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For years we have been writing on this blog about the housing crisis, but recently it seems as if the crisis has stepped up a notch.

  • People are unable to find a home.
  • Agents put out an advert for a flat and hundreds of people apply for it.
  • Students at Manchester Uni have to go and live in Liverpool.

What is going on?

Well, basically, many landlords are selling up and leaving the sector with fewer landlords taking their place.

It’s a complex story, and I don’t claim to have all the answers, but here are some of the contributory factors:

Tax

There is not a lot of point in being a landlord if you don’t make any money from it.

There is, I suppose, capital growth which is why some property owners leave properties empty (the so-called ‘golden bricks’). However, the majority of landlords need the rent to cover their expenses and earn an income.

The current taxation regime introduced initially by George Osborne when he was Chancellor has reduced landlords’ profit and, therefore, their interest in being landlords.

It’s not always easy being a landlord, and like other businesses, it carries risks.  So, few are willing to do it unless it is worth their while financially.

Although it does look as if Ms Truss might do something about the tax, which may encourage some landlords to stay a bit longer.

Government apathy

We have had 12 housing ministers since 2010 and 21 since 1997. You can find a list of them all up to July 2022 here.  That does not indicate a sense of urgency by the government or any drive to deal with housing issues.

Housing and housing law are complex. It takes time to get to grips with them. Few want to invest that time when they consider they are on the way up to better things.

So by the time the report commissioned by Housing Minister A is published, that minister has moved on, and their replacement, Housing Minister B, has different priorities.

What housing needs is someone in place permanently, preferably someone who will remain if the government changes. Such as the ‘housing tsar’ some are calling for.

Although there is also the problem that while ‘housing’ comes under the Ministry for Levelling Up Housing and Communities, improvement of the court eviction process (which has been promised as a condition of removing section 21) comes under a totally different department, the Ministry of Justice.

The loss of social housing due to right to buy

Social housing has been being sold off ever since Margaret Thatcher introduced the right to buy in the 1980’s. Much of the best housing stock has now gone.

This is a problem as it means housing for low-income families is now dependent on the private sector. Who, as we have seen, charge more and who will leave the sector if things don’t go their way.

If we still had the social housing which has been sold off over the years, most low-income families would be able to live in a ‘Council house’. And although Council housing was not perfect, it was a home, often a good home, and people had security.

There is also the fact that as private rented housing is more expensive than social housing, the cost to our benefits system is considerably higher. Which is something we all pay through our taxes.

Uncertainty and the threat of regulation change

In my article here, I explained how the private rented sector was moribund until landlords got the right to recover possession as of right under section 21.

This is important for landlords as it allows them to recover property easily for their own use (for example, if they need to sell it or live in it) or to remove unsatisfactory or anti-social tenants.

Sadly some landlords misuse this right. But the fact that section 21 is likely to be abolished, with no immediate prospect of improvement to the court eviction process, not unnaturally makes landlords question their decision to remain in the sector.

Being a landlord is being a business, and businesses need to know where they stand.

For example, we had a White Paper in June which proposed a new ‘periodic tenancy’ model – which incidentally threatened the business model of student landlords – but this was followed within three months by a complete change of ministers. No one knows what will happen to that White paper now. This makes many landlords very uneasy.

In Scotland, where the government has announced a rent freeze and an eviction ban, tenants are in a ‘perilous situation’ as there are fewer and fewer properties available to rent and reports of thousands of applicants for properties.

If landlords are really spooked, this is what will happen.  Particularly as the fallback of social housing is largely no longer available.

The fact that landlords are free agents

When housing is provided by a Local Authority or housing association, there is a duty on that organisation to carry on providing the housing.

However, landlords are free agents. They don’t have to be landlords. They can sell up and invest their money in something else if they want to.

Now obviously, those houses still exist. They are not being knocked down, just sold on to a new owner. Some of them will be sold on to other landlords who will carry on renting them out to tenants. But many won’t. Many will be used as holiday accommodation (which bizarrely is treated more favourably under our tax system) or sold on to private owners.

Which is nice for those private owners, but means that property will no longer be available to low-income tenants.

The vilification of landlords in the media

This has been relentless over many years. Yes, there are some very bad and sometimes criminal landlords. However, this is mainly due to the failure to enforce the various regulations by Local Authorities and other enforcement agencies.  Not their fault, by the way, they don’t have sufficient funding to support the staff.

Most of the landlords I see provide decent accommodation and work hard to provide a good service to their tenants. They resent being treated by the press as if they were a wealthy criminal.

In most cases, they only own one or two properties and are not particularly wealthy.  They are not billionaires such as those who invest in secret offshore companies in order to avoid paying tax.

It’s all about supply

The things people complain about – the poor conditions of some properties, the high cost and the shortages, are all to do with supply.

  • On the one hand, we have many landlords leaving the sector for the reasons given above. Then,
  • On the other hand, we have a rising population (or at least an increasing number of people needing to be housed) but few new properties being built.

This is a car crash situation which is bound to result in large numbers of homeless people.

But it’s more than that. If we had a sufficient supply of good quality rented rental properties, tenants would avoid the bad landlords and rent from the good landlords. So the bad landlords would be frozen out.

The only reason bad landlords can thrive and survive is the lack of competition and enforcement action against them.

So how do we solve the housing crisis?

  • Encourage landlords to reinvest in the sector by dealing with the issues discussed above, and
  • Build more houses – which should be easier now we have good quality modular housing services available

And, I would also suggest, build more social housing and stop the ‘right to buy’ as has been done in Wales and Scotland.

But whether our politicians, who often appear to live in an alternative universe, will take this sort of action is another question.

gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw== - Our worsening housing crisis - what is the cause, and what can we do about it?



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