Ben Reeve Lewis Friday Newsround #36

[Ben Reeve Lewis is anxious to call a spade a shovel, but ends up feeling sorry for landlords’ dire financial plight (well sort of) …]

After the party

Well the furore over the new housing strategy is settling down after a hectic week of articles and opinions.

A few latecomers are still arriving at the party with metaphorical bottles of Cava, hoping that the inebriated throng wont notice that they have little to offer now as they ditch the brew and make for the vodka punch.

The Chancellor ignores

Interesting to note that despite Camo and Clegg getting their physogs on the report and pronouncing that housing is the centre of the government’s economic recovery, George Osbourne failed to even mention housing in his autumn budget address on Tuesday.

A matter not lost on Gavriel Hollander writing in Inside Housing on Wednesday.

Council shenanigans

Here is a hidden thing that not many of you will know about. All councils are looking to reduce expense, not least in the area of housing benefit/local housing allowance.

With so many would-be purchasers being frozen out of the home buy market flooding the PRS market and HB cuts getting worse by the day, many landlords are moving away from benefit tenants which in turn pushes the pressure onto homelessness units, thus further putting up council’s costs.

So, many of the wealthier boroughs, particularly in London have been involved in people trafficking. Not of the illegal immigrant, sex trade kind you understand but in people who are a drain on the borough’s resources. Namely, benefit tenants.

Finding creative ways to farm them out to boroughs where housing is cheaper, thus putting up the HB bill for those boroughs whilst lowering their own.

The Guardian gives two points of view

Its been a dirty, underhand war for a while now but the latest scam….sorry….scheme! comes courtesy of the Royal Borough of Kensington & Chelsea’s new rent deposit scheme. A nice pro and con article was featured in this week’s Guardian, penned by both Ian Dodds for the prosecution and K&Cs Timothy Coleridge for the defence.

Its worth reading both viewpoints and also reading between the lines of K&Cs flim flam. The key being where Mr Coleridge states:-

“This new scheme recognises the lack of affordability of private rented housing in the borough, enabling applicants to search for anywhere they wish to live.”

In other words “’Ere’s some dosh, Kent is looking beautiful this time of year I hear. Close the door on your way out”.

K&Cs scheme expects the money given over to be recycled as tenants move from 1 property to another, passing on their deposits. Coleridge also shows remarkable ignorance of the real, on-the-ground situation when he states:-

“Since 2007 landlords have been required to keep deposits in a deposit protection scheme. Landlords cannot simply retain deposits, and there is independent adjudication about any disputes. Provided tenants keep to the terms of their tenancy agreement they will likely be able to retain much of their deposit and recycle”

Has he not been following the rocky road of tenancy deposits over the last few years and how many people still lose theirs to spurious claims or landlords simply not protecting them?

This also ignores the practical problem that even uncontested deposits can be and regularly are, held onto for 10 days after the tenant moves out, leaving the tenant’s without a deposit to move on with for nearly 2 weeks.

Orwellian doublespeak

I love the current trend for renaming things. Coleridge said the scheme would help people move “Anywhere they wish”. For “Anywhere they wish” you need to read “Somewhere they can afford, whether they wish to move or not”

We also have “Affordable rents” which means raising rents to an unaffordable level for many [we had a post on this in 2008 here – Ed], and “Flexible tenancies”, a scheme whose ‘Flexibility’ applies only to the landlords.

Any council worker will tell you how much we all laugh when the words ‘Staff consultation process’ are used. Which tells you its already been decided whether you like it or not.

Calling a spade a shovel

Noam Chomsky wrote many years ago about what he termed ‘Transformational Grammar’ and Linguist Robert Dilts explains the mechanics of how it works in his excellent “Sleight of Mouth”.

I think in housing it is very important to call a spade a shovel wherever we find it.

Pity the poor landlords …

I read with interest on Property Talk Live  how UK flat-sharers pay the highest rents in the whole of Europe. This does not surprise me as a London tenant being crippled by my own rent every month but the same day that I read this I also read, on Property 118, that the Residential Landlord’s Association found that buy to let landlords aren’t making enough to cover expenses, even with the current level of rents.

My initial annoyance at what seemed like simply the moan of the RLA at how hard done by landlords are gave way to a more measured view when I discovered that these findings came from a report produced by Reading university. The report’s findings stated:-

“The university found rents do not cover expenses when the true cost of investment is considered, including;

• Refurbishment and borrowing costs
• Agents and legal fees
• Voids and arrears
• Energy and safety certificates
• Repairs, depreciation and regulatory compliance.

Landlord taxes averaging £1,000 a year are also more than on other types of property (said the report author Professor Michael Ball). Tumbling property prices over the past 4 years have resulted in negative yields for many landlords who would have had a better return investing their money elsewhere”

How scary is that? If paying rent of 60% of net household income on average still isn’t enough to meet many landlords financial costs, where is that going to take us?

Despite my gripes at London rent levels I still acknowledge that we need more PRS landlords than ever before. The government should be supporting PRS landlords because the housing crisis will grow exponentially if they go out of business.

Mortgage rates are at an all time low at the moment and yet tenants are maxed out paying rents in some areas (mine) running at 29% higher than they were 2 years ago and simply cant pay much more so when, (not if), mortgage rates rise what is going to happen to those small buy to let landlords who cant cover the true cost of running their investment?

Down the homelessness unit with so many others.

Government hide behind the nonsense of a free market hands-off approach and reject tinkering with things but in an excellent article, my personal favorite this week, by Property Newshound he explodes the myth that the government doesn’t intervene.

They could provide a range of support measures for PRS landlords if they chose too and although it would involve costs I would suspect that the true cost would be a fraction of the actual cost if Reading University’s report is accurate and everyone’s prediction of what will happen when mortgage interest rates rise comes good.

There, I’ve said it. I’ll bet you never expected me to call for the government to help PRS landlords. I really think they should. All but my landlords anyway, the greedy tight fisted bastards.

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.

Orwell picture from Moe