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Private rents & rent control – housing is not a designer handbag

oldrentcontrolBlog by Thomas McNeil

The problem

Private landlords, whether they know it or not, are often exploiting the majority of people who are unable to buy a home due to the crippling inflation of house prices and deposit requirements. Not to mention the inadequacy of the minimum wage and job insecurity.

Of course, being a private landlord doesn’t automatically make one a bad person. Everyone has a right to do their best to improve their own economic situation, and landlords wanting to make money from rent are just doing what they can to help themselves and where applicable, their families. However, where they are at liberty to charge exploitative rents, they are the players in a broken market that has not been properly regulated in order to promote fair living standards.

With social housing usually unavailable and home ownership unaffordable for many first-time buyers, renting privately is often the only option for households on lower incomes. At the same time homelessness is reportedly on the rise with more than 55,000 households in temporary accommodation in England. This is 10% higher than a year before. More than 1.8 million households are currently on the waiting list for social housing. This is a 60% increase in the last 10 years. In other words, the housing situation for many people is bad.

In response to the problems highlighted in the report, a previous conservative Housing Minister Mark Prisk called the situation “alarmist…And it fails to recognise that housing benefit provides a safety net which ensures that up to a third of private properties in most areas are affordable to low income families”. Prisk’s response arguably “fails to recognise” that where private rents are inflated, low income families are having to find more of their own money to pay landlords and are struggling with other living costs as a result – less money to eat, to pay bills, to travel to work, to look after children.

Even if individuals are not actually spending more of their own money on housing, Prisk’s comment makes it clear that housing benefit payments plug the gap. This must mean people’s taxes are being used to pay greedy private landlords. In conclusion then, either individuals are being squeezed by over inflated private rents, society is being squeezed, or both. None of these options are good. All are costly, and all see the wealthy get richer at the expense of everybody else.

Housing is not a designer handbag

Housing is not like a designer handbag. People can do without the latter. Whatever your stance on wasting good money on logos, no one can survive without housing. Therefore, like a broken strap, we need a radical solution.

What’s the solution?

Like capping energy bills, the mere suggestion of a rent control policy that restricts the level of rent is labelled as economically incoherent for the preserve of communists. That’s not how I see it, and neither does Germany; a country we often look to with admiration for their sturdy engineered economy. Rent control is a brave political intervention that truly challenges inequality.

Many people are dying or skipping meals because they cannot afford energy bills while giant corporate conglomerates make record profits with executive directors on millions. Capping serves to defeat well paid lobbyists and their false messages.

Similarly, private rents are squeezing many people into a miserable existence; anxiety and poverty. Therefore, in certain areas within the country, excessive profiteering of private landlords should be curbed because with the renters’ desperation, we need strong action. Of course, any such policy needs to be very well considered. It would perhaps be poor form to punish all those who have already invested in buy-to-let property without expecting this radical change. Therefore rent caps might best be at a point that does not cause mortgage defaults. On the same token, the heavy hand of the law should enforce property maintenance obligations on landlords such that they do not scrimp on housing standards to recoup lost profits brought about by any cap. Such maintenance obligations would be particularly important seeing as housing standards are another significant problem spreading plight across rental markets.

Whatever form a rent cap takes in the UK, we should not be scared of employing a policy that pushes back against the often well articulated interests of the wealthy.

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8 thoughts on “Private rents & rent control – housing is not a designer handbag

  1. Nice post. I was checking continuously this blog and I’m impressed!
    Very useful information particularly the last part :
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  2. When was the last time you heard of a landlord being subject to a custodial sentence PD? It almost never happens. And fines are too tiny to be punitive. And my mouth fell open at the notion LHA caps have caused landlords to cap rents. Rents have gone in the opposite direction. We’re working on our proposal for rent control combined with rent stabilisation. Watch this space! There are those arguing for simply re-introducing rent control as it existed under pre-1988 tenancies (‘Fair Rents’) but that would only work if we also got rid of no fault evictions.

    • Granted there are few custodial sentences, but they do happen. Usually relating to breach of fire regs for HMOs . So they are justified. We often read of fines between £5k and £20k for same type offences, or lack of gas certificate.
      Of the Rents I charge. Some have gone up £25 over last 6 years othees have gone down by similar amount. Just dropped one by £50pcm because combination of low LHA and local trust advertising on rightmove at 80% market value. The rising rent problems that you are suffering are not being experienced everywhere, hence my comment that one size doesn’t fit all. Any rent capping must be capable of making allowance for local conditions.
      Be aware, there are always 2 sides to any story. No matter who is telling you. Best friend or adversary.- my other half was volunteer at CAB. had a landlord in one afternoon complaining About damage to property, non-payment of rent, refusing to vacate, lying in court to gain extra time etc.
      Only after hearing the story did she realize he was the other side of the story that she had heard the previous day from a couple in complaining about their Unreasonable landlord who was kicking them out . Normally she wouldn’t have heard both sides due to rules of conflict of interest, until it had gone back to court and then made to look a little stupid when all the info was out.
      Not all tenants are perfectly innocent. Not all landlords are totally at fault.
      I have a property with damp problems.
      Caused by building defect- it is old with solid walls. Past improvements were done ignorantly. Ground level raised against the wall above dpc. Air bricks blocked. Upvc widows added without vents etc. Tenant complained of dampness. Said they had to put heating on full blast whenever they came home. I went round to see problem and my glasses steamed up as I entered the lounge. It was about 25ºC and v humid. I was told it had to be that hot to dry everything out. Including the washing on every radiator. So as soon as the heating went off at bed time the air temp cooled and laws of physics took over, creating rain clods over the sofa and massive condensation on the coldest surfaces available. The walls.
      They called in the env officer from council.
      At this point, with with half the info. I would be labelled a rogue Landlord by the likes of your blog for forcing tenants to live in such awfull conditions.
      Other side: spent a lot of time and money lowering ground and inserting land drains. New boiler. Opening air vents, replastering, drylining, etc.
      Env officer agreed that all was being done to solve issues of damp. Exacerbated by lifestyle.
      I eventualy issued a sectoon 21. Retaliatory eviction of course.
      NO. they asked for it
      So they could get social housing. I gave them a good reference, ignoring the rent arrears sufficient for section 8. Or they would be refused.
      Property has been empty for months because I can’t let it without doing work first, that I cant afford at present.
      Either side could put a spin on it to suit their argument.
      I’m not blameless but I’m no rogue!
      If I could raise my income I would. So would you. Not many folk refuse a salary rise or more benefit!

  3. “Therefore rent caps might best be at a point that does not cause mortgage defaults”.
    Sounds generous. How would this be achieved practically? I have yet to hear a considered proposal on how a rent cap would work with all the variables that are involved.
    The LHA rates having been set at the 30th percentile not only have the effect of capping rents on houses suitable for benefit claimants but also make sure that BCs are automatically priced out of 70% of the market. It is also no coincidence that the cheapest 30% of housing stock is also the worst maintained and of the lowest quality. There is no financial incentive for LL to do anything more than the minimum to relet it. There is no (financial) benefit to improving it beyond that bottom 30%.
    I have tried. It was money wasted. Good quality carpets and underlay as touch of luxury had to be replaced after 2years. They had a design life of 10 years.
    I think a cap could be a good idea if it is done fairly and takes account of local variables. One size doesn’t fit all.
    Iin return I would like to see people who don’t pay their rent are prosecuted for theft. If they requested housing benefit on the grounds that they would pay their rent with it and didn’t then it would be obtained money by deception. The rogue landlords that ww hear so much about are subject to massive fines and custodial sentences. If we want to make things fair then it should be done properly.

    • Rent caps are not a new idea, they have existed for a long time, and, when done properly, have been considered successful. See the German market as an example. The most common criticism of such a scheme, is that where a landlord’s profits are restricted, they let properties fall into disrepair. To remedy this, laws need to enforce that landlords maintain standards or face real consequences. I think most people who have experienced rental markets would strongly refute any claim that there is adequate redress against landlords who do not properly maintain properties. Can you please post here the many cases of prosecution to which you refer? That would help inform the debate.

      In terms of where the cap is set, the focus should be on affordability. The reason rent arrears have gone up is because rents are too high and families cannot afford to eat or pay their energy bills – food banks have increased by up to 400%. It is obviously a worrying thing that many tenants are unable to pay their rent at the expense of landlords, but I know who I feel more sorry for in all genuine arrears cases, and that’s the families struggling to survive rather than the landlord’s profit margins.

      As to your point of removing incentive for landlords, one might suggest that this would be, to some extent, a good thing. If there were less buy-to-lets, perhaps more hard working people would be able to afford to buy their own home as a result of the increased supply. In any event, house supply needs urgent attention through cross-party support for housing construction growth.

  4. Pingback: Private rents & rent control – housing is not a designer handbag | Tower Hamlets Renters

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