It is testament to the UK’s dysfunctional housing market that over the course of coronavirus-dominated 2020, rent for private tenants actually increased by 1.3%. This news is of course nothing new; the trend over the past six years shows a rent increase of 10%, but what the latest rise demonstrates is that a bleak economic picture doesn’t automatically lead to landlords being out of pocket.
This has been aided by government support measures for homeowners and landlords during the pandemic. The stamp duty and mortgage holidays provided by the UK Government have helped to increase house prices and stop people defaulting on their mortgage repayments. Contrast this with the Government’s policy towards renters, with their refusal to put in place rent controls or provide an equivalent ‘rent holiday’ for the duration of the pandemic, and it becomes clear that this is a political choice. The begrudging way in which the eviction ban was extended only at the eleventh hour, without which thousands would have been left homeless, further highlights the difference in treatment between renters and landlords.
‘A partial blueprint’
The way to tame the housing market and support renters is for bold government intervention. Luckily for housing campaigners in the UK, a partial blueprint has been provided by Berlin, with their parliament passing legislation in January 2020 to freeze rents. This legislation, by Western standards, is radical: a five-year rent freeze for all private sector homes built before 2014, with rent prices backdated to June 2019 in the first phase. What sets this legislation apart from similar rent freezes in cities like New York, however, is that the freeze still applies between tenancies. This removes the incentive for landlords to evict tenants because they want to hike their rent up.
The legislation is, however, only a partial solution. The overwhelmingly good news is that Berlin’s average rent has dropped by 7.8%, but the stock of eligible homes has been depleted, with a 30% reduction since the start of the scheme. The lack of supply of eligible homes was made inevitable by the Berlin Government’s decision to exempt homes built after 2013 from the rent freeze; intended as a compromise to housing developers, ostensibly to enable them to continue building at a profit. However the effect has been to create a two-tier housing system, where those unlucky enough to live in a modern property and unable to find a ‘rent freeze’ property to move to, are forced to pay extortionate rents.
‘A permanent transfer of power to ordinary Berliners’
The solution for Berlin is to go further. To address the two-tier system, all properties need to be made eligible for the rent freeze and to solve the inevitable problem of a timid private sector unwilling to build, the public sector need to step in to build more social housing. An initiative with significant support in Berlin is for the Government to expropriate the property of the city’s large corporate landlords; a measure initially backed in 2019 by the Greens and Left Party, but vetoed by the Social Democratic Party (SDP). Now momentum is gathering for a referendum on the issue. The ‘Expropriate Deutsche Wohnen & Co’ campaign group far surpassed the 20,000 signatures required for the Berlin Parliament to consider the issue. After this proposal is almost certainly rejected, 170,000 more signatures are needed for the referendum to take place and, with two polls showing support for expropriation at between 44% and 55%, there is a good chance this could become law.
The timeline of events is more than a little interesting. It is no coincidence that after the expropriation campaign was launched in April 2019 and signatures were soon gathered, that a time-limited rent freeze was voted into law just nine months later. Seen through this lens, the SDP’s backing of the rent freeze was merely an effort to stave off the more radical expropriation proposal, which would enable a far more permanent transfer of power to ordinary Berliners, enabling them to control their rent rates for the foreseeable future.
But whilst renters in Berlin are keen to go on the offensive, they must also stand ready to fight a rearguard action from powerful interests seeking to quash the rent freeze. The German Federal Constitutional Court is expected to rule on whether the law is unconstitutional in July this year. This must serve as a warning to housing campaigners in the UK that property developers and landlords will stop at nothing to oppose radical action being taken. To counteract this reactionary influence, renters must constantly push for more radical measures to be adopted.
‘An opaque and convoluted process’
In the UK the policy of rent control has overwhelming support, with 74% of the public in favour of some form of rent cap or freeze in a recent YouGov poll. Yet the UK is almost unique in Western Europe in having no form of rent control, with all regulation abolished in 1989. The only proposals put forward to control rents have occurred in Scotland, whose devolved government established ‘rent pressure zones’ (RPZs) in 2016. In a similar way to Berlin, this legislation was created as a compromise to stem growing calls for action. But unlike Berlin, the compromise was designed to be deliberately ineffective, with an opaque and convoluted process whereby councils have to apply to the Scottish Government to introduce RPZs and then submit detailed findings, despite having insufficient resources to do so. The reward at the end of this process isn’t even a rent decrease, but a limit to the level it can be increased. It is little wonder then, that no council has successfully introduced an RPZ.
Renters across the UK need to organise within tenants’ unions, like ACORN and the London Renters Union, and be bold in their demands in order to bring about real change to the housing market. There have already been small victories as a result of collective action, with universities being forced to cut rent, evictions being stopped and campaigners taking the first steps to introduce rent control in Scotland. As the number of homeless people on our streets continues to rise and the social housing waiting list swells to 1.6 million households, it is essential that these victories are built on and lessons learned from the success of Berlin so that we may put an end to our housing crisis.