When Liz Truss met her MPs on Wednesday, the mood, by all accounts, was as if there had been a death in the family.
One MP reportedly described “a terrible feeling of sorrow in the room” as backbenchers listened despondently to a leader who has barely been in office a month yet already seems broken beyond repair.
It’s the markets that call the shots now, not the prime minister. Truss will surely have to junk much of her ill-judged mini-budget to placate her new masters, but will even that be enough? A chaotic U-turn could merely strengthen investors’ view that Britain has become a basket case. It’s still hard to envisage the precise mechanism for triggering a general election, but it’s even harder to imagine staggering on like this for another two years. The funereal Westminster mood reflects the fact that many Tory MPs now expect to lose their jobs sooner rather than later, and are beginning to wonder how they’ll pay the bills. To which the nation could be forgiven for responding: well, now you know how it feels.
Rocketing interest rates make this a scary winter for anyone with a mortgage, but arguably even scarier for renters. Rents were already on the rise before this crisis, driven by a shortage of properties as tenants streamed back into big cities post-pandemic. When the pressure group Generation Rent surveyed its supporters, it found 45% of those who had been in their current place for more than a year had been asked to pay more, with cut-throat competition for flats sparking bidding wars and even outbreaks of gazumping. But the big difference between now and Black Wednesday, the last time mortgage rates suddenly rocketed, is that this time renters are more directly exposed.
The private rented sector has almost doubled since the early 1990s, as social housing dwindled and an army of amateur landlords, property moguls and assorted hustlers moved in to plug the gap. Back in 1992, bespoke buy-to-let mortgages had yet to be invented. Now more than 60% tenants have a landlord reliant on one. How will overstretched landlords respond once their mortgage costs start rising, too? Some will surely try to pass the hit on to tenants. Others might get cold feet and try to sell up. A fire sale of ex-rentals may sound like heaven for buyers, but would risk turmoil in the short term for renters competing over whatever’s left.
How realistic is the prospect of buy-to-let blowing up? The National Residential Landlords’ Association surveyed members when interest rates first started rising this summer, and concluded they would only sell up in significant numbers if the base rate reached between 3 and 5%. Rates are now at 2.25%, with the Bank of England due to consider another hike in early November – days after a Halloween fiscal statement from Kwasi Kwarteng, which is supposed to reassure the markets. Given the chancellor’s track record, it feels unwise to bank on that.
What makes all this so politically acute is that renting long ago morphed from a youthful rite of passage into a more permanent life stage, including for families with children settled at school who can’t just up sticks and move easily. Thankfully, Liz Truss this week ruled out scrapping a planned ban on “no fault” evictions, which might have left tenants even more insecure. But a third of renters who voted Conservative in 2019 have already switched parties, according to recent polling for the housing charity Shelter. It identifies a string of Tory-held marginals across the south-east of England with high proportions of unhappy renters, from Hastings and Rye or Milton Keynes North to Filton and Bradley Stoke on the outskirts of Bristol, long a canary in the mine for housing affordability.
Average rents in the city are £1,125 a month, not far off London prices, but Bristolians aren’t on London salaries. Because it’s expensive to buy here, almost half the city’s residents rent, leaving too many people chasing too few flats (one Bristol university is now sending students to digs in Wales).
Under pressure from local rent campaigners, Bristol’s Labour mayor, Marvin Rees, has committed to examining the case for rent controls, or formally capping what landlords can charge. Rent caps have been widely, if controversially, imposed in European cities from Dublin to Barcelona, and the Scottish government has pledged to introduce them in Scotland by 2025 (having already frozen rents until at least March 2023 as an emergency cost of living measure).
In Bristol, a living rent commission has been established to explore the idea of rent caps, and although there’s little chance of it becoming reality anytime soon – that would require ministers granting the city new powers, which London’s mayor Sadiq Khan has already tried and failed to get for the capital – the aim is to build the case nationally. But it’s also perhaps to stay one step ahead of an increasingly desperate mood, in a city where radical Greens nip closely at Labour heels.
Capping rents doesn’t permanently fix a housing crisis: only building more affordable houses really does that, and critics have long argued that squeezing landlords’ profits merely encourages them either to skimp on repairs or sell up. (In Ireland, some blamed a 2017 decision to freeze and then regulate rents for triggering the kind of housing shortage that saw 150 people queueing round the block recently to view one house in Dublin.)
At best it could help the poorest renters keep a roof over their heads while more houses are built, assuming Britain can get over its resistance to building them. But it’s an idea born of desperation whose popularity is best understood as a distress signal, a warning sign of frustration bubbling up in cities that are becoming unliveable-in because more sustainable solutions have consistently been ducked.
It’s this kind of desperation, built up over 12 years but intensified in recent weeks, that gives some otherwise chipper Labour MPs cause to worry.
Can a future Starmer government really satisfy what will be sky-high expectations, not just on housing but on so many other pressing challenges, if all it inherits from Truss is debts and a pile of smoking rubble? The Tory backbencher Charles Walker was brave but right to argue recently that his colleagues should now accept their time is over, and focus on their patriotic duty to leave things in the best possible shape for their successors. The real sorrow in the room is the knowledge that that almost certainly won’t happen, leaving the rest of us to live with the consequences of this madness for some years to come.
Gaby Hinsliff is a Guardian columnist
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