If you rent your home from a private landlord, it looks like our new Labour Council is about to put your rent up by £200 a year
Croydon Council is consulting on introducing a 'Selective Licensing' scheme for private rented accommodation. Despite the title, there’s nothing selective about it. Every private landlord in the borough would have to pay £200 a year to the Council for the privilege of renting out a property. If they don’t, they could be liable to a fine of up to £20,000.
It doesn’t take a genius to work out what will happen if this scheme goes ahead: landlords who make the payment will simply pass the cost on to their tenants. Lest I be accused of scaremongering, the Council admits this, though the admission is buried 19 pages into its report (“tenants may...be impacted by an increase in their housing costs as landlords seek to pass on some or all of the costs of licensing through higher rent levels”). At a national level, the Labour Party is arguing for the re-introduction of controls to stop rents increasing (a policy which, like many of Ed Miliband’s ideas, is superficially attractive, but which evidence from around the world shows would inevitably lead to fewer homes to rent and therefore higher rents in the medium term), but locally Croydon Labour Party is pursuing a policy which it admits will increase rents. Go figure.
So why is our Labour Council doing this?
Well, it gives two reasons.
First, it says it wants to reduce flytipping and other forms of anti-social behaviour - a laudable aim. It claims that these problems are “commonly associated with poorly managed, overcrowded and low quality private rented accommodation”. Even if this is true, it would suggest that the Council should be doing something about poorly managed, overcrowded and low quality private rented accommodation, not taxing the whole sector. And it is very difficult to judge from the Council’s report whether it is true - little evidence is provided and what is said undermines rather than supports this claim (for example, the report says the private rented sector in the borough is growing rapidly but most forms of anti-social behaviour are declining and it also includes data which suggests that there is little correlation between the size of the private rented sector in different parts of the borough and the levels of anti-social behaviour in those areas).
Second, the Council says it wants to improve the quality of the housing in the private rented sector - another laudable aim. But again, the evidence in its report, both from within Croydon and from other London boroughs that have introduced Selective Licensing, suggests that most properties in the sector are in a reasonable state of repair. There are over 30,000 households in Croydon living in private rented accommodation: last year, the Council received 1,371 complaints (some households probably made multiple complaints so the number of properties complained about is probably lower than that, but set against that there are undoubtedly some tenants who don’t complain because their landlord makes it clear that they will evict them if they do). The London Borough of Newham has introduced Selective Licensing and registered 20,500 landlords, but has so far only banned 18, prosecuted 243 and cautioned 136.
In other words, all the evidence suggests that it is a minority of landlords that are causing the problem, not the whole sector. So why is our Labour Council taxing all landlords right across the borough (a tax which law-abiding landlords will pay but those causing the problems will try to avoid), rather than using powers it already has to take action against those landlords who are not maintaining and managing their properties properly?
Answer: because this tax is predicted to raise over £4.5 million, much of which will fund enforcement action the Council is already taken. It is a classic Labour stealth tax. It goes without saying that there was no mention of it in Labour’s manifesto.
If you want to increase Council spending, you should have the honesty to make the case for higher Council Tax bills. To introduce a tax on landlords which you know is going to lead to some of the most vulnerable people in society facing even higher rents is beneath contempt.
UPDATE: I found out last night that the Government is currently consulting on whether it should stop councils from introducing borough-wide Selective Licensing schemes. It is surprising to say the least that the Council's report made no mention of this.
You can read the Government's consultation paper here (pages 17-18) but this is the key section:
"A major drawback of licensing is that it impacts on all landlords and places additional burdens on reputable landlords who are already fully compliant with their obligations....The majority of landlords provide a good service and the Government does not want to impose unnecessary additional costs on them or tenants who may see their rents rise as landlord costs rise...The Government does not support the use of licensing across an entire local authority area. Such an approach is disproportionate...we believe that it goes against the policy intention of the original legislation (Housing Act 2004) which was designed to tackle problems in specific and strictly defined parts of a local authority area."