Government policy, landlords and thinking from B to C

Everyone agrees that the housing generally is in a bit of a mess, but few seem to acknowledge that this is a direct result of government policy.

Everyone just wants to blame the landlords for it. Because that’s easy.

But any problems with landlords are just the result of government policy and government action (or inaction).

People see the immediate effects of something (that A will = B) but not the long term effects (that B will then lead to C).

So what do I mean by this?

The right to buy

This was set up by Mrs Thatcher years ago, and the results have been coming for a long time.

The immediate effect, the A to B effect, seemed good. Lots of ordinary people became homeowners. Brilliant! Joy for the people, all of them then gratefully voting Tory.

But what happened then?

• Because of the way it was all set up financially, those houses were never replaced in the social sector (I think that was by design by Mrs Thatcher), meaning fewer social houses available for low-income families.
• As regards the houses sold under the right to buy –  many of them (I think the figure is about 40%) ended up eventually in the hands of private landlords.
• Obviously, the private landlords charged more rent than a social housing landlord would, meaning that the benefits bill went up – which we all pay for through our tax.

That was the B to C.

Increasing tax

George Osborn, when he was chancellor, changed the tax regime for landlords making it less profitable for them. The changes came in gradually over several years but are now fully in force.

A to B reasoning is that the government gets more tax income, and the ever unpopular landlords are ‘bashed’.

The B to C effect, though, is twofold

• Landlords have to raise rents to say solvent, or
• Find that the whole landlord thing is becoming unprofitable and either sell up or rent properties as holiday accommodation.

Because you can’t force ordinary people to carry on being a landlord if they don’t want to.

Rent control

This is a lot in the news just now.

Landlords are increasing rent (probably due to government tax changes), and tenants cannot afford it.

Short term answer? Stop landlords doing this. Restrict their right to increase rent.

Initial effect? The A to B?

Probably good. Tenants won’t have to worry about their rents going up dramatically. Evil landlords are prevented from profiteering and causing misery to their tenants.

But what about the B to C?

Landlords, faced with a changed tax regime and increased costs (remember that they are being expected to make their properties energy efficient before anyone else) will find the whole landlord business to be totally uneconomic and will either

• Sell up, or
• Rent the properties out as holiday lets instead (as they are more profitable).

But, you may be saying, those properties will still exist. They will still be there.  Doesn’t the fact that they are being sold up mean that they can be bought by families?

Well, maybe a few of them. But many ordinary families can’t afford to buy.

Prices will have to come down very significantly for that to happen. We would need a big property price crash. And government and the rest of the population who own their properties won’t want that.  That would be very unpopular.

But in the meantime, if there are fewer rented properties, where are all those people who can’t afford to buy and who are on benefit going to live?

They can’t live in social housing as much of that has been sold off! Millions are on waiting lists.

The shadow housing sector

In the meantime, there are an increasing number of rented properties owned by criminals.

Why? Because Local Authorities are unable to enforce the myriad regulations that government keep passing as

• They don’t have the funds, meaning that
• They cannot afford the staff (whole teams of Local Authority enforcement staff have been made redundant) and
• Cannot afford to train the new staff that they have had to take on since

Think about it. If you were a criminal, what type of criminal activity is most attractive?

Answer – the activity which is unlikely to result in enforcement action.

Plus, Local Authorities are so desperate to find somewhere to house all the people who cannot afford to live in normal private rented accommodation that they are paying some of these bad landlords to take on the homeless.

It’s crazy!

Other criminal landlords, just stay under the radar, as described by Ben in his article here, and prey on the most desperate in society.

THAT is where you find those shocking housing conditions you read about in the news.

But why are they there? Because government do not fund proper enforcement action!

So what have we got?

Short-termism in our politics, which means that it is never in a politician’s interest to reason from B to C, has brought about the current big problems we have in housing.

• Over many years the ‘right to buy’ has resulted in most rented accommodation being moved to the private rented sector. Which is more expensive. But by the time we can really see what the result of the ‘right to buy’ is, Mrs Thatcher and her government are long gone.
• A changed tax regime and increased costs means that we have decent landlords who cannot afford to carry on as landlords and who are either increasing rent, renting out as holiday accommodation or selling up.  But again, the politicians who put those policies in place are no longer here. THEY are not the ones who have to deal with the result of their actions.
• And finally, the only people who can afford to carry on renting, because they just ignore all the rules anyway and don’t pay tax, are the criminal landlords. Who are attracted by the lack of enforcement. Which is the result of austerity. But Mr Osborn has long left Parliament and is now doing lucrative jobs elsewhere.

Councils that have been forced to shed their experienced staff due to funding cuts are not in a position to enforce the laws. Leaving us with

• unaffordable good accommodation (and an increasing shortage of it),
• poor quality affordable accommodation run by criminals, and
• no-one to enforce standards.

Great! All the result of government policy and inactions.

So, where do we go from here?