Guardian’s current onslaught against private landlords

Guardian’s current onslaught against private landlords

9:54 AM, 7th August 2017, About 7 years ago 32

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It’s getting very hard to keep up with the Guardian’s current onslaught against private landlords; it’s also supremely ironic that they should be engaging in this one-sided tirade whilst simultaneously stating that the paper provides: ‘quality, independent journalism, which discovers and tells readers the truth.’

I would beg to differ.

Just in the last few weeks we have had article after article attacking private landlords and presenting inaccurate, biased and illogical arguments in order to do so.

The first in a recent spate of articles was written by the Policy Editor, Michael Savage; it contained a highly selective interpretation of a recent report commissioned by the Joseph Rowntree Foundation, which in itself was significantly flawed.

100 tenants a day lose homes as rising rents and benefit freeze hit

The mistakes in the article by Savage were multiple; for example, he referred to ‘the spiralling cost of renting a property’ (when, in fact, rents have increased over recent years largely in line with inflation and earnings); to ‘no-fault evictions’ (there is no such thing. He was referring to Section 21 of the Housing Act 1988 which allows landlords to apply to court for possession without giving a reason; this does not mean no-one is at fault); he stated that Section 21 gives tenants two months to leave, but for the sake of accuracy, he should have said in practice if the tenant decides to sit tight (as local authorities, the Citizens Advice Bureau and ‘homelessness’ charities often advise), it takes a minimum of 5 months during which many tenants enjoy a rent-free stay, while the landlord has to still pay the mortgage and running costs.

Finally he presented an uncorroborated case study of a tenant who allegedly had to move many times over recent years. This is not ‘evidence.’ When case studies like this are offered there should be corroboration by the landlord. How do we know this person wasn’t a nightmare tenant and/or serial defaulter on the rent? It seems very suspicious to me that so many landlords should have allegedly served her with a notice to quit, as changes of tenancy are very expensive to landlords who prefer decent tenants to stay put for many years (the average tenancy length in the private rented sector is 4.3 years, meaning many tenants stay a lot longer).

As if it wasn’t already enough to read his partial analysis of the deeply flawed JRF report – there is a critique of it here:

Who hijacked the JRF project “Poverty, evictions and forced moves”?

Dan Wilson Craw of the vehemently anti-private landlord organisation, Generation Rent, was given the opportunity by the Guardian to piggy back on to the previous article. The Guardian thereby allowed him to ramp things up even more with inflammatory language about landlords ‘turfing people out of their homes without reason.’

Landlords are turfing people out of their homes without reason – and it’s completely legal

Wilson Craw stated that the primary cause of homelessness is the ending of a private tenancy. The ending of a private tenancy, however, is a process and not a cause. Private tenancies end for all manner of reasons, notably for non-payment of rent and other breaches of tenancy or the landlord wishing to sell (especially now because punitive tax rates and persistent attacks on the sector are creating an intolerable and unviable atmosphere in which to run a business).

If an employer sacks an employee for stealing, it is tautological nonsense to say ‘losing the job caused the employee’s joblessness’. These self-appointed ‘experts’ must stop repeating this inane comment.

The other logic that they seem oblivious to is that evictions are only possible because the private landlords have provided the housing in the first place – and as private landlords now provide slightly more housing than the social sector (because of the  Government sell-off of social housing), then so the rate of evictions from the former has risen, proportionately.

Conversely, organisations like Shelter and Generation rent do not evict anyone, because they don’t house anyone (additionally, when landlords evict someone, they then house someone else, so they still provide the same amount of housing; they are not engaged in ‘buy to leave’ and leaving properties empty; but rather maximising the use of housing as is needed in a housing crisis).

Wilson Craw also used the JRF report for his organisation’s political ends of aiming to get Section 21 notices scrapped (even though the JRF recommended firstly observing the Scottish experiment with this before considering following suit).

He then stated: ‘Landlords should be legally accountable for ending a contract early.’ This is completely inaccurate as landlords cannot end contracts early and if they did try they would be legally accountable.

He then squeezed in a call for rent controls (which have in fact a highly destructive impact in practice). He presented no case for how they would be a solution to anything; as Kristian Niemitz of the Institute of Economic Affairs has pointed out, when rent controls are proposed, it is always deemed self-explanatory that they provide a solution. Well, capping the price of bread in Venezuela under Maduro hasn’t worked; shop owners simply stopped selling it, rather than operate at a loss.

Similarly, if landlords have their ability to charge a market rent denied and, under the new tax regime whereby they cannot offset finance costs, operate at a loss also, then many will simply withdraw from the market and exacerbate the housing shortage in the rented sector.

In response to these articles, I proceeded to write to several journalists and section editors at the Guardian, including Michael Savage, as the Policy Editor. I attached an article I had drafted which would have provided some balance had the Guardian printed it.

Michael Savage suggested however that I send it in as letter (yes, a summary of my article in letter format would help balance all the inaccuracies and bias of the two prominent articles which had been published by this stage).

Instead, yet another article appeared, this time from a freelance journalist, Abi  Wilkinson, declaring that the housing market is ‘corrupted’ (whatever that means) and that the profit motive must be removed from it.

Britain’s corrupted housing market needs more than a lick of paint

It’s not clear how this would be done. Perhaps Ms Wilkinson thinks one can instantly magic up millions of new properties for the social sector (where there is presumably no ‘profit motive’ apart from needing to get the rent collected so that the properties will be maintained, the finance costs on the loans to build the properties will be paid and the staff will receive their remuneration, so actually that is the same kind of profit motive that exists in the private sector).

Ms Wilkinson may also think private landlords will run their businesses for nothing (‘at cost’).  For those of us who provide housing to many people and do this as a full-time occupation, I assume we will then live on fresh air whilst also going out each day dealing with our tenants’ issues.

I assume she would then like other business people to run their services and provide their goods at cost.  In this new utopia, I assume she won’t mind also working on her ill-informed articles, getting them published and also not being paid for her work.

Following this piece, the Guardian then published a case study of one woman (who is using the article to flog her new book as a novelist) who, according to the headline, made ‘a profit of £190,000 almost entirely due to house price rises’ on one flat in Oxford.

Goodbye to buy-to-let: why I’m moving on after 13 years as a landlady

In fact, the figures presented in the article were completely inaccurate as was the headline. Ms Lafaye bought the property for £155,000 and sold it for approximately £270,000. That is an initial profit of £115,000, but deducting costs and capital gains tax leaves a profit of £94,000, not including the cost of any capital improvements done during the 13 years of ownership.  So her profit is less than half of what is declared in the article.

I believe the exaggeration/false reporting feeds into the narrative of landlords making a killing out of house price increases, when in recent years gains like this have been very localised in areas like the south-east, London and towns like Oxford. Also, as landlords pay capital gains tax and owner occupiers don’t, the latter make far more from any increase in value and yet the Guardian isn’t talking about them cashing in on house prices and it isn’t calling for owner-occupiers to pay tax on their vast ‘unearned’ profit as landlords have to.

I would suggest that publishing a case study of one landlord compounds the distorted representation of the private rented sector. If the Guardian wants to be seen as independent, it would have been more appropriate to have three case studies; one with a landlord who had done well (but with accurate figures), one with a landlord who had broken even and one with a landlord who had lost out from their investment (there are plenty of landlords in this category).

Being a landlord does not give you a golden ticket to success; if it did everyone would do it. In fact most people are far too frightened to take the risks associated with this line of work and also do all the dirty work that can come with it (over the years I’ve had to clean dog poo off carpets, clean away broken, bloody glass after a self-harm incident, hold a tenant’s bloody head while waiting for the ambulance and so on. In fact, it was only afterwards that I realised I could have been infected with HIV).

Moving on, as I write this, we now have yet another article from the Guardian.

Outrage at eviction company advert calling tenants ‘household pests’

And in this, once more, the Guardian is serving as a mouthpiece for Generation Rent and Shelter. Although the article is about an eviction company referring to tenants as ‘household pests,’  the Guardian quotes Seb Klier, campaigns manager at Generation Rent, saying that ‘comparing tenants to vermin provided a shocking insight into the way renters are viewed by some landlords and agents.’

But landlords and agents had nothing to do with the advert. It was from a company based in one area of the UK. This company’s insensitive publicity campaign also did not merit a whole article, in which once more gross generalisations could be made about  ‘colossal rents, being forced to live in flats crawling with mice or rats, and having the threat of eviction hanging over them…’.

The Guardian is wittingly or unwittingly allowing itself to be used to push the propaganda of anti-private landlords groups with these inaccurate, illogical, biased and distorted ‘analyses.’ It is shoddy work and I call upon the Guardian to now publish a set of counterbalancing articles to put this right.


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Comments

H B

8:00 AM, 8th August 2017, About 7 years ago

Reply to the comment left by Appalled Landlord at 07/08/2017 - 13:19"The difference between the purchase price and the selling price is £115k. Deducting £21k for the costs of sale and CGT leaves £94k which is less than half the figure in the sub-headline, "

Isn't the pertinent figure £55,000 (the amount of her deposit), rather than £155,000, for calculating her profit? One of the great things about being a landlord or homeowner is that the return can be many times the initial deposit.

Chris Clare

9:58 AM, 8th August 2017, About 7 years ago

As usual Ros you nailed it.

The fact is wherever you look you will find bad things. Take journalism for an example they don't exactly hold themselves in a great light.

But Shelter and Generation Rent remind me of the silly man sawing the branch he is sitting on. Here they are, constantly lambasting landlords and wishing them a horrible death. But what happens if they get their wish? Well the branch and their only seat comes crashing down with them. Knowing how long the world takes to adapt to change it could be decades if ever before a comprehensive alternative comes to replace the very landlords they are trying to kill off and what happens to all their acolytes in the meantime, who will house them, the social sector will take a very long time to gear up and as for the corporate sector they will only provision a service if it is truly lucrative and I don't see any money kicking around for that? Moreover coporates are the devil and beware of making any deals with the devil. They might be proposing a solution to the housing crisis but what happens years down the line or when they get bought out by another and they want to start asset stripping, remember there is never sentiment in business.

We need to stop the name calling across the fence and we need to find a way to bring these people inside the tent and start working with them on a proper solution. Let's face it, all GR and Shelter really want is oxygen for their agenda, if there is a way they can remain in the limelight but working for the benefit of all couldn't it work for us too?

Landlords need to properly unite in one super organisation and enlist a PR guru and start working at changing hearts and minds because until that happens GR and Shelter will never be able to work with us and the government will just succumb to pressure to throw yet more regulation and burdens upon us.

The experiences of the past should teach us one thing we need a better way.

Jim Swallow

13:05 PM, 8th August 2017, About 7 years ago

Reply to the comment left by Appalled Landlord at 07/08/2017 - 22:24Excellent AL three very, very well made points

Appalled Landlord

13:38 PM, 8th August 2017, About 7 years ago

Reply to the comment left by H B at 08/08/2017 - 08:00Hi H B

The deposit is not pertinent in calculating profit. Deducting it from the selling price would give a result of £215k, which is even higher than the article claimed.

Her gain is the difference between the selling price and the purchase price, as for any enterprise.

Seething Landlord

11:13 AM, 10th August 2017, About 7 years ago

Reply to the comment left by Appalled Landlord at 08/08/2017 - 13:38This is really a matter of perception. The true gain (return on investment) is the amount of cash in the hands of the seller after repayment of the mortgage and deduction of all taxes and expenses, plus any net profit during the period of ownership, minus the amount of capital invested i.e. deposit and legal costs, SDLT, additional cash injections from own resources etc. The prospect of enrichment using "other people's money" was an attraction emphasised by the property gurus running courses on BTL 15 years ago and was a major driver of the leveraged portfolio model until the advent of S24, but that's another story.

linda green

13:37 PM, 10th August 2017, About 7 years ago

Hi - for those who missed this landlord`s (honest!!) response to a would-be tenant - thought I`d post it on here...

http://www.dailymail.co.uk/news/article-4774574/Couple-benefits-furious-rejected-landlord.html

Dr Rosalind Beck

15:04 PM, 10th August 2017, About 7 years ago

Reply to the comment left by Seething Landlord at 10/08/2017 - 11:13Do you think that business loans should therefore be outlawed? You imply it is wrong to 'benefit' from 'other people's money.' In the context of the PRS, there would be hardly any BTL landlords had the buy-to-let mortgage not existed. Instead, even if a landlord had managed to buy one rental house out of money they saved over a period of many years, they would then have to wait to save again for maybe 10 or 15 years before again purchasing, renovating, commissioning new-builds etc., as they would need to have saved the whole purchase price before buying. There would now be a much smaller PRS had that been the case and as the sell-off of social housing is still likely to have occurred under Thatcher and afterwards, where would the population live who hadn't been able to buy? In hotels? In caravans? In tents? Maybe it would be like America with trailer parks all over the place. I don't think that scenario would be preferable to having millions of rental houses over the UK, housing a whole range of different types of people for whom this housing is essential. And the BTL model of leveraging was essential for this and has worked extremely well for all concerned.

Appalled Landlord

17:21 PM, 10th August 2017, About 7 years ago

Reply to the comment left by Seething Landlord at 10/08/2017 - 11:13Hi Seething

It is not a matter of perception. Just deducting the deposit from the selling price does not give you the gain. You have to deduct the whole purchase price.

I note that you deduct the mortgage as well as the deposit in your description of how to calculate the return. You also include the net profit during the period of ownership. The Guardian’s calculation did not include the latter, and it did not deduct the deposit. Whoever did the calculation didn’t know what they were doing.

The sub-headline of the Guardian article was “Like many landlords, a first-time property investor is cashing out - after a profit of £190,000 almost entirely due to house price rises”.

The purpose of this sub-headline was to inflame renters against BTL, and it worked, judging by the comments under the article.

My complaint was firstly that the profit calculation was nonsense. Secondly, the profit due to house price rises was £94k which is less than half the figure in the sub-headline, even without deducting the stamp duty and legal fees on purchase - which are not stated in the article. I have since seen, in Vanessa Lafaye’s first article, that the legal costs and stamp duty were £2,590 and she paid £879 for appliances/fixtures. Presumably she included these items in the sale, so the profit is reduced by £3,469 to £90,354.

https://www.theguardian.com/money/2004/jul/24/buyingtolet.property

From the figures available, what do you calculate the return to have been, and how?

Your comment gives the impression that you look down on those who bought using mortgages as if they were enriching themselves by exploiting “other people”. Is that the impression you intended?

Seething Landlord

1:15 AM, 11th August 2017, About 7 years ago

Reply to the comment left by Dr Rosalind Beck at 10/08/2017 - 15:04I was simply describing the leveraged model, neither condemning nor condoning it. Of course most businesses use borrowing to a greater or lesser extent and the economy would stall without it. The fact remains that the returns on leveraged BTL as a percentage of the initial investment are far greater than if you measure the gain against the purchase price - it's the same in cash terms but quite different in percentage terms. I agree with you that the model has "worked extremely well for all concerned".

Seething Landlord

1:44 AM, 11th August 2017, About 7 years ago

Reply to the comment left by Appalled Landlord at 10/08/2017 - 17:21Hi Appalled. I was initially responding to your reply to HB that "The deposit is not pertinent in calculating profit" and intended to point out that it is very pertinent in calculating the percentage return on investment.
As to your final paragraph, I have nothing against anyone using mortgages to buy property - again the point is that using other people's i.e. borrowed money enhances the return on investment dramatically. This is not exploiting the people, it's exploiting the opportunity.

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