Reading articles such as this article in the Guardian, you would think that the whole of the housing crisis is down to ‘greedy landlords’.
However, this is just one side of the picture. Let’s take a look at some of the other issues.
The loss of social housing
The first thing to say is that if you do not own your home, you really have no choice but to rent in the private sector.
Ever since Mrs Thatcher started to sell it off in the 1980’s, we have had a diminishing social housing sector which now accounts for a relatively small proportion of the housing stock.
‘Council housing’ used to be the cheapest housing around, and although it was not without its problems, it was probably the best solution we ever had for housing low-income families at an affordable price.
Some 40% of the Council housing that has been sold is now in the hands of private landlords and being let at a considerably higher rent – which, if the tenant is on benefit, we all pay for through our taxes.
Scotland and Wales have now stopped the ‘right to buy’, but Conservatives still allow it, presumably in the belief that homeowners vote Tory.
Private sector landlords can sell up
It is a fact that a substantial proportion of private sector landlords are ‘small landlords’ ie people owning just one or two properties which are rented out as an investment.
These will be ‘ordinary people’ – for example
- People who have inherited a property from relatives
- Couples who both owned a property before marriage, renting one of them out
- People who have chosen to invest in property rather than a traditional pension or other savings – as in a low-interest economy, rented property pays a better return
On the whole, private landlords are not faceless billionaires. They are people like
- Builders – who are able to buy run-down properties and do them up,
- Affluent people like doctors, lawyers, and high-earning actors or footballers – who are able to afford a ‘buy to let’ as an investment, and
- People such as servicemen and women – whose living accommodation is provided by their employer and who buy a property to use as a retirement home later.
The trouble is that if things become difficult for landlords, there is nothing stopping these people from selling up and investing in something else.
Or switching to holiday lets where they (basically) get more money for less hassle.
Why are landlords selling up?
We need to remember our history here.
Prior to the 1990s, few people invested in rented property because, under the old Rent Act 1977, it was practically impossible to evict tenants once they had moved in. However badly they behaved and even if they failed to pay rent.
The reason we have a private rented sector today is because the section 21 ‘no fault’ eviction ground, which came into force in 1989, gave landlords the confidence that they could get their property back if needed.
This is now under threat, and so understandably, many landlords are rethinking their future as a landlord.
There are two other things which are putting landlords off:
- Increasing regulation and
- A reduced income due to increased taxation
Plus the fact that landlords are going to have to increase the energy efficiency rating level of their properties to C, which, for some properties, is going to be expensive. If indeed (for older properties) it is possible at all.
So many landlords are ‘getting out’ while they have the chance.
This is particularly noticeable in Wales, where new, more tenant-friendly legislation is due to come into force in December.
A perfect storm
So we have ‘small’ landlords (who make up the majority) selling up as they see their investment becoming increasingly less profitable and more problematic.
We also have more and more people looking to rent. For example, young people wanting their own home and immigrants and refugees needing to be housed.
Is it any wonder that the remaining landlords decide to charge a ‘market (albeit, to many tenants unaffordable) rent’?
Bearing in mind that they will have to pay for expensive energy efficiency upgrades, plus they too are subject to higher interest rates on their mortgages and will have to pay the new high energy costs recently announced (a particular problem for landlords who rent property inclusive of bills).
It is not the fault of private landlords that the government has chosen to sell off much of its social housing.
Not being millionaires or billionaires, most private landlords are just trying to keep their heads above water and provide for their families, the same as anyone else.
There ARE of course, greedy, unprincipled and even criminal landlords. Although these exist mainly becuase of the dearth of enforcement action by Local Authorities.
Most landlords, though, are decent people who take a pride in the service they provide. They comply with the rules and would prefer the bad landlords to be driven out – as they reflect badly on all landlords.
Indeed this is another reason why many landlords are glad to be selling up – they are sick and tired of being vilified in the press and social media and being treated as ‘the enemy’.
Well, many of them have gone now. Which is why tenants are finding it harder and harder to find somewhere decent to live.
The lesson from all this?
If government wants private renting to be the principal source of housing for those unable to buy – they must create an environment where people are willing to be landlords.
Or the problems will just get worse.