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Ben Reeve Lewis Friday newsround #73

August 31, 2012 by Tessa J Shepperson

[Ben ReeveBen on a chair Lewis has an anniversary   …]

This week saw a personal milestone for me. 3 years ago Frazzy walked into interview number 9 at my office seeking some housing advice.

While she sat there, lost in her own personal problems that she was communicating with an earnest face, all I could think was “Well helloooooo. Whose this charming creature”. I am nothing if not professional, albeit it in a slightly oily Terry Thomas kind of way.

Exceptional customer service …

Ben and FrazzyBut in defence of my dreadful man-type shallowness, by Christmas (see picture opposite) housing issues resolved, we were engaged and we now live together. How’s that for a happy ending?

Not to mention an exceptionally high level of customer care? Although I was astonished by the speed of it, as my daughter said “Sometimes you just know”!

So it was with a warm and fuzzy glow that I turned my more charitable eye to the news this week. Shapps? What a lovely, good looking, charming straight guy. Lord Fraud? He is doing his best isn’t he? Eric Pickles? Well I’m sure that diet will work someday.

The Montague Report – a confusion of comments

It’s the Montague report that caught my attention to be honest. Not just it’s publication but the different and sometimes polarised responses it has drawn from various blogs and tweeters. I thought I had best try to understand it a little better.

The Montague report, for those who missed it, or like me, just couldn’t be arsed, was a document published this week, mentioned last year as part of the government’s housing strategy that suggests the there should be more institutional investment in the PRS. Councils freeing up land and stalled building sites to build more homes at PRS rent levels rather than social housing

I was intrigued by the various angles taken by different writers on the same subject. Prompted not least by an annoying and unwanted ‘Wasp in the car’ of a twitter follower, who I studiously ignore, whose views on tenants would make him an ideal contestant for an extreme version of ‘Come dine with me’, starring Nicholas Van Hoogstraaten, Peter Rachman and Heinrich Himmler.

I found it interesting because I expected industry voices whose vested interests were around property developing, landlording and investment opportunities would be universally in favour but even among the usual suspects I didn’t read a review that didn’t contain reservations

The BBC carried an article on it covering a number of views, among whom were Shelter’s. Who, quite rightly in my book, pointed out that the report;

had “missed a trick” in not addressing the current state of the sector. The report offered nothing for the millions of people already in the sector, paying sky-high rents and living under constant threat of eviction or further rent rises.

So far so predictable but when I turned my attention on writers from the investment side it got funky

The next article I read was in the Guardian, authored by Andre Yates. A London based partner of Berwin Leighton Pasner, a real estate company.

Andrew thought the report to be ‘Positive news’. Saying;

Clients are telling us that – at least in the medium term – they still see the best opportunities for residential investment in the affordable housing sector with registered housing providers. Social landlords such as housing associations offer quasi-government backed covenants with the potential for index-linked secure rental streams.

Fair play, that seems like a good thing. Private investors actually seeing a good business model in working with social housing providers. However I don’t operate at that strategic financial investment level. I’m a front-line kinda guy, who only ever meets Mr and Mrs Jones with their concerns about paying the rent, so my focus is on the people at the sharp end, rather like Shelter.

Although welcoming the report Chesterton Humberts expressed their doubts about elements of it and wrote;

The government may not be willing, or able, to provide the necessary incentives to sway any hesitant investors, for example through tax concessions, by making land available or by creating a new use-class for build-to-let. Furthermore the product cannot be delivered unless there are developers onside.

Head of the National Housing Federation David Orr said on their website

We absolutely support the Montague report’s call for reform of, and more investment in, private (market) rented housing. It will be a crucial part of the solution to help tackle the country’s desperate housing shortage.

So far, so supportive but David also added;

That said it is important to plan positively for housing growth which meets the needs of the whole local community. With 1.8 million households on housing waiting lists, the delivery of market rented homes shouldn’t be at the expense of affordable homes.

While the Nat fed and Shelter were concerned about affordability ARLA wrote of it from another angle;

Any increase in supply will help address the issues of ever increasing rents as it is a supply and demand driven market. However any institutional investment will look for a reasonable rate of return to satisfy the demands for a return for the pension or insurance fund, whose investors are the general public.

Which kind of indicates that the return on investment that would be sought wouldn’t exactly result in affordable rents

The Royal Institute of Charted Surveyors who contributed to the report and so you expect to be more optimistic in their support rather interestingly noted;

The Review’s recommendation that local authorities should have a degree of flexibility on the provision of affordable housing must be tempered with a recognition of local market needs. In areas like London where 80% market rent is often not ‘affordable’.

I returned to more familiar ground for me and looked at what the Joseph Rowntree Foundation had to say of Montague. For those of you who don’t the JRF, their views and leanings are similar to Shelter but they have better shoes.

Whilst the Montague report also acknowledges issues around quality standards and longer-term tenancies, I don’t think these run sufficiently deep through the report or its recommendations. The things that make longer-term renting more attractive to people in other countries are the certainty around longer-term tenancies and rent levels. Neither of these are necessarily givens with institutional investment.

What I liked about every single article I read was that they all began with praise for the common sense of it, even Jack Dromey in the BBCs article, they then proceeded to point out the cracks and voiced their doubts that in practice it might not work. Which is par for the course with any report to be fair.

Summing it all up

So what did I learn? That although a good idea in principle there was no guarantee that the increase in investment and the properties it brings onto the PRS market would necessarily result in more affordable rental properties.

Against the background of this plan Shelter Scotland this week reported a 40% rise in advice calls from people who are struggling to afford their rents while websites that represent the interests of landlords still talk about what a wonderful time it is to be one with the massive gap between mortgage rates and rent levels.

So it seems once again that the only solution being offered by Montague is a plan that relies on the chimera of market forces to come together in some mystical and misunderstood conjunction and solve the problems of the PRS in a wave of Disney-esque pixie dust.

What happens when Shelter’s advice requests see an 80% increase?

Mr Cameron, Mr Shapps…..The housing ship has struck an iceberg and we need more than you two bailing furiously with your bowler hats. Quick, shove Eric Pickles in the hole and let the water swell him up to plug the leak

Ben Reeve Lewis

Follow Ben on twitterBen is a Tenancy Relations Officer for a local authority in London, a housing law trainer, a published author on housing law who writes regularly for the Guardian on the same topic and occasionally pops up wittering away on TV. He also runs Easy Law Training with Tessa and Graeme. Occasionally he sleeps

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About Tessa J Shepperson

Tessa is a specialist landlord & tenant lawyer and the creator of this site! She is a director of Landlord Law Services which runs Landlord Law and Easy Law Training.

« Aggressive receivers threatening tenants – what should they do?
Landlord Law Blog roundup from 28 August »

Comments

  1. Rentergirl says

    August 31, 2012 at 11:15 AM

    I agree: Montagu has holes. We need more homes to be built, but the free market will not like a rent (or rent rise) ceiling, which must happen. And Shapism of the week? ‘Tax Payer Funded Housing.’ Eejit.

  2. JS says

    September 1, 2012 at 11:05 AM

    Hey folks. Sorry I’ve not been on recently. Stuff keeps coming up.

    Total non sequitur, but Ben, does this ring a bell to you?

    http://www.bbc.co.uk/news/uk-19443279

    Funnily enough in my old job when I was working in Hounslow, there were lots of properties with converted garages and sheds like that which were rented out at high prices and often illegal evictions followed. There was one very unpleasant case where the landlord was also a friend of a Hounslow social worker and she used the threat of snatching the children into care due to the unsafe accommodation unless they left in 7 days and even did a hatchet-job of a report on it.

  3. Ben Reeve Lewis says

    September 2, 2012 at 10:15 AM

    Not sure I see the connection there JS but yeah, beds in sheds is another example of how broken our housing system is.

    There are no interconnecting ideas because that would be called social engineering by a government that prefers to leave everything to be sorted out by the magic of market forces

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