[Ben Reeve Lewis is having problems in the shower…]
Hot and cold shivers in the shower
Have you ever tried having a shower where the water alternates cold and scalding hot every other minute? That’s been the backdrop for my week as something has gone wrong with our boiler.
I jump in when it is cold enough to wash the shaving foam off of my freshly shaved bonce and when it changes to a temperature hot enough to smelt iron I scream and back into a corner waiting for it to go cold enough to step back in before it swings alarmingly back to the land of hyperthermia.
Frazzy gets in after me and I hear her alternating screaming with swearing. Trouble is we’ve both been so busy we have had no time to stay in for the repair man so this ridiculous dance continues.
Could rent control be good?
Getting a temperature balance right is important in so many areas of life. I read an informative piece in The Guardian Housing Network this week by Islington Councillor James Murray about the balance needed between the landlord’s need for a profit and the tenants need for security.
This seems to be a growing call from many areas.
One of the advantages of constantly surfing housing news stories, which I have been doing since I started this Newsround series, is that you see trends developing.
A month ago the only person commenting on the poor lot of tenants was Penny Alexander, on her Renter Girl blog and Guardian column of the same name but lately more voices are being raised, expressing concerns about run-away rents and lack of security.
James Murray’s piece talks of the spectre of rent control, citing the fierce restrictions that were in place before the introduction of Market Rents with the Housing Act 1988 that disincentivised investment in the PRS. However he suggests that there are different ways to control rent that aren’t so punitive.
This is called ‘Second Generation Rent Control’ and is operational in many countries, whereby the rent level is limited to the rate of inflation but landlords are given tax breaks to make up for it.
Ben to teach the lawyers
I’ve been interested in this all week. In December I am booked to do a presentation at a lawyer’s conference on the law as it relates to rent increases, and during my research for the notes was surprised to read that government in the UK introduced rent controls several times in the 20th century.
Most recently in 1972 when rents were capped for a short period as a counter-inflationary measure.
Most rent control was related to conditions thrown up by the two world wars and when restrictions were in place for too long, property standards started to decline as landlords lacked the funds to maintain them. So balance has always been a tricky point to find.
Shocking London rents rise
The tenants Information Service produced figures this week showing that London rents have risen a staggering 23% in the past 2 years Over the same period incomes have risen only 6%, so rents are running at virtually 4 times that rate.
I remember the recession of the late 1980s/early 90s where mortgage rates went up to about 15%, a paltry sum by today’s rent standards. That was bad enough but the effect then was on home owners not tenants. Everyone at that time sympathised with borrowers. I was one myself back then but few seem to be sympathising with tenants up until now.
Is ‘supply and demand’ an excuse for profiteering?
I am communicating regularly with several good landlords who I respect greatly but we never find agreement on this matter, the vast majority of landlords simply citing the law of supply and demand, as if it is nothing to do with them, just an accident of fate.
I can’t help feeling that the uncontrolled forest fire of rent increases isn’t doing anything to help the image of landlords in this climate of low mortgage rates, in that it seems like profiteering rather than profiting.
My research for the upcoming presentation brought to my attention the case law of Bankway Properties Ltd v. Penfold-Dunsford where the landlord had set a rent review clause with stated rent increase from £4,680 per annum to £25,000.
Although pre-determined rent increases are perfectly acceptable the courts in this case took the view that the landlord was trying to trap the tenant into future rent arrears and overruled it. Cheeky bugger. [Yes that was an interesting case, the Judge used abuse of process rather than the Unfair Terms regulations – Ed]
And in the world of social lettings
Wandsworth council, who were the first and loudest to jump on the notion of evicting squatters in the wake of the riots, soon followed this with a pronouncement that they are going to re-jig their housing allocations policy to give priority to people who have been in work for the last 2 years.
This week they got all proactive again and launched their “Housing into Work” strategy. A scheme whereby new tenants could lose their home if they fail to look for work and this is picked up by ‘Periodic reviews’.
Now this is announced in the same week that youth unemployment has passed the 1 million mark. The Centre for Economic and Business Research predicting that unemployment will rise to 2.8 million by 2013 [Bah Humbug, I can remember when it was 3 million, and the population was less then – Ed] So how is that going to work then? If you get priority for a council house by being in work or lose it if you can’t find work?
Not so welcome in the valleys
Changing direction and driving across the Severn Bridge, it would appear that Wales is getting hit big time by the recession with a 300% rise in people facing mortgage repossession. Shelter Cymru’s Director John Puzey saying
“Many thousands of people in Wales are struggling with a toxic combination of rising living costs, high inflation and stagnant wages. All it takes is one misfortune such as illness or redundancy for people to find themselves in serious financial difficulties and at risk of losing their home”.
I do a lot of training in Wales, it’s a lovely place but I suppose you cant eat scenery as they say.
Finally a heads up to HMO Landlady for introducing me to a new blog that looks great fun “What Sam Saw Today”. A blog run by a property professional that highlights some more unusual aspects of the housing world. Worth keeping an eye on.
Pantless in Birmingham?
Right, me and Frazzles are off to Birmingham this weekend for a stay at the Hyatt hotel for a travel conference (she is in travel) So a decent shower with no fluctuating heat for 3 whole days.
Entertainment usually comes courtesy of failed X Factor stars. We have had the scary bleached opera singer Rhyddion and some faceless, cloned, shaven headed kid who the women threw their pants at last time, maybe, as a faceless, shaven headed middle aged man, flushed by a decent heating system and some free champagne I may throw my pants this year. Be warned, police may be called.
Ben Reeve Lewis
Ben has started Home Saving Expert, to share his secrets to defending people’s homes from mortgage repossession Visit his blog and get some help and advice on mortgage difficulties and catch up with him on Twitter and check out his free report “An Encouraging note on Dealing with your Mortgage Lender” and have it sent right to your inbox.
Hi! Penny ANDERSON here…And yes we need rent contrls, as I say in my latest post, as currently people use free-form jazz reasoning to guestmate a bluesky rent. And it’s causing misery and nightmares. Also – showers? Don’t get me started…it HAS to be a shower over bath.
Sorry about the surname Penny. Thats what comes of not double checking before posting.
Iam a very very very reluctant tenant. Forced into renting by circumstance. I dont think anyone in their right mind would choose it in the UK at the moment, given the complete lack of rent control and the limited security given by ASTs that guarantee eviction for anyone who complains.
I interviewed a hard working couple today who say their landlord keeps letting himself in and moving their belongings so they cant find anything. I looked at their tenancy agreement and there wasnt a clause prohibiting lock changes so I advised them to change the locks to keep him out. They said they tried that 6 month’s ago and he brought a locksmith and changed the locks back. I called the landlord and asked for his version of events. He was incensed that the couple had complaiend to the council and said he would just evict them. So for coming to the council for help, they have lost their home.
There is nothing in the government’s new strategy to address this very common behaviour.
My London rent is crippling on a simple 1 bed flat, so much so that I am thinking I am going to have to move out of London, home for my entire life because I dont earn £60k that would allow me to stay.
I just spent the last weekend in Birmingham and had a look in a local estate agent’s window and was gobsmacked to see a 4 bed house for rent at £100 a month less than what I have to pay and 2 bed flats in the city centre renting out for £400 – £500 a month less than London rents. This has made me realise that it isnt rent increases per se that are the problem but London rent increases.
I dont know the answer, other than to move out. I spend my whole life helping London residents out in difficulty and I cant even afford to stay here myself. This is wrong
I don’t know how long this can go on for. I wrote a post about the sainted Sheila Mckechnie predicted ‘bantustans of poverty’ in the north. And when, when, when will retaliatory evictions be outlawed? Today: more money for the housing ladder. People overcharged for rents. And thrown out for challenging serious wrongs. Good luck with your search! (Armstrong is my secret agent name…)
I wonder this myself Penny. If the free market means finding what the market can bear as a barometer for price then I would say the London market has long overstepped that plimsol line without realisng it and it must end in tears. Not for the Portfolio landlords whose overall income can weather storms but the buy to let amateurs, who form the vast majority, taking out mortgages on a rent/mortgage assessment.
If you borrow money against a projected income that the market cant actually bear you have to go down. And if middle aged, relatively well paid professionals like me and Frazzy struggle to meet the rent on a 1 bed flat where is the market going?
The government’s housing strategy, published today, concentrates more on home ownership than the PRS market, which is millions of people with no rent control and no safety. Where is the country going? When the only way to live is home-ownership?
Today’s published housing strategy has absolutely nothing to offer either the small private landlord or their tenants. London landlords are seduced by the rent fest of a market our of control whilst late payments and rent arrears continue to grow through people unable to cope any longer.
Wasn’t it the other way round a few years ago? Then people were struggling on horrific mortgages while people in rented properties paid a lot less?
What happened to the glut of unwanted flats that were built at the height of the boom? Presumably they are now all full and the investors who bought them are doing nicely??
Oh yeah Tessa, absolutely. I’m not saying that landlords are greedy. The market is like a see-saw. One can only be up when the other is down. That is the problem, the lack of balance.
Lanldords should be able to make a profit and tenants should be allowed some security but the rental system doesnt allow this to happen and, in London anyway, landlords and tenants are going down the toilet, its just that landlords in London dont realise this yet.
There isnt an over-arching rental system. Rents should be limitied to the rate of inflation and landlords should be supported with grants and tax breaks, expecially since the advent of ‘Genneration rent’.
To leave rent levels up to market forces is ultimately to damage landlords. I have spent my whole life working in pRS housing and homelessness and I can see this coming but nobody seems interested to even look at it. Everyone keeps on about ‘Supply and demand’ as if it is some kind of religion on foundation stone of basic logic
If you look outside of London, there are still a lot of landlords that can’t rent for enough to pay the mortgage and a lot of empty flats that are for rent. Outside of London landlords will work hard to keep a tenant, as there are not 101 other people that will beg to be able to rent from the Landlord.
I think the real problem is that too many people are wishing to live in London. The housing benefit changes may get enough people to move out of London to redress the balance, but this will take a long time. At present employers in London can get away with not paying enough for someone to live in London or commute into London, as housing befit is picking up the difference. Overtime this may change with employers having to pay more in London, or move jobs to areas that people can afford to live in.
London is an expansive area both for housing and office space, it is not sustainable for anyone without top rate skills to be working and living in London unless they are willing to put up with a lot less living space.
I would much rather the government was making a lot more effort to spread jobs better across the UK, as I don’t think there is a way to sort housing out in London without changing the demand side. The government could if they wish remove the “high count” to say Birmingham within 18 months if they decided to do so – then a lot of law firms would move staff, and these high paid staff would start spending money, so moving other jobs. (Repeat 10 times and a real difference could be made)
I believe rents in London are primary a housing problem, so trying to find a “housing solution” to them is unlikely to work.
Sorry I missed a “not” from “believe rents in London are primary a housing problem, so trying to find a “housing solution” to them is unlikely to work.” But I can’t find an edit button.
Ian I accept that housing sits in a wider framework and that unemployment is a key part of this also but I am not convinced that a housing based solution will not address the problem. Even in London.
And I have to say I dont buy your argument that London employers dont meet requirements. London wages are well over regional ones. I think, as far as I understand it, that by far the worst place to live must be the South West, where house prices are high but wages are appalling. I lived there in the early noughties and my work as a trainer was all in London. I could not have afforded to live in Taunton on Taunton wages and my partner too had to work in the South East and travel home at weekends for the same reason.
I’m sorry mate but I do not think there is an excuse for the level of London rents, even taking into account the fact that it is more expensive to live here. Mortgage rates are the same whether you live in Cornwall, London or Manchester. Okay other peripheral costs rise, like booking a plumber but nowhere near the nigh on 30% increase of the past 2 years.
I am a London tenant and I work in landlord/tenant disputes in London and all I see is blatant profiteering at the tenant’s expense and this causes debt (for landlords too whose tenants default on their rent) overcrowding, misery and broken relationships. That is my daily stock in trade, caused in large part by exhorbitant and exploitative private sector rents.
Your point about only people with top rate skills being able to live in their home town irks me in that you seem to suggest that only the middle class should be able to live here and that by definition unemployed or the poorly paid should move out.
I work in the homelessness unit and everyday I see more and more people being made homeless because they can no longer meet the rents being levied by thier landlords, who, as you point out, have 101 others ready to move in. It has been estimated by the National Homelessness advice service that it costs around £16,000 to put a family through the homelessness system and that doesnt include ancillary expenses like housing benefit. London landlords can have their high rents and if people cant afford them they will turn to workers, leaving the public purse to pick up the bill for the rejects, London residents who have been priced out of their home town by the cold and inhumane logic of ‘Supply and demand’.
Ben,
I was brought up in Hackney but spent most of my working life in Cambridge before moving north due to getting married and my wife’s job. (The first job I got offered when I left university was in Cambridge, so I moved there for work)
I chose not to live in London, as I could not afford to buy a reasonable home on a London’s Computer Programmers salary (lot’s of employment agents phoned me to try to get me to move to London over the years), I could get a much better quality of life on two thirds of the pay in Cambridge. (House prices drop of very quickly once you get more than a mile or so from the centre of Cambridge unlike London)
Now we live in Stockport, my salary is as good as it was in Cambridge, but you get so much more for your money – however unlike Cambridge I have to commute into Manchester by train rather then having a 10 minutes cycle ride to work. (Our location works well for my wife’s job)
A nice two bedroom house within a 10 minutes’ walk of our local hospital (Stockport) can be brought on the open market for about £100,000 (rents for about £500). Yet nurses still move down to London for some reason! These two bedroom houses are also within a 5 minute walk of a station that has a good, 30 minute service into the centre of Manchester then a few minutes walk to most office blocks.
It was noticeable that none of our school friends in Hackney had parents with a “middle of the road” income, as you had to be on housing benefits or in a very good job to get a home large enough for children even in my childhood.
I think London landlords will have a shock coming when the demand reduces due to the low quality of like people can afford. However a landlord that changes below market rent is MORE likely to get tenants defaulting on their rent etc, and will not get any support if the market does turn and interest rates go up)
That you can get more for your money outside London I dont doubt Ian. I saw that on my recent visit to Birmingham and was jealous of the Brummies for that (and the fantastic indoor market at the Bullring). I dont have a problem woth people choosing to move for that reason but London rents are forcing people out, not by choice.
Much as I really liked Brum city centre the fact is both mine and Frazzy’s families, friends and infrastructure are in London. Her mum is elderly and not very mobile and moving away from her is not an option. (Ironically Frazzy’s mum came here as a nurse in the 1960s from Barbados and lived in Stockport before relocating to London)
I am glad you agree that landlords in London are heading for a fall. The market can only bear so much. I know landlords are moving away from HB tenants because there are enough working people in the capital looking for rentals, priced out of the mortgage deposit market but when two reasonably well earning people like me and Frazzy can barely afford our rent something is wrong with the system. The rent levels could end up killing the goose that lays the golden egg for them and when the mortgage interest rate does rise many landlords will be hurt by it, if they cannot raise the rent further to cope.
Ken Livingstone is back in the London mayoral race on a promise to cap London rents. Given how many people are renting in London he stands a good chance of winning on that alone, although I dont personally see how he can introduce it.
“Ken Livingstone is back in the London mayoral race on a promise to cap London rents. Given how many people are renting in London he stands a good chance of winning on that alone, although I dont personally see how he can introduce it.”
This sound very bad, as I don’t see how any government will give him the power to do it (they all hate him!), but the fact he is talking about it may mean that someone chooses to leave a house empty for a year rather than renting it out! Putting fair into possible landlords is not the way to get empty homes back into use..
No I dont see it either Ian. Although I will definately vote for him on that issue because I am sick of whacking out £1,200 a month for a 1 bed flat out of a £1,960 take home pay packet.
Government always hated him and as an ex Trot (like me) he has little credibility without populist campaigns but even if he could pull it off I doubt that rent capping will force landlords to leave a home empty, that would be nose/despite/face territory.
This is why I think government should work with landlords on this. How about rent control so that tenants are driven into poverty by profiteering but tax breaks for landlords who supply the properties?