[Ben Reeve
Lewis has changed his mind about devolution …]
It’s been a week of opposites for me. Last Friday and Saturday I gave talks to seriously minted up landlords at the Property Investor’s Show at the Excel Arena in Docklands.
While on Tuesday I gave a talk to Camden Federation of Private Tenants on the problems of being a TRO and what needs to happen in the Private Rented Sector, most of the members struggling on in the PRS shambles
At the Excel Arena I was unexpectedly approached by a cheerful, pretty young woman who struck up a conversation with me.
Sorry, I thought you were someone else …
I knew something was going on as I am long past the age when pretty young women come up and start talking. In fact now I think back I never was at that age. I always had to go up to them, and when I did their eyes would glaze over and they would start looking nervously around for their best mate, or the police, I was never sure which.
This lady with a smile both on her face and in her voice said cheerily “Have you ever thought of buying a house in St Lucia?” to which I cheerily mimicked “Well I would if I wasn’t paying 71% of my take home pay on my F***ing rent” and we both tossed back our heads and laughed gaily as her eyes glazed over and she started to look nervously around for her best mate, or the police, I wasn’t sure which.
Caribbean paradise
Frazzles and I had the good fortune to spend 2 weeks in St Lucia a couple of years back (She works in travel so we get free holidays now and then, see pic) .
What we saw there was pretty reminiscent of modern Britain. Villas and terraced homes owned by the well-heeled, sited next door to the houses of the locals which would have drawn the attention of our government’s beds in sheds taskforce.
But soft, maybe tenants like me don’t have to decamp to the West Indies in order to have a life. Wales is far nearer and a lot of tenant friendly stuff has been happening there.
Wonderful Wales
I have been writing a lot about what is going on beyond the Severn Bridge but happily it was all encapsulated for me on Nearly Legal this week by David Smith.
I’m not going to go into detail about the Wales plan to licence landlords, I’ve already written about this robust and radical initiative that I quite like but Dave makes some very pertinent points about the role of devolved governments and how effectively they operate independently of Westminster, especially when he says’:
“Devolution offers a laboratory of social and legal change.”.
And even more pertinently suggests:
“Whilst one can wonder at the developments in the devolved regions, it must surely make the Westminster policy-makers and civil servants reflect on English law and policy, and possibly its impoverishment by contrast”.
I have to confess, until I read Dave’s piece I had always been a bit scathing of devolution, considering it to be merely a manifestation of anti-English chippiness but I have changed my view.
Why can’t England be devolved?
Westminster seems more concerned with the UK’s image in the world as a whole and ignores what is happening in its own garden.
I don’t even blame the Con-Dems for this; it is a problem endemic of all governments who take an English, nay, even London Centric view of life.
My sister assures me that as well as being mouthy cockneys and insouciant French by background, we are also an 8th Welsh somewhere in the mix so it gets my vote.
Scotland is doing it too
While Wales is busy “Strapping one on” as the phrase goes, Scotland are also getting in on the act in attacking letting agents fees that have been unlawful but entirely ignored for a number of years.
With all this going on in the devolved countries, local governments listening and responding to the needs of their communities in housing terms, Westminster is looking more and more like Private Godfrey from Dad’s Army, a bumbling irrelevant poltroon, lost in hazy memories of cucumber sandwiches at mid-war picnics in Pangbourne, like Mrs Lopsided in Ealing’s ‘The Lavender Hill Mob’.
“What can we do as tenants to assist the introduction of licensing” I was asked by one delegate at Camden Fed. “Get your support behind Wales” was my reply because if they can operate it successfully in the magic land of my beloved Laver Bread the buggers-at-the-base-of-Big-Ben can’t say it doesn’t work.
What about rent capping?
Popping over to Wales Online I read that under devolved powers given in 2006, Wales could actually introduce rent capping if it chose to.
Annoyingly the article doesn’t go into detail about how those powers work, which my more legally minded self (plus the self that is too lazy to look it up) would like to know more about. Any readers who can illuminate me feel free.
Speaking as a London tenant I would say that rent capping is becoming a much more pressing issue than any concerns that it might disincentivise investment in the PRS. People are being driven into hunger and poverty partly by out of control rents.
The Guardian ran a piece this week about how record numbers of people are relying on food banks to feed their families.
Upad spells it out
At the same time the latest LSL survey reported on Upad reveals that nearly 100,000 tenants are in more than 2 months arrears. Upad is an industry insider but even they say:
“There is no full proof way of guaranteeing your tenants won’t fall into arrears but – making sure the rent is a sensible proportion of their income prior to the start of the tenancy is a good start”.
At last, people are making the connection that unaffordable rents end up damaging the landlord too.
Of course I’m sure what Upad really mean by that is “Don’t rent to people who don’t earn enough”, in which case those low to middle income earners who aren’t eligible for the dwindling stock of social lettings have to sleep on the street.
If rent capping were introduced and if it were to result in a shortage of housing stock I can’t see it making much difference as many working people can’t afford the rents anyway so they are still homeless, so WTF? as my daughter texts me.
Digging Digs
On an up-note I have recently had the pleasure of meeting Heather Kennedy from newly formed Hackney tenant’s rights group Digs and read her excellent debut on the Guardian Housing Network about the role of tenants groups in tackling the problems of the PRS.
Like me she finds flaws in Shelter’s rogue landlord campaign, highlighting the lack of resources that councils have to deal with criminal allegations brought in daily by tenants.
With a rallying cry not seen since Mel Gibson’s ‘Freedom’ speech in Braveheart she says:
“Not until tenants are allowed to define their own campaigns and solutions will we begin to see the deep rooted change to the private rented sector we so desperately need.”
Way to go Hev, I heartily agree.
No Pickles please
And finally I read with more than a little amusement on 24 Dash that the old Dale Farm protestors are planning to evict Eric Pickles from his eyrie at the CLG offices at 1pm on 19th of October. The article doesn’t say how they plan to achieve this but they are apparently intent on giving Pickles a “Taste of his own medicine”.
So, if you reading this at lunchtime on the day of posting, make yourself a cup of tea and switch the lunchtime news on.
You may see the unusual sight of a an assortment of ragged people laying a trail of mars bars on the ground leading from the front doors to a waiting police van, hoping to tempt the normally shy and retiring creature into the light where they can slap him with a Warrant of eviction. Maybe even just make an edible warrant – he won’t be able to resist.
Ben Reeve Lewis
I worry about Upad’s stance: if rents are too high for everyone, ensuring they are a ‘sensible proportion of income’ willl punish the low paid. And all those self help tenants groups are starting to be noisy, and make some good points.
It already does though. If you cant afford it what can you do? Even working people cant afford London rents. I do a full time job, I work as a freelance trainer, I write articles, books and even occasionally work as a freelance statement taker just so I can afford the rent on my 1 bed flat. Around 60 hours a week just to stand still.
Upad’s idea is great for landlords protecting themselves from rent default but does nothing to help out tenants. As their report states 100,000 people are now in more than 2 month’s rent arrears in which case they are lined up for mandatory eviction. Where I would point to impossible rent levels, they would point to not enough income but the 2 are inseperable. I have long thought that landlords are harming themselves for the future with these rent levels
Ben – Ive been concerned and vocal lately on the overall benefit cap recently OBC yet see very little in the ‘housing press’ about it and its impact which today I said would create an additional 130,000 homeless families in the capital next year (http://wp.me/p1vuvL-lI)
But hey its Friday and admire the courage of anyone who not only would wear the shirt you did in St Lucia, but have the nerve to put it up in a public arena
Ben’s shirt is very courageous. And who will rent when nobody can afford the rents? Sounds daft. It isn’t.
No rent caps please, we live in a (relatively) free market economy.
I would strongly encourage you to take a look at what happened to investment and supply in the Private Rented Sector the last time rent caps were introduced, before you go calling for them again. It didn’t benefit tenants at all in the long run. Rent caps would be a backward step for the PRS and ultimately tenants.
I kid you not, the very first tenant we took in Scotland without a holding fee withdrew at the last moment leaving everyone out of pocket. For a number of reasons we’re retreating from Scotland and not accepting any new landlords there. As existing tenancies are coming to an end our landlords are almost universally putting their properties on the market for sale instead – so much for improving rental supply.
Protecting deposits is a good idea but licensing in Scotland is a joke. Don’t forget the agent has to be licensed as we’ll as the landlord and that registration is per county too. We don’t have to prove we’ve got trained staff or CMP or anything remotely useful like that. Scotland is a nightmare if you operate nationwide and piecemeal registration by county is ridiculous. Oh, and don’t forget you have to pay for the pleasure of renewing all the registrations every three years too. From my experience it hasn’t done anything at all to get rid of bad landlords or encourage greater investment in stock. Show me some evidence to prove licensing works and I might change my mind. Bad implementaion of legislation is simply driving out good agencies like ours.
Good ideas can definitely be ruined by poor implementation. My view is that for licensing to work its GOT to be nationally organised otherwise it is just unfair on landlords.
I don’t think rent capping is the answer either (I explain this in part 10 of my free ebook http://www.landlordlawblog.co.uk/files/TheBiggerPicture.pdf)
JamieT: so letting agents are quitting Scotland are they? Good! That’s because the law on illegal fees to tenants are being enforced. And also because online portals are easing out high st agents. Again: good!
Ben, why should your housing be subsidised in one way way or another just because you choose to live in one of the most expensive places in the world?
I moved from London because I realised I couldn’t afford to live there and still have the standard of living I wanted for my kids.
People relocate from the far ends of Europe to come and work in the UK. Why isn’t our workforce prepared to be as flexible or mobile?
Like many others who live north of Watford Gap, I have little sympathy for you. It’s not just the government who are too London focused.
@ Rentergirl
Your attitude is grossly unfair to reputable agents doing a valuable job for a reasonable fee.
You’re also misinformed about the structure of the marketplace as it relates to letting agents and online portals. Don’t confuse Estate Agents with Letting Agents, we’re not always one and the same thing. Sales Agents have no ongoing involvment beyond the inital sale.
So many ideas.
@Jamie and Tessa on the point of rent capping. A year ago I was myself against capping but I have changed my view for 2 reasons.
Firstly, I am ideally placed in my substantive day-job to see the increase in repossession cases caused by people, even working people, unable to pay their rents, and secondly I think it ultimately damages landlords too, like a child over-indulging in chocolate while the parent warns they will regret the gorging in the morning haha
Jamie you make the point of a free market but although I am certainly no communist I cannot accept the morality of a free market that profits from the misery of others and that is what high rents are doing.
Have you seen the National Housing Federation’s ‘Home truths’ report published yesterday? PRS rents, particularly in London (but also Peterborough for some strange demographic reason) are rising exponentially, for the 6th consecutive month, while wages stagnate.
I also read this week in an LSL report that 100,000 tenants are in more than 2 month’s rent arrears, giving landlords cause to go for mandatory eviction on rent arrears that they know they wont be able to recover in reality, so the high level of rents causes more debts for landlords, conversely if landlords were less rapacious they might create a more sustainable market and earn some Karma points too.
I Have been a landlord and even a letting agent for a short while and I wouldn’t be able to live with myself if I knew my good fortune was at the expense of other people’s quality of life.
@Another Ben. I not only live in the most expensive city in the world, I will freely admit that I also live in a trendy, expensive bit of it, but I also work in and serve that community and my elderly mother in law is disabled so we need to be near her to provide care and support.
I aint saying that as a top trumps of human misery, just pointing out that people’s lives are more complex and it isn’t simply a case of just saying “I cant afford it, I’ll move to Peterborough’…….damn…..I already rules that one out.
Finally I agree with Tessa, licensing needs to be a national standard, I also see Jamie’s point about repetitive costs and local daftness. I really don’t think licensing need be expensive or onerous and it’s introduction would really help enforcement officers like me to take bad landlords and agents off the board quickly, leaving the good ones for us to encourage, assista, gude and even mentor
The same report also said the general level of tenant arrears across the entire market have improved, with 8.9% of all rent in the private rented sector late or unpaid by the end of May, a decrease from 9.9% at the end of April.
If the report is correct and many landlords cannot afford to be flexible on the rent, then rent caps won’t benefit anyone. The landlord will default on mortgage payments, the property will get repossessed and the tenants will lose their home anyway!
It’s basic supply and demand. The market will only support the price people are willing to pay otherwise people are priced out and landlords won’t let their properties. If they start getting long voids they drop their rents. The market may take a while to adjust sometimes but give it a chance.
I’m not surprised more people at very bottom are struggling during a recession, but rent caps are not the answer. The government should build more social housing as a safety net for those most in need.
The free market has wonderful corrective power when the government does not interfere unnecessarily.
Jamie saying there has been a slowing down since April is like saying the Titanic is sinking but it hasnt sunk as far in the last half hour. The trend is still rising, whatever blips occur on the journey.
I know costs rise for landlords too but if they cant turn a profit in an economy where mortgage interest rates have been at an all time low for years and rents at an all time high what are they doing?
I agree that overall more houses need to be built to drive down demand but what happens in the meantime to people at the bottom? while foodbanks are becoming increasingly more necessary, homelessness units like mine are seeing a 38% increase in approaches and stuffing people by the van load into B&Bs. Houses arent being built to anything like the level they need to be so your suggested free market solution is a bit of a pipe dream and is irrelevant to my clients from yesterday, 2 adults and 18 month old renting a box room because they cant afford anything else or the repossession lists at the county court was in yesterday where there were so many cases to be heard they had to use spare court rooms in the Magistrates court down the road just to cope with the over-spill, and not for the first time either.
Politicians and even us lot on blogs can talk up a storm about what needs to happen but meanwhile people at the bottom are hurting while landlord websites keep harping on about it never being a better time to be a landlord and how bouyant rents are
Amazingly, rent control is the one area of economics where the majority of economists consistently and predominantly agree. The concensus, based on lots of evidence worldwide, is that despite the best social intentions, the effect of rent controls actually turn out to be a reduction of quality and quanity in the housing stock.
Lets not repeat historical mistakes, however tempting it may seem initially.
“based on lots of evidence worldwide”???? That wouldnt get you a doctorate Jamie haha Its like saying “A gallup poll of horses all over the country”. I wont hold you to it though, coz I havent got the figures either.
But even if I accepted your argument you would be looking at balancing, on the one hand rent levels being capped against, on the end hand, Rising homelessness and people needing food handouts.
It comes down merely to, as Russel Crowe says in Master and Commander “The lesser of two weevils”
But I do have the evidence. You only have to look as far as wikipedia for good references to lots of independent data and studies on rent controls.
Including the Guardian article in the same section on rent controls also seems to suggest that high rents are resulting in more food hand outs. But the article blames “rising food and fuel costs combined with static incomes and high unemployment rate”. It didn’t mention high rents at all.
The point I’m trying to make is that your point about rent controls possibly being a good idea is not really well researched and comes across more as being out of self-interest because you happen to live in a trendy and expensive part of the capital and pay a large amount of your income on rent.
Ouch Ben! Thats telling you!
I have a LOT of sympathy with people with high rents but I have to say that I agree with you Jamie – rent control is not the answer – and will probably end up creating a worse problem if it is introduced.
The real answer is to build more houses.
Jamie that I choose to live in a relevantly expensive bit of London I take full responsibility for but my complaints about rent levels arent based on my position but the position I see so many people in everyday in my job in frontline housing advice where we pick up the pieces of broken lives, the homelessness unit.
Of course high rents arent the only cause of debt or the rise in foodbanks but you cant deny they are a big part of the picture for hundreds of thousands of people.
Or are you saying that concern over high rents is misplaced and it isnt a problem for people?
Statistics aside I dont think you can ignore the situation.
You make the assertion that my claims are made out of self interest but couldnt the same claim be made of landlords and agents who justify the rent levels?
Dear Mr Pot, Yours sincerely Mr Kettle