Truss Risks Reversing Years of Progress On Renters’ Rights

Aaliyah Harris

October 13, 2022.

It seems that something of a housing policy bonfire is taking place right now in Whitehall.

According to a report in The Times, Prime Minister Liz Truss is shelving former housing secretary Michael Gove’s plans to end no-fault (Section 21) evictions, which were first promised by Theresa May in 2019 and included in the Tories’ last manifesto (writes Aaliyah Harris for the i.).

Section 21 evictions are a leading cause of homelessness and, as long as they continue, landlords can evict renters at any time with just two months’ notice.

This news comes just one day after The Guardian reported the new Levelling Up Secretary, Simon Clarke is cooking up a “planning reset”, which will potentially see a relaxation of requirements for affordable homes to be included in new developments.

Government sources also told The Guardian the target of building 300,000 new homes a year by the mid-2020s had quietly been abandoned. This is something that Ms Truss alluded to over the summer when she took aim at “Soviet-style” housing targets.

I asked the Government whether these reports were true. The Department for Levelling Up, Housing and Communities refused to comment on leaks, but a spokesman did say: “The Government is committed to exploring policies that build the homes people need, deliver new jobs, support economic development and boost local economies.”

Reversing years of progress

For many homelessness and housing experts, it seemed like the needle had finally moved on housing policy when Michael Gove became Secretary of State for Levelling Up, Housing and Communities last September. It felt like their calls to build affordable homes and rebalance private renting in favour of renters had been heard.

Now, with Liz Truss as prime minister, they fear his progressive reforms to private renting and social housing are being thrown onto a policy bonfire which threatens to impact every corner of the housing market: affordable housing, private renting and homeownership.

House prices are currently at an all-time high. Affordability is at an all-time low. Private rents have spiralled and, according to the homelessness charity Shelter, evictions involving bailiffs have increased by 39% on the previous quarter amid the cost of living crisis.

As previously reported, building social housing has been found to stimulate economic growth. It also reduces the housing benefit bill which, right now, sees billions of pounds go from the taxpayer to private landlords because we have a social housing shortage. Ending no-fault evictions gives renters stability and enables them to carry on with their lives and jobs. Affordable housing does the same.

Whitehall insiders are not happy. As the leaks kept coming, one told me by text: “Scrapping these reforms would be a betrayal of renters and voters. Polling shows that people in all age groups and across the political spectrum support increasing security for renters.

“There’s no evidence to suggest that letting people lose their homes through no fault of their own will promote growth. It’s undemocratic and it’s indefensible if this happens.”

‘A betrayal of social tenants’

The Government pledged to cut stamp duty in their “mini-Budget” in the hope that it will stimulate the housing market and wider economy. But rising mortgage interest rates may well soften demand for housing as mortgages become more expensive, so ending affordable housing provisions – which will prop the market up – in the current economic context seems like an odd and, indeed, counterproductive, thing to do.

Another housing expert who usually describes themselves as an “optimist” told me that they couldn’t understand where the Government was coming from. Similarly, Osama Bhutta, director of campaigns at Shelter, said: “Make no mistake, a government U-turn on banning no-fault evictions will pour fuel on the housing emergency and make thousands homeless.

”The Prime Minister has no mandate to shred manifesto commitments and turn her back on 11 million private renters, nor does she have the right to betray over a million households stuck on social housing waiting lists by slashing the already tiny number of social homes that get built.

“The Government should be doing all it can to build the stable, genuinely affordable homes this country needs, but it’s doing the opposite.”

So, here we are. If these rumours are true, perhaps the Government believes that the housing market can withstand the epic stress test currently being placed upon it by inflation and rising mortgage rates. If so, I’d love to know what they can see that the people who have spent years trying to solve the housing crisis cannot.

Key Housing

Related to all of the above is what is currently going on with mortgage rates which are only headed in one direction: up. In recent years, it is private renters who have borne the brunt of unaffordable housing costs, handing over huge chunks of their take-home pay to landlords, while those who could afford to buy homes have benefited from the ultra-low interest rates that have been in place since the global financial crisis of 2008.

However, now poverty experts fear lower-income homeowners could be pushed into poverty. This is because average two-year fixed mortgage rates have risen to 6.43 per cent (according to Money Facts) from around 4.75 per cent in the few weeks since the mini-Budget.

The Government’s announcement of their “growth plan” triggered economic chaos: a run on the pound which caused gilt yields (the interest rate paid on government bonds) and swap rates (the financial products lenders use to provide mortgages) to surge. In short, mortgages are now more expensive than they were before the mini-Budget because it is more expensive for lenders to provide them.

According to the Joseph Rowntree Foundation (JRF), an independent organisation working to end poverty, the potential consequences of this are grave indeed. The JRF is warning that mortgage interest rates of 6 per cent will massively increase monthly housing costs for families buying with a mortgage. If they remain this high, they say, an additional 1,000,000 people and 300,000 families would be pulled into poverty over the next few years.

The political fallout of being seen as the political party who caused mortgage rates to spike could be lethal for the Conservatives. After Black Wednesday in 1992, when Britain crashed out of the European Exchange Rate Mechanism, mortgage rates spiked. At the next general election in 1997, Labour won a landslide majority.

Perhaps that’s why Liz Truss has now said in two interviews – one with the BBC’s Laura Kuenssberg – and another with Sky’s Beth Rigby – that interest rates are “a matter for the Bank of England” and not politicians. This is a mantra repeated by her deputy Prime Minister Thérèse Coffey during an interview with Sky's Kay Burley.

Does the Government understand what has caused mortgages to become more expensive? Or does it not want people to know that they had a hand in it and blame our central bank instead?

And, finally, let’s pause to consider the possible fallout to the Government’s rumoured planning changes which could reduce the number of affordable homes built by around a fifth by scrapping policies which ensure they are included in new developments.

When I logged on to check my emails the morning after the proposals were leaked to The Guardian, my inbox was full of responses from organisations which were concerned. One, from the CPRE, the countryside charity, stood out in particular.

Tom Fyans, interim chief executive of CPRE, said: “Proposals to allow developers to build up to 50 homes without any of them being affordable would be damaging everywhere and particularly devastating for rural communities.

“Housing sites in rural areas are typically small, which means the supply of affordable and social homes could be choked off altogether. It would consign thousands of key workers and young families to the margins of society, turbocharging the conversion of the countryside into a millionaires’ playground of second homes and weekend retreats.”

This made me think of my recent visit to the Lake District, where I met key workers and young people who had been priced out of their community and forced to move away from their families and jobs.

“If the Government wants to grow the economy through housebuilding, it should be launching an ambitious programme of social house building with a large proportion ring-fenced for rural communities,” Fyans continued in his response. “Reducing affordable homes would be self-defeating. Government reviews have shown that if you only build housing for a small segment of the market, it results in much less new housing overall, reducing and not boosting growth.

“The Government seems intent on repeating failed housing policies and laying the blame on the planning system and environmental protections. The reality is that our rural communities are crying out for more – not less – homes for social rent and genuinely affordable prices to prevent destitution and homelessness.”

Fyans is not alone in his damning reading of the Government’s reported intentions to cut what they see as “red tape”. Housing policy expert Rose Grayston agrees. She tweeted: “We could start responding to unmet housing demand – & more importantly need – by building more social housing and affordable housing That would mean MORE planning, not less!”