Why have we let side-hustle private landlords seize control of our housing – and our politics?

The Guardian

2 days ago

In the 1970s, private landlordism in the UK was a fringe part of the market – and a dying one. With council housing plentiful and house prices within the range of those with decent, working-class jobs, we did not need private landlords. In the mid-1970s, the Conservative Policy Council had written that their decline was 'quite irreversible' and that within a generation they would be 'as extinct as the dinosaur'.
This prediction has proved to be among the worst ever made about the UK housing market. Since then, our reliance on private landlords has exploded. They are now the first port of call for everyone in the market who cannot afford to buy: students, graduates, families, pensioners, refugees and more. There are 2.8 million private landlords in Britain – almost twice as many people as work for NHS England and almost four times the UK's entire workforce of teachers.
How did we go from one extreme to the other? We chose it.
In 1979 Margaret Thatcher arrived with a new vision for the country. As she defunded and sold off council housing, her plan was that the private market would take its place. A big-bang deregulation of private renting in 1988 swept away rent control and introduced short tenancies where the tenant could be evicted at the end without the landlord needing a reason.
Her expectation was big, strategic investment from the corporate world – there was demand for rented housing, so there would be supply. Competition would drive up standards. The state just needed to get out of the way and let it happen. But instead, something else happened.
In 1996, 'buy-to-let' mortgages were launched, targeting everyman investors with a bit of spare cash. Previously, the only way to build up a property portfolio was to take out a commercial mortgage. This new product was available to anyone with a deposit, the repayments were interest only and the mortgages could be written off against tax. This came at a time when a global collapse of interest rates left lots of people without a viable pension plan, which meant it was suddenly the most obvious, and perhaps only, route to financial security.
By 2001, the number of private landlords had exploded, but a survey revealed that only 9% of landlords saw the profession as their full-time occupation. It was the dawn of what the lawyer and writer Nick Bano terms 'the small-time side hustler'.
Today, we live in the wreckage of this policy failure. The thirst for investment assets has driven house prices far beyond the reach of ordinary first-time buyers, especially in big cities. Meanwhile, rents have soared – as landlords make use of Thatcher's 'no-fault evictions' to create an effective ratchet system, where they can quickly and easily evict tenants in favour of whoever can pay the most.
We have some of the lowest protections for renters in the developed world, and are, according to the London School of Economics 'at one end of the international spectrum on rent control' – ie the end that gives most freedom to landlords. The consequences of this are plain – people on lower incomes can no longer afford to live in the cities where they need to work; those who fall into homelessness are stuck in temporary accommodation indefinitely; and pensioners and families who cannot buy or find council housing are left without security.
It is a great failure of policymakers of all parties over the past 35 years that they have simply sat back and let this happen.
All of which brings me to Rushanara Ali. The homelessness minister resigned last Thursday after the revelation that she had kicked tenants out of her private rental property, before putting it back on the market at a significantly increased rent. This was, in effect, a classic example of the 'ratchet effect' of rent increases, and a major driver of the homelessness she is supposed to prevent.
Ali resigned as minister, but retains the Labour whip and returns to the backbenches, where she will join the Labour MP for Ilford South, Jas Athwal, who was exposed last year for renting out properties with black mould and ant infestations.
They are among 83 landlord MPs in the House of Commons – a list that includes the foreign secretary, David Lammy, and the chancellor, Rachel Reeves. Labour has more landlords among its ranks than any other party, with 43. And this is before we get into the House of Lords – a chamber previously made up exclusively of landowners. There are at least 134 landlord peers in the upper house, although the true number is likely to be much higher – with many holding properties via a trust.
All of this poses a big problem in policy terms. Listen to the landlord lobby and you would imagine that policy has turned decisively in favour of tenants in recent years, with landlords' representative arm warning that forthcoming changes to tax, law and environmental requirements will drive 24% of its members to sell up.
The legal change they are worried about is the Renters' Rights Act, which will abolish no-fault evictions and impose tougher standards for fixing serious disrepair – in other words, attempting to tackle the behaviour of Ali and Athwal respectively.
But these laws have been desperately slow coming through. They are a package of changes first announced in April 2019, under the government of Theresa May. That they took six and a half years and a change of government to finally become law owed something to the Conservative party's fear of its backbenches, as Tory MPs pushed back hard against the removal of no-fault evictions.
We will now get the act, with royal assent likely in September and implementation from 2026. It makes steps towards a more stable, European-style rental market. That it is coming at all shows progress, and perhaps the start of a break in the dominance of the landlord influence in parliament. That it has taken so long shows the control that force has had over our politics until now.
Labour does also appear likely to impose a requirement to bring private rented homes up to a moderate standard of environmental efficiency by 2030 – though this faces continual challenge and was previously scrapped by the Conservatives after landlord pressure. Rental reforms, though, remain off limits, despite support from figures outside parliament such as Sadiq Khan and Andy Burnham. Labour called even limited rent control 'cowardice' before the election.
Over the past 35 years, we have dug ourselves into a pit. The dominance of the rental market by small-time side hustlers makes any reform perilous: if these landlords sell up, those who need somewhere to rent will be left in the lurch.
If we want a functional housing market again, we need a long-term housing strategy that ends our reliance on side hustlers to meet complex housing needs and encourages an economy that treats homes as places to live, not an investment asset to replace a pension. But we are unlikely to ever see such a strategy when it is the side hustlers themselves entrusted to write it.
Peter Apps is a contributing editor at Inside Housing and the author of Show Me the Bodies: How We Let Grenfell Happen