Tenancies of unlimited duration & tenant setiment

The Week in Housing 24/06/22

Another month, another major change to policy for the private rental sector. Under the Residential Tenancies (Amendment) Act (2021), Part 4 tenancies are now ‘tenancies of unlimited duration’, a phraseology that will remind ‘80s children like me of the term ‘rodents of unusual size’ from the film The Princess Bride. From the 11th of June, tenants enjoy indefinite tenancies. This means that after 6 months in a tenancy, you can’t be evicted without reason. In particular, at the end of 6 years the landlord no longer has the right to terminate the tenancy without reason. To ensure things are as confusing as possible for tenants, tenancies that began before the 11th of June are still under the old regime.

In response, Michael McDowell published an opinion piece in the Irish Times. I wrote just a couple of weeks ago about my frustrations with some of the discourse around the PRS, and this was another example of how far we have to travel to get to a place of serious debate.

According to McDowell, the new legislation will ‘damage the private rented housing sector in a radically misconceived way’. The ‘damage’ in question is spelled out as follows:

“In short, private landlords can no longer decide to end a tenancy on any notice period to, say, re-let the property to a more distant relative or to anyone else of the landlord’s choosing (for instance, a prospective employee, a deserving friend, a cousin or an in-law other than a parent-in-law, or a business partner, or some other relative or person whom a farmer-landlord intends to make an heir)”.

So the price we pay, as a society, for bringing about indefinite tenancies, is a ‘farmer-landlord’ won’t be able rent a property to a random person they intend ‘to make their heir’. To be clear, McDowell’s hypothetical farmer-landlord can still evict a tenant if they want the property for any of the people who are actually likely to be their heirs, e.g. their children, partner, spouse, parents, parents-in-law etc. But this list is not exhaustive enough for McDowell.

This left me wondering if McDowell inhabits a world akin to a Victorian novel, in which strangers claiming to be long-lost second cousins turn up out of the blue wishing to be made the heir of an unsuspecting farmer-landlord.

On a more serious note, he goes on to make the familiar argument that ‘Buy-to-let investment has been made radically unattractive for private landlords. The natural consequence has been an exodus from the market by those private landlords.’ As I noted a couple of weeks back, this is an important issue and is central to the homelessness crisis. But as an important issue, it deserves to be debated in a serious fashion. It is true that landlords exiting the market is a cause of homelessness. But it is also true that insecure tenancies are a major driver of homelessness.

Indeed, the homelessness crisis, and the central role of the PRS in it, began long before the recent series of legislation to strengthen security of tenure. Homelessness caused by landlords selling properties, as well as other issues with insecurity in the PRS, was a major drive of homelessness from at least 2013/2014. Reform of security of tenure only began in earnest in 2017.

To be clear, it is certainly true that there is a tension between strengthening tenants rights and landlord investment. But the challenge for housing policy is precisely to navigate these difficult trade-offs and tensions, rather than arguing for a status quo that everyone knows is failing.

Having said all that, I am not completely convinced of ‘tenancies of unlimited duration’ myself, but for the opposite reasons. Tenants can still be evicted on a number of grounds, including sale or refurbishment of property, or family use. The recent legislation gives tenants a kind of paradoxical permanent insecurity, rather than any qualitative progress in security of tenure. I would have preferred to keep Part 4 tenancies at six years (or even four to be honest) and eliminate all grounds for termination other than rent arrears, undue damage to the property etc.

The importance of security was once again underlined by Threshold’s annual Tenant Sentiment report, entitled We are generation rent and published yesterday. There’s loads of important data and analysis in the report, but on the issue of security it finds that 44% of tenants surveyed stated they did not feel secure, with just 38% saying they do feel secure. Some groups, such as lone parents, feel particularly insecure. Returning to the issue of indefinite tenancies, the report says:

“While the Government increased security of tenure by creating indefinite tenancies, this does not seem to have had a positive impact of people’s feelings of security in their rental home. This may be due to the fact that a landlord can still evict a tenant on a number of grounds where there has been no wrongdoing by the tenant”.

This chimes with the now very large body of international evidence in suggesting that certainty, predictability and control are the key issues as far as security goes, and I would guess most tenants would take six years of certainty over a lifetime of uncertainty.

The report also suggests that feelings of insecurity reflect the underlying reality. Just 22% of those surveyed have been in their current home for 6 years or more, and a full 50% have been in their current home for less than 2 years, despite the fact that a large majority of respondents have been renting for more than 6 years.

Another interesting finding is that the vast majority of renters do not do so by choice, again supporting previous research on the topic. 62% said they were renting because they were unable to buy a home. Importantly, though, 20% said they were renting because they could no access social housing, which reminds of the importance of that tenure in terms of responding to the issues faced by many private renters.

All of these issues are becoming increasingly pressing, not just because homelessness is once again on the rise, but also because, as Aideen Hayden noted at the report launch yesterday, renters are getting older. Indeed, Darragh O’Brien, speaking at the launch, recognized the importance of ‘permanent homes’. But it seemed he was referring primarily to homeownership, shared equity and cost rental. It is still unclear whether or not he, or anyone else in Government, sees real secure homes as the ultimate goal in terms of the future of the PRS.

Meanwhile, across the water Westminster published their long awaited White Paper on the private rental sector. Given the major steps forward in both Ireland and Scotland in recent years, e.g. rent regulation, stronger enforcement etc., England and Wales have become real outliers at a European level as they still have a hardcore neoliberal style PRS. The White Paper sets out a legislative agenda to change this. The overall direction of travel is to move towards the kind of hybrid model Ireland and Scotland now have, which we might describe as a mix of a Western European and traditional liberal/Anglo-phone approach to the PRS.

Specifically, the White paper proposes removing no fault evictions, introducing a register of landlords, and outlawing discrimination against rent subsidy recipients. It also proposes a ‘private rented ombudsman’ which would be empowered to hold landlords to account and therefore greatly strengthen enforcement in the sector. You can read Generation Rent’s analysis of the White Paper here. As they point out, although no fault evictions will be ended, landlords will still be able to terminate tenancies on specific grounds, which are likely to include sale or family use, as in the Irish case. Another big omission is rent regulation, which has been recently introduced in Ireland, Scotland, Germany, France and parts of Spain. Unless something radically changes, Westminster will probably end up needing to regulate rents down the line, so they may as well do it now before rents get any higher.

There is one word which to me sums up a parallel between the English and Irish PRS reform projects: piecemeal. Back in 2016 in Ireland, the Strategy for the Rental sector set out a vision for PRS housing. It sought to strike a pragmatic compromise between landlords and tenants, for example introducing RPZs but capping rent increases at a very high rate of 4% and including plenty of exemptions. Similarly it strengthened security of tenure, but not enough to make a real difference. Since then, the Department of Housing has had to continually strengthen rent regulation, security of tenure, and enforcement. Rather than adopting a pseudo-pragmatic approach back in 2016, it would have made much more sense to recognise that with one in five households in the PRS and a housing system beset by structural crises, we were going to need a more radical reform of renting. I would suggest that reforms in England should learn the lesson from the Irish experiencing, instead of introducing half-measures which they will no doubt have to revisit once they prove inadequate.

Events

On the 30th of June Lidia Manzo will give a seminar in Maynooth on housing, gender and financialization. A reminder that the next #SimonTalks seminar is with the ESRI’s Conor O’Toole and looks at rent inflation and rent regulation. A recording of this year’s Simon Brooke lecture, looking at the intersection between domestic violence and housing in Ireland, is now available to watch here. Finally, if you are organising an event be sure to let me know so I can include it here.

What I’m reading

A new book, Contemporary Housing Struggles: A Structural Field of Contention Approach, has just been published by Palgrave Macmillan. There was also a couple of interesting newspaper pieces this week, this one on house price dynamics and this one challenging how we think about vacancy, both in the Irish Times.