Landlords that provide longer term tenancies (5 years or more) and give tenants more control over their repairs should benefit from less of a tenure bias in taxation in favour of owner-occupation. The most effective way of holding down market rents is to increase the supply of good quality rented housing.
Tenancy terms in the UK are far worse than anywhere else in Europe or the rest of the developed world. In order to turn a house into a home a family needs control over repairs and maintenance and a fair degree of security of tenure.
As a first step landlords could be encouraged by tax reliefs to offer a new kind of 5 year renewable tenancy in which the tenant has full control over repairs and maintenance. The landlord would remain responsible for major repairs, and the homes must meet the Decent Home Standard. Additional tax reliefs could apply where a landlord offers an indefinite tenancy where the rent can only rise in line with market rents in the locality (the ONS already publish a suitable index). The landlord could only end the tenancy following a significant breach, or on exchange of contracts to sell the property.
This would allow the private rental sector to grow, steadily reducing the shortage of supply which is the most effective way of holding down rents. Contrary to popular opinion the returns on investment from rents are lower than other comparable investments (eg in equities), and profits from rental almost all arise from capital gains.
Most problems arise at the bottom end of the rental market, amongst the poorest tenants in the cheapest properties. The aim of policy should be to provide routes out of this poverty and into better quality accommodation, encouraging both responsible tenants and responsible landlords, creating a change in the culture of private rental. The lower end of the rental market requires tighter regulation, and effective enforcement of a Decent Homes Standard.