Getting to the nitty-gritty of tackling Britain’s rent arrears crisis?

Getting to the nitty-gritty of tackling Britain’s rent arrears crisis?

9:55 AM, 22nd February 2021, About 8 months ago 8

Text Size

Last week I spent an hour listening to a podcast by the Resolution Foundation. It can be found here Resolving rents: Tackling Britain’s rent arrears crisis

After listening to it I tried to comment underneath the podcast, but for some reason, my comment would not appear. This also happened to others. I don’t know if it has yet been allowed, but I thought it was worth reproducing it here to publicly invite members of the panel to respond to my points.  If you want to completely understand things and make some of your own points, you will need to listen to the podcast.

Overall, it was an interesting discussion and I thought the information on how long court processes might take was sobering. I’ve been saying possession cases could take up to 2 years – ruinous in cases where no rent is coming in – but it looks like even this could be optimistic.

Anyway, to get to the nitty-gritty of the problems I had with the discussion:

1. The graph on affordability between the private, social and owner-occupied sectors was overly simplistic (as they invariably are) and took no account of the fact that:

  • Owner-occupiers and private landlords have to cover other costs that tenants don’t pay/are included in the rent. To take an example, if the interest on a mortgage is £400pm and rent is £500pm, but average monthly maintenance, insurance and other costs come to £100, the rent is in fact equal to the mortgage and not £100 more expensive.
  • With many private rented homes, utility bills and other charges, such as gas safety certificates, expensive council licences etc are also in effect ‘included in the rent.’ No allowance is made for this in simplistic graphs.
  • Private rented homes have a ‘tax’ payable which social and owner-occupied homes do not. It is most clear in the case of a tenant on benefits. If a privately rented home is occupied by someone claiming Local Housing Allowance, a portion of the rent paid by the state will go back to the state via the landlord’s income tax. This means social housing isn’t as cheap as it looks when compared to private rentals, as no tax is payable on the rent. Private landlords also have to pay the Section 24 tax levy on top, and have had to increase rents to cover this ‘tenant tax.’ So private rents are inflated due to having to pay these taxes. This also means that private landlords create a profit and a tax for the country, which the other two tenures do not.
  • Many homes in the private rented sector are in more desirable areas and are better quality than in the social sector. Comparisons of their rents can therefore be meaningless and take no account of qualitative differences.

2. There was no mention of tenants who have been completely taking advantage of the eviction bans to not pay rent. The uninformed observer would think it is only tenants who can’t pay the rent exist, and not those who won’t.  As we know, many tenants were already not paying before the pandemic and for reasons nothing to do with it. These cases should have been fast-tracked through the courts. Instead, landlords have had their rights to possession completely removed, causing many extreme financial and other types of misery.

3. There was a complete bias throughout the presentation in favour of the social sector and against the private sector. So there was an accusatory implication with the graph on rents that private landlords charge too much compared to the other tenures, but the later graph which showed that the social sector even before the pandemic was the biggest ‘evictor’ was unremarked upon. We were also informed that Steve Douglas had worked for Housing Associations, and it appeared that, as if to be polite, everyone present, therefore, went along with the idea that the social sector is best – or they might be offending him. It was also ridiculous to suggest that Section 21 and the PRS caused homelessness. Repeating a lie countless times does not turn it into a truth.  In fact, for every 10 people who become homeless, the PRS houses 9. Where would the country be, and what would the homelessness levels look like without the private sector? (although this will change as we can’t afford to take the risks now with the lengthy court procedures and time-wasting schemes such as the pre-action protocols mentioned – another way of keeping non-payers in situ and heaping further pain on landlords).

4. It was stupid to call Section 21 ‘no fault.’ It is a ‘no reason can be given’ notice. There is nearly always fault, most likely because of non-payment of rent and anti-social behaviour. No landlord wakes up and thinks ‘I’ll evict my blameless tenant today, for no reason.’

5. Regarding the tenancy saver loans, I was the first person to bring this idea to the UK from Spain (as someone who does speak Spanish – it was implied the panelists don’t) but I am also the first to point out problems with it. If the panelists want it introduced in England they had better look more closely at what is or rather isn’t happening with it in Wales and Scotland. It would appear that in most cases where loans are needed, they won’t be allowed. There are also problems of fairness – for example, if some people have struggled and paid their rent, why should others who perhaps prioritised other spending, have the money given to them or loaned to them (when everyone knows it will be a huge task to then get them to pay it back to the state)?

Those are my thoughts on the podcast and I hope that those who took part can take the opportunity to answer some points raised.

 



Comments

by TheBiggerPicture

11:26 AM, 22nd February 2021, About 8 months ago

Great post thanks.
Too many simpletons or state biased cronies running the show in the U.K.

by SM

12:05 PM, 22nd February 2021, About 8 months ago

I seem to recall that when Section 24 was first announced any Landlords many private Landlords suggested that this would force up their costs which would mean that they had no alternatives but to pass these increased on to their tenants. When Councils started to charge private Landlords a license fee, some of the conditions to get this such as PAT testing also further increased landlords cost base, the same point was made.

Unfortunately, its all to easy to ignore comments like these and then just blame Landlords for putting up their prices.

by Helen

12:32 PM, 22nd February 2021, About 8 months ago

Another blight to the PRS are the proposed regulations to bring the minimum EPC level for renting to C. According to government statistics, which I think are much too low, there are 750,000 properties which currently don't reach this benchmark. 7 out of my 8 flats don't even though they are all warm flats with high roof insulation, double glazing and mostly new boilers. This will put me out of business.

by NewYorkie

13:08 PM, 22nd February 2021, About 8 months ago

Very well put, Rosalind.

After 20 years in the PRS, starting as an 'accidental' landlord, I've had enough. I don't have a large portfolio with which to spread my risk. But even if I did, if a tenant simply decides to stop paying, it is still a significant cost I must cover, and will never recover. Increasing rents is not always possible if the going rate in the area won't support it. And you then have the increased risk of the tenant refusing to pay, and the whole fiasco which is our possession proceedings today.

I had a well-paid job when I started, and if S.24 had existed then, I would have been crucified. I've now retired and am drawing my State pension [earlier than planned]. So, S.24 won't have a major impact on me. But what is really hurting me is the tenant who simply stopped paying last April, even though he has continued to work, receive a tax rebate, and claim all the SIESS grants. Oh, and cause extreme anti-social behaviour which is affecting other residents! Why should he be allowed to earn more than me, receive grants paid for by me, and live in my property for free?

BTL is no longer viable for me and, I would suggest, anyone starting out today. The big landlords will get bigger, and those like me will fail (already are!). I had lovely tenants before my miscreant tenant, and am now facing a financial disaster because of him.

by David Price

14:13 PM, 22nd February 2021, About 8 months ago

Ros please do not confuse the Resolution Foundation with facts; they, like Shelter and Generation Rent, are only interested in rhetoric.

by Mick Roberts

18:14 PM, 22nd February 2021, About 8 months ago

We got a lot more charges as well now, I'll copy below.

Losses from Universal Credit.
Fines from Licensing on trumped up charges. Invent a tax, then find those for not knowing about it.

We now have to do Fitness tests on new rentals £150 each house.
Electrical Installation Condition reports organisation & implementation £300+ each house.
Selective Licensing £890 just for one house.
Legionnaires checks £70 each house.
EPC’s £80 each house.
Data protection checks £40.
Carbon Monoxide detectors & smoke detectors, when wired, £300 each house.
Getting registered with Information Commission officer £40.
Floorplans, Inventories £90 each house.
Landlord has to criminal check himself & has to prove he has Right to live in UK
Increased staffing admin behind the scenes.
As you’ve seen, checks/inspections on your houses now with smoke alarms-Should be much more detailed checks.
Consultant & Legal fees to keep pace with legislation & staff training.
Letting Agent costs for new tenancies & house swaps £70pm each house.
All the above is extra costs we din’t have when many of u moved in.

by TinaShoebb

23:09 PM, 27th February 2021, About 8 months ago

comments on that video now appear to be open

by Luke P

23:42 PM, 27th February 2021, About 8 months ago

Reply to the comment left by TinaShoebb at 27/02/2021 - 23:09
You can probably only see your own comment (which no-one else can see) as well as not being able to see other peoples’.


Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

BECOME A MEMBER