Hypocrisy Is a Problem. Bad Policy Is Worse

As a landlord, Ali had ended a tenancy on her East London property with the stated aim of selling it. Weeks later, she relisted it for £700 more per month. The scent of an “economic eviction” would be awkward for any homelessness minister. For one whose government is trying to legislate against these “no-fault” evictions and aggressive rent rises, it was fatal.

Reports suggest Ali may have breached multiple-occupancy rules, so one can’t say she did nothing wrong. But most accept she broke no laws in ending the tenancy. The fixed term was honoured, the statutory notice was met, and landlords (at least for now) can charge whatever someone will pay.

No, her main offence was hypocrisy. That is, of failing to live up to the values she preached and the laws she sought. For that alone, she was right to resign. As with Boris Johnson’s pandemic rule-breaking, when politicians exempt themselves from the rules they desire on others, it fuels perception that laws are just for the little people.

And yet, the reaction to this story leaves me conflicted. Not because Ali’s personal hypocrisy was defensible, but because the ideals she flouted, and the principles her government is enshrining, are themselves wrong-headed.

Unfashionable though it is to say, we’re better off when landlords can use their property as they see fit and can charge the market price. Labour’s Renters’ Rights Bill (RRB) would rip up those principles, banning mutually beneficial deals and piling new distortions on to our broken housing market. It eviscerates two foundations of a functioning economy: secure property rights and freedom to contract.

Labour’s bill scraps fixed-term tenancies and bans “no-fault” evictions, effectively transferring use-rights from landlords to tenants. Once in, the tenant can stay indefinitely unless the landlord proves a narrow set of statutory grounds for possession, such as moving in themselves, intending to sell, or tenant’s rent arrears. Even then, landlords must give up to four months’ notice and often endure lengthy bans on reletting.

Labour boasts that this delivers economic security, especially for young families. But multi-year leases are legal. They’re rare because many tenants want shorter terms, and others won’t pay the premium that compensates a landlord for locking up their asset. So, yes, the government can mandate that landlords provide indefinite leases, but it can’t legislate away the risk of getting stuck with a bad tenant or unprofitable investment. Those risks must be borne somewhere.

To block landlords from using steep rent increases to recover properties, the bill thus adds rent-regulation clauses. Landlords can only raise rent once per year, at two months’ notice, and tenants can challenge the increase in a tribunal, which can cut rent back to the “market value” of local properties. In other words, the bill introduces state arbitration of fair rents. Another new landlord risk.

Economics tells us how the marginal landlord responds when forced to bear new risks: they leave. Propertymark says a third of landlords plan to exit the sector within a year, and 88 per cent have “no confidence” in Labour’s rules. Global evidence concurs. In markets with “just cause” eviction laws and rent regulation — from San Francisco to Stockholm — the rental supply shrinks.

Argentina offers a cautionary tale. Mandated three-year leases and rent caps within them gutted their formal market, driving owners to short-term lets on Airbnb. When President Milei tore these regulations up and permitted completely free contracting over rents and tenancy duration, listings surged back.

Put simply, landlords aren’t sitting ducks. They adapt, often in ways that harm other tenants. Some landlords will raise initial rents, some will sell up, others will switch to short-term lets or skimp on upkeep. In tight markets, they’ll become choosier, using various forms of screening to favour low-risk tenants, with impeccable credit scores and steady salaries.

True, some tenants will win from this new regulatory regime. Those who want to stay put for years, who pass the vetting and whose landlords stick around will benefit, just as Labour says. But the losers will be the mobile — students, contract workers, young professionals — who still can’t afford deposits to buy, and who rely on a healthy supply of rental properties when moving jobs or city.

The bill’s impact on student housing exemplifies this problem. Universities and big purpose-built blocks have been exempted through amendments, but many shared houses near campuses haven’t. Without fixed terms, their landlords won’t be able to promise next year’s cohort a home, wreaking havoc on a churning market. Faced with that uncertainty, many independent landlords will exit.

I get why this trade-off appeals to Labour, politically. Tenants far outnumber landlords, and everyone likes the idea of getting “security” for free, especially given the downsides of the regulations are indirect and often borne by others.

But markets aren’t zero-sum morality plays. Landlords are unpopular largely because our housing supply is sclerotic, resulting in high rents and fierce competition for dwellings as the population has grown. In a healthy market, landlords would compete fiercely on price and quality to attract tenants. Given the fundamentals, they don’t need to.

Labour’s instinct, then, is to regulate these symptoms. To show they care. The beneficiaries will become an interest group fighting to entrench the regulations. Yet the overall consequence, as new losers are created, will be disappointment.

Give it a year after the RRB passes and we’ll be drowning in demands for new regulations: fresh rules to stop landlords “discriminating” against certain tenants, tougher maintenance mandates, and more direct rent controls. Each proposal will attempt to fix problems this bill helped create.

Hypocrisy in politics is corrosive. But the real rot here is the policy itself. This law will do far more lasting damage than the former minister for homelessness.