Housing: Rented Sector — Motion to Take Note

Part of the debate – in the House of Lords at 4:13 pm on 12th July 2012.

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Photo of Lord Sawyer Lord Sawyer Labour 4:13 pm, 12th July 2012

My Lords, I thank the noble Baroness, Lady Rendell, for initiating the debate. We all know her lifelong commitment to the problem of housing, particularly her work with Shelter. It is very important that we give our time and energy to debating this important issue.

I have an interest to declare. I am not the chairman of anything or a councillor, but I am a member of the angry brigade. I feel quite angry about this, as do lots of people of our generation, although it is hard to be angry in your Lordships' House at quarter past four on a Thursday afternoon when it is not very heavily populated. Some of the speeches, to which I have listened very carefully, have reinforced my disposition. Although they might not be described as angry speeches, they have been passionate about a commitment to doing something about the hugely serious problem that we have with young people in almost every sense of the word.

When I was a young trade unionist, which was nearly 50 years ago, we used to march with our banners, which had two things on them: homes and jobs. Those were the two things that we had least and wanted most. We were never able to get them. I thought about that this week when I noticed the Shard building that has shot up near London Bridge and read that there will be £50 million flats available for people to rent. I do not suppose that many people in your Lordships' House will be putting their name on that list. Looking down from the £50 million flat to the kind of problems that we have in London-and beyond, as apparently you can see beyond from the Shard-it occurred to me that nothing has really changed. For a lot of young people things are much worse than they were when I was young myself.

The average age in your Lordships' House is, I think, 69. It is important that we, as the older generation, work hard to understand and sympathise with what it is like to be young-and there has been a really strong display of this in the House this afternoon-and do everything that we can in whatever way we can to help young people with both jobs and housing, because that help is welcome and very much needed. It is one of those days-they occur to me sometimes-when I wish we could get young people on these Benches debating the issues; let us hear what they have to say. If this happened, the House would probably be fuller than it is today. I might be joined by some other members of the angry brigade if we were able to do that. We recognise the very tough time that young people are having.

The old deal that we were all used to was this: work hard at school, get a job, save a deposit for a mortgage, pay your pension and, at the end, you will probably be okay and, if not, there will be a welfare state that will support you. I am afraid that this paradigm has gone. The new deal is this: work even harder at school and borrow a lot of money-£30,000 to go to university, which you pay back when you get a job, if you get a job, which many cannot do. Pensions are even more elusive, as are mortgages without a wealthy or generous parent, which is probably not available to the majority of people. This is a very different paradigm to the one that we experienced.

What happens at the end of this? What will it be like for these young people in 30 years, with no mortgages, not-so-good jobs and no pensions? Where will they get £100,000 to pay for their care? What will they have to sell? They will not have any equity or pensions. It will be a huge burden on the state. This is obviously not a subject for today; it is for another debate but it is very important. Fast-forward the problems that we are talking about today 30 years and what sort of consequences will we see?

This is what our generation of young people are faced with. I do not think that any of us have a strategy to deal with it. We have piecemeal initiatives and schemes, which have often failed. As people have said this afternoon, sometimes they are flawed but the model itself of actually helping young people either to buy or to rent is broken. It cannot deliver the kind of decent homes for future generations that we need. I have looked carefully at the Department for Communities and Local Government housing strategy to find a big picture. Is there a five-year strategy, as the right reverend Prelate indicated would be very helpful in these circumstances? My conclusion was that there was not. It was cloaked in the language of choice, flexibility and community. A lot of initiatives do not add up to what we want. I do not say that they are not worthy or not worth trying, but they are not adequate to meet the situation and the problems that we face.

The basic problem is that young people between 20 and 35 cannot any longer afford to buy a home in lots of parts of this country. Why is that? It is because there are not enough homes being built for people to live in. The noble Baroness, Lady Scott, has made this point very eloquently. Will the prices, therefore, of renting existing limited supply be higher or lower? It will be higher because it will mean high rents in some places, particularly London, where the amount of money that young people have to pay to live is disgustingly high. If we were to build more homes and bring down prices, the savings that young people had would make adequate deposits. However, with the present price of private homes, most young people have no chance of ever climbing the housing ladder. They have no choice: they have to go to the private rented sector.

There has been an eloquent debate today about what that sector is like. It is a mixed bag. It is unregulated, by and large. Although councils have a role there, it is not regulated successfully. As to individual landlords, I know decent people who have buy- to-let properties. I do not agree with it but it is a matter for them. Decent people buy to let and we need people to provide rented accommodation. However, there are also the worse kind of rogue landlords, about whom we have heard today. Whether they are decent people or rogues, they are all there for a reason: they are all making very good returns in one of the few growth areas of the British economy.

How are rental levels determined? They are determined by the market, which in a country which fails to build anything like the number of homes needed to house its population is going to be fairly buoyant. It will be a good market for sellers of accommodation but not such a good market for buyers. Landlords can charge what the market will take. Tenancies are normally short term, six to 12 months being the average.

Rent levels next to earnings are cripplingly high. In London, a small two-bedroom flat in zone 1 and 2 can cost £15,000 to £18,000 a year, not in the high-quality areas but in the poorer areas. Outside London, in major cities you would be lucky to find a two-bedroom flat under £5,000 a year. That is a lot of money for people working in the kind of jobs that are very important to us. How does a nurse, a postman or a teacher on a salary of between £15,000 and £30,000 afford this kind of rent? It is impossible to do so. We have to wake up to that fact and do something about it.

In London, in the main, unless young people share or live in one room, as many do, they move back to the suburbs and join those families affected by housing benefit. They pack their bags and they have got to go. What does that mean for the nurses that I was talking to when I was a patient recently in Guy's Hospital? It means that they have unaffordable travel costs and it is difficult for them to go to work and meet the shift patterns. The nurses come crashing in, worn out by the travel before they even start to look after their patients. That is an anecdote, of course, but it is part of the reality of why we have not got nurses living in London: they cannot afford to rent accommodation.

All these problems arise before we examine the space and quality of accommodation, for which we have no standards. We know that standards are certainly very poor at the bottom end of the market. Some landlords seriously overcrowd their properties and only a few good local councils have the money or the political initiative to do anything about it. The quality of the space in which you live is as important as the street in which you live, and I get angry about young people being shuffled into small, inadequate accommodation without proper facilities and having to grow up in that kind of environment. It never happened to me and I do not see why it should happen to this generation.

Rightmove has said that in a double-dip economy there is a rent rise bubble as landlords push through even higher rents, God forbid. One in three tenants now spend more than a half of their take-home pay on rent. Can you believe that? Rightmove, which wrote the survey, says that there is,

"unique evidence of a rental squeeze that may be leaving some tenants with little or no headroom".

Few are renting because they want to. The noble Baroness, Lady Scott, put forward different figures, although we can all look at different reports. However, according to the Rightmove report, 56% of people are trapped as renters and forced to pay landlords because they cannot access a mortgage. It is really serious if that is the case. If 40% or 50% of tenants do not want to be in rented accommodation but want their own home, should we not tackle that situation as a society?

It is now said that housing benefit may be removed from the under-25s. If that happens, it will hit about 300,000 young people, remove a vital safety net and push more young people into the ranks of the homeless.

What will happen to this problem? It will get worse, I am sad to say. The Joseph Rowntree Foundation forecasts that the number of new home owners will fall from 2.4 million to 1.3 million in eight years. This will mean a need for 1 million more private landlords because the public sector is not going to house people, and 1 million more young people looking for private rents, which will probably be unaffordable.

What are we to do? With respect, it is probably too late for this Government-I am not saying that the previous Government were brilliant, either-to have a major housebuilding plan of the kind called for by the right reverend Prelate. I am confident that a new Labour Government would at least have a chance of putting tenants in private rented accommodation, which would include longer term leases, registration of landlords and decent space and accommodation standards, among other things. I address my remarks to my noble friend on the Front Bench, with whom I am glad to say that I have been friends for many years, almost since I was marching with my banners-not quite but not far off. We really need to accept that the present model does not work. In opposition, it is time to think about the bigger picture and to ask the questions.

What would we need to do to provide a home for all those who wanted to own one? What would we need to do to give those who did not want to own a home a choice of high-quality options at affordable rents? Those are two really simple but very important questions. I hope that the Labour Party in opposition will work on this and that we will not go round the same paradigm, doing the same things and trying to patch things up when, in reality, nothing much really changes and for many people things get worse. I honestly believe that this debate is more important than bank reform. It is more important than the Leveson inquiry. It is even more important than House of Lords reform.