Land for the Many but Rentals for the Few

by Appalled Landlord

10:25 AM, 7th June 2019
About 2 weeks ago

Land for the Many but Rentals for the Few

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Land for the Many but Rentals for the Few

The Land for the Many report for the Labour Party was released on 4 June. Click here

George Monbiot was the editor and there were six other authors. One of them, Beth Stratford, wrote an article about it in CityMetric. Click here

Paragraph 6 of her article reads “We recommend measures to reduce the exploitation and insecurity in the private rented sector – reforms that make sense on their own terms, but have the added benefit of dampening demand from Buy-To-Let landlords.

The link takes you to a section of the report headed “Reform of the private rented sector”.  This claims that “Measures to end the insecurity and exploitation experienced by private renters make sense on their own terms, as the constant threat of rent hikes and evictions is affecting the health, relationships and life chances of millions of people.[85][86] ”

Shelter is the source for this claim.  Firstly, footnote 85 reads ”Evictions are the number one cause of homelessness. Shelter, 2017. Eviction from a Private Tenancy Accounts for 78% of the Rise in Homelessness since 2011. Press Release, March 23, 2017.”  [Except that termination is not a cause, click here ] and, as Shelter subsequently admitted: “The inability to find a new place to live once a short term tenancy ends is a leading cause of homelessness in Great Britain.” Click here ]

Secondly, footnote 86 reads “Even for those unlikely to be made homeless, the threat of eviction can mean constant anxiety and insecurity. Shelter, 2017. Unsettled and Insecure: The Toll Insecure Private Renting Is Taking on English Families.  [The basis for the claim of millions of people is “a survey of 817 Private renters in England with children in household”.  It is not clear why those who are unlikely to be made homeless should have constant anxiety and insecurity over the threat of eviction.]

The Land for the Many report mentions Theresa May’s proposed abolition of Section 21 and John Healey’s call for caps on rent increases, but the authors want more:

“We further recommend that the permitted grounds for eviction within the first three years of a tenancy should be more limited than they are under the reformed system in Scotland[89], excluding, for instance, a right to repossess the property in order to sell or renovate.[90]  (Emphasis changed)

Footnote 90 reads: ”As a recent IPPR report notes, 62 per cent of no fault evictions are served to enable landlords to sell their property or to use the property themselves. This additional protection would not prevent landlords from selling their property with sitting tenants. See D. Baxter and L. Murphy, 2019. Sign on the dotted line? A new rental contract. IPPR.”

[Baxter and Murphy’s report, courtesy of Nationwide Building Society (not the Nationwide Foundation), says: “Improving security for tenants:   Government should introduce a mandatory open-ended tenancy, ending section 21 (no-fault eviction), removing selling a property as a ground for eviction in the first three years of a contract and limiting rent increases to once a year, capping them in line with the consumer price index.” (Emphasis added) Click here ]

But even that is not enough.  The Land for the Many report goes on:

We recommend increased eviction notice periods. Two fifths of private tenants (41%) report that the current two-month notice period is too short to allow them to find a new place to live.[91][Except that only 18% said it was definitely too short, and 24% said it was possibly too short – paragraph 3.9 Click here ] We also propose compensation (equivalent to three months rent) for tenants who are forced to move through no fault of their own. This would incentivise landlords to sell to sitting tenants or sell the property as tenanted to another landlord where possible. It is paramount that such protections are in place before any broader housing market changes are enacted that could trigger landlords to sell. (Emphasis changed).

There is no footnote to support the second part of this recommendation, but I recognise the source: Dan Wilson Craw, the director of Generation Rent, who is mentioned in the Acknowledgements. He wants landlords to give six months notice if selling, and refund three months’ rent. Click here

In summary, all they are asking for is lifetime tenancies, rent caps, no sale in first 3 years of a tenancy except with sitting tenants (at below market value therefore) and six months’ notice from landlords, three of them rent-free.

They want these changes to be enacted first in order to trap landlords in the PRS before tax changes are brought in that will make them wish they had sold when they had the chance.

The people and organisations mentioned above think that the changes they demand would help tenants, by making the PRS fairer. Beth Stratford claims they “have the added benefit of dampening demand from Buy-To-Let landlords.”

She may be unaware that demand from Buy-To-Let landlords has already been dampened by George Osborne’s lunatic tax on mortgage interest and other finance costs, and that the PRS is already shrinking for the same reason and consequently the cost of temporary accommodation is ballooning.

These people lack the wisdom, knowledge and experience to realise that the mere threat of these changes would drive even more landlords out of the market, reducing supply and making the poorest tenants homeless.  The latter would have more to worry about than whether their children will need to change school. Brilliant! Well done, all of you, not forgetting Nationwide Building Society!



Comments

Peter G

11:38 AM, 7th June 2019
About 2 weeks ago

The tenant signs a contract to stay for a defined period. They know they are expected to leave when the contract period ends. So why should the owner pay the tenant 3 months rent in compensation for honouring their contract? Bizarre? Or have I misunderstood something?

David Price

12:59 PM, 7th June 2019
About 2 weeks ago

Reply to the comment left by Peter G at 07/06/2019 - 11:38
Peter, the only thing you have misunderstood is the concept that the tenant can do no wrong and the landlord can do no right. Dan Wilson Craw may be able to help you understand!

JJ

14:25 PM, 7th June 2019
About 2 weeks ago

I am renting my property with a view to developing it and/or living in it; my present tenants know this but still wish to continue renting until I do it. If these proposals were to come in as described I would have no choice but to evict my present tenants before the new regulations came into force.

Rob Thomas

14:53 PM, 7th June 2019
About 2 weeks ago

I have looked at the IPPR report and it is one of the most one sided documents you could imagine. If the recommendations listed were enacted it would be the end of the private rented market as we know it. Just to give one example it recommends that "Local authorities should purchase private rented
properties to address local housing need" - as if private rented property doesn't address housing need. Of course, we all know how well local authorities run their housing stock.

It is frankly absurd that a mortgage lender with a buy-to-let offering would sponsor this. I suggest we should ask landlords to boycott Nationwide Building Society (The Mortgage Works).

Simon Williams

15:13 PM, 7th June 2019
About 2 weeks ago

The underlying thesis of the report is that buy to let demand has caused rampant house price inflation. Furthermore, the extraordinary assertion is made that the problem in the UK isn't really about lack of supply, thus confounding a whole generation of economists and flying in the face of all international evidence. Take Japan for example - a very densely populated country with inherently high land prices. But because they have built roughly 3 times as many new properties per year as we do in the UK, property prices have been far more stable than in the UK.
As for inflated demand, our PRS is actually quite small by international standards, despite attempts to portray it as an over-inflated monster. In Germany, the PRS is more than twice the size, but property prices are cheaper than the UK.
Encouraging landlords to get out of the market will lead to the PRS shrinking to even smaller levels by international standards. That will mean less competition, less quality and higher prices for tenants. It will also reduce the supply of new build (see for example Berkeley Group's statement that they will build less property because of less demand from buy to let.) Right now, help-to-buy is helping to prop up a lot of developers, but it won't last forever.
What is offered in the report is a worn-out analysis of which Marx would be proud - the state must control the market to make it all better.
In my view, the state must get out of the way of restricting supply. It must positively encourage buy to let if we want competitive forces to drive up quality and keep a lid on rents. If tenants have a decent choice, they won't fear eviction; they won't stay in rubbish property and they won't need to put up with bad landlords. They'll just take their business elsewhere. The problem at the moment is that right now they often can't because supply - and therefore choice - is dwindling by the day. This report would obviously like that trend to continue.

Mick Roberts

16:03 PM, 7th June 2019
About 2 weeks ago

Wow, even less houses for tenants now then. After reading that, Landlords will be ringing Estate Agents up to sell.
And then Labour will be moaning Greedy Landlords vacating the market & Selfish Landlords not buying more to ease the crisis.

3 months rent just like that. Can we never retire? The few Landlords that did buy houses with tenants in to keep them in, after reading the above, Labour is gonna' be losing them too.

Cathie Hawkins

21:37 PM, 7th June 2019
About 2 weeks ago

Unless these sorts of reports are torn apart and ridiculed in the same platform as they written, people will believe them. The authors need to be vilified as completely stupid/ignorant. I’m scared now and seriously considering jacking it in before I can’t. I have held on before, trying to adapt. I don’t actually want to make 7 families homeless but I’m now thinking that maybe I can’t afford not to. I’m already paying 40% tax for a profit that is way below the threshold. These were our pension - looks like we may have to rely on the state in the end.

Matt Wardman

10:15 AM, 9th June 2019
About A week ago

I think you missed the bit where LLs will be paying the Ts Council Tax, and not allowed to pass it on:

" A cap on rent increases, when rents are already
unaffordable in many areas, may sound of modest help to tenants, but in combination with the removal tenants’ liability of council tax (see below), it should result in an overall reduction in housing costs for most private renters. "

Appalled Landlord

11:46 AM, 9th June 2019
About A week ago

Reply to the comment left by Matt Wardman at 09/06/2019 - 10:15
Hi Matt
That had already been covered in an earlier thread.
https://www.property118.com/land-for-the-many-not-for-landlords/#comments

Luke P

12:29 PM, 9th June 2019
About A week ago

Reply to the comment left by Cathie Hawkins at 07/06/2019 - 21:37
The only way it couldn’t be passed on is by implementing rent controls, otherwise the moment it was due to come into force rents would go up by the same amount.

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