives (social renting or home-owning) are fading, what will the future be?
To my mind, if the UK can’t figure out how to lower rents and provide greater security in renting, maybe rent strikes will be back to haunt us.
(Picture is of the statute of George Peabody in the City of London)