Why we need a maximum rent

Housing Benefit hands £35 billion to landlords every year, writes DK Renton. It’s time to put a limit on rents – and far from that being impossible, forty years ago it was the law.

Here’s one idea which would cut billions from the benefits bill, without making the lives of disabled people unliveable. Introduce a maximum rent – to cover all housing, both private sector and social housing – as well of course as all housing funded by benefits.

Such a policy would have many advantages. Here, I’m focussing on what it would mean for welfare budgets. The state spends £35 billion each year on one benefit – Housing Benefit – which is designed not to protect tenants, but to subsidise landlords and keep the cost of all housing high. 

We spend 50 per cent more on subsidising the hoarding of housing, through housing benefit, than we spend on PIP. In London, the average one-bed Housing Benefit flat costs the tenant, and ultimately the state, £15,000 a year. 

If no private-sector landlord was permitted to demand more than £10,000 a year in rent, that measure alone would save the state more than all Labour’s proposed benefit savings. 

There would be wider consequences, too. Wages and rents are linked. For most people, rent is their single biggest expenditure. One of the reasons young activists today spend more time involved in housing campaigns – rather than trade unions, compared with any previous generation of socialists – is that it’s easier to imagine your landlord trying to increase your rent by 15 per cent than it is to imagine winning a 10 per cent wage rise.

If you can have a minimum wage you can have a maximum rent. Set the maximum rent at £7,000 a year, or £5,000 a year – which is after all about a third of the average take-home pay, and why should anyone have to spend as much as a third of their income on rent? – and you’d have such a windfall of savings that the state could rebuild health and education.

At present, on the other hand, some landlords are making tidy profits – particularly from homeless housing involving Houses in Multiple Occupation. This is a sector where it’s common to see homes broken up into 8 or more flats, each rented out for £15,000 a year. Repairs are rare but damp is common. Landlords boast of covering their initial costs and going to pure profit within 6 years of purchasing a new “unit”. In the London borough where I live, there are landlords who hold up to 1,000 homes and pay themselves higher salaries than the highest earners at HSBC or British Aerospace. There is no conceivable way in which people owning on that scale add anything to society. All they do is take.

It’s easy to grasp that we won’t touch landlords in a society where the largest group of businesses in Britain are now buy-to-let companies – and 85 out of 650 MPs are landlords (Labour having more of them, right now, than any other party).

But for 73 of the last 110 years, we had laws mandating rent control. For some of the time, control meant anaemic “no rent rises above inflation”. But eventually – between 1977 and 1988 – private tenancies were based on a “no rent above market rates” model. Because it was introduced before Thatcher and the housing boom, it capped private sector rents at a fraction of what they are now.

What’s more, any private sector tenant who has managed to hold onto their home since before 1988 in fact lives under that system right now. There are, still, around 70,000 people living in that forgotten world of tenant protection. That system is barely ever discussed – it’s invisible to most people most of the time – and yet it shows that the victories the rich have won weren’t inevitable. Nor are successes for our side in the future unachievable. To demand a maximum rent is to demand the possible.