To hate landlords?

[MsPeachh]

Last month, I had to move suddenly. I found the flat I’m in now, it had just been bought by my landlord and I’m the first person in after the former owner moved out. It’s an ex-council house that the owner had purchased under “right to buy” and now I have to pay a third of my salary to a private landlord for what was originally meant to be affordable housing.

I’m a scientist in my late twenties with good qualifications and I feel total despair that I might never be able to afford my own home, and I will be lining someone else’s pockets via rent for the rest of my life. Let alone what anyone in a position less fortunate than mine is supposed to do.

To make matters worse, I looked up my landlord’s info on Companies House and I discovered that they have 22 properties in my area! It’s a village on the outskirts of a town where lots of people move when they are ready to move out of the hustle and bustle and settle to raise kids. And more and more of these properties are being snapped up by this landlord. It makes me sick, honestly. I know a lot of people become landlords accidentally in later life due to remarrying etc and ending up with two houses between one couple, but this landlord sucking up 22 houses in such a small area disgusts me. I feel like I’m completely losing hope for the future of people my age and younger as house prices keep soaring and soaring.

AIBU?

So, quick back of a fag packet calculation:

Take half the cost to the state of subbing the private rental market ie £6bn. This represents the tranche of people on the lowest incomes who get Hb/housing element of UC. We've been paying out that £6bn for twenty years. That's £120 bn.

If we'd taken £120bn and built 1,200, 000 houses with it and charged those workers an affordable rent for living in them, we'd by now as a country have one million two hundred thousand real estate assets whose cost had already been covered and which are now running at profit from the rents we're continuing to charge for them.

But we haven't got that. Instead we've just given billions of state money to private individuals and we ourselves have no assets but the private individuals do.

It doesn't make economic sense.

So by paying housing benefit we are providing a subsidy for landlords
No, we are paying for people who couldn't otherwise afford it to put a roof other their head.

HB is not aimed to subsidies landlords. Landlords don't really care where the money comes from, they only care that tenants pay for the property they are borrowing.

It's no different to getting a car on a lease. The rental.of the car might be paid by UC the person recurves. You wouldn't say that UC is subsidising car lease companies!

It doesn't make economic sense
No it doesn't because you've left off the taxes that private renting generates.

That is, if we'd taken 120bn twenty years ago and built houses at a cost of 100,000 each.

No different to getting a car on a lease
Ya think?
I think it's very different, for one thing a car is a depreciating asset

Actually I think that UC subsidises lots of things. Mostly employers but yes general costs and profits too.

I think it's very different, for one thing a car is a depreciating asset
But it doesn't change the fact that in both instances, you are borrowing a borrowing avoid that doesn't belong to you.

The car company will still see to make money out of the transaction, car depreciating or not, because that's the nature of the business.

Yohoheaveho yes. Actually it's so different from renting a car it's not even worth going into.

But I wonder how we'd be thinking now about say the 400bn covid bill if we had a few million more real estate assets on our sheet in reserve.

"Puzzledandpissedoff
It should be by need not by want
I need the 3 bed house for my family. Absolutely!
I want the 3 bed house because I've lived here for long time. Sadly. No

I happen to agree, but good luck with that given the howls of "you can't just uproot people!!". Nobody's suggesting tenants should be flung out at a moment's notice, but perhaps some change in expectations is called for

It seems to me that SH is either a valuable resource to be deployed properly or it isn't - and as said, we can't all have everything we want exactly as we want it all the time"

To me, this is where the private rental market serves a purpose as well so that people have the choice of an open market. Let's take an able bodied couple with children who have just moved out. Theoretically they should only "qualify" for a one bedroomed flat, but they enjoy gardening and would like to have grandchildren to stay over weekly. They're also pretty particular about the area they like. They can't afford to buy so what do they do?

This is where private renting is useful.

I agree, SuperbGorgonzola; for me they both have a role, but the whole thing gets bogged down in ideological objections about private ownership and scumbag LLs

Nobody denies these types exist and should be controlled, but then not all LAs and HAs are great either - as threads about allocation and maintenance make only too clear

I guess the point is that hardly anyone ever posts about when things have gone right; we usually only hear about problems, and that can skew things a bit

There's definitely a place for both. What we have now though is that renting is mostly through private individuals. Fifty years ago, most people who rented did so through the state, so there's been a huge shift in provision for the 35% of households who do rent.

As with many supposed private enterprises eg railways the state still subs to a fair degree but there's less accountability as practices are less regulated.

I'm not sure that's a good thing overall.

The initial impetus to ending lifetime tenure - which all tenants, state and private used to have until 1989 - was to encourage private investors to step in and roll back the state and allow more flexibility through the market.

However there hasn't been any big time player investment, it's mostly piecemeal individuals and they're not regulated plus we've ended up having to sub them anyway. I don't think it's worked out as planned.

angryfishes I think this is where I disagree with some other posters on the concept of a professional landlord who owns at least say, ten properties being a positive rather than a negative.

Someone with that size of business should be running it better than an individual who is making little to no profit from one property. Tenants should find that a landlord with a bigger business can have repairs done quicker and to a professional standard and is more likely to invest in things like better windows and insulation because they can take a longer term business view. The benefit of the tenant should be that the landlord making a good profit is less likely to sell and as long as the terms of the contract are met should have no reason to bother a good tenant.

Little to no profit from one property
This observation conveniently hides the fact that the property is an investment which is appreciating, the revenue from renting at it's just a 'face washing' exercise.
Landlording is an investment activity

The enthusiasts for state housing tend to repeat untruth so frequently they may come to believe it themselves. Sorry, but No:

Building a house pre-war may have cost a thousand pounds or less. But as a proportion of average income, that was an enormous amount of money. A smart five year old can figure out that a 'Thing', of any kind, which is worth the same as ten Mars Bars has a value of ten Mars Bars. If currency has devalued, to the point where the same 'Things' now cost one hundred Mars Bars, then said 'Thing' a) has not been fully paid for, if only one Mars has been handed over, and b) will still not be fully paid for, even when ninety nine Mars Bars have been handed over.

Inconvenient Truths:
Opportunity Cost Of Capital Invested. (This might need a smart 8 year old) At the time you invested all available pocket money savings in Mars Bars, which produced no 'Interest' or 'Profit' at all, you could instead have invested in all kinds of other things; Stocks and Shares, Land, other profitable income-producing investments, not least, buying a sweet-making factory, or in this case, housing which was let out at Market Value Rent.

That way, if an average person on average earnings was able to spare two day's income a week for rent, that would be the rent agreeable to both sides. It would be a peculiar investment to deliberately and permanently set a rent of only half that, ensuring no return on the capital, and no capital reserves for future major repairs and refurbishment and maintenance. It is wilfully silly to declare that council houses are 'free', because they were built long ago. Are other houses 'free', built at exactly the same time?

Variation in the Rental Value and in the Resale Value (A smart twelve year old could grasp this) You built homes in lots of areas.

But currency devaluation, all on it's own, now makes the cost to buy them a hundred times more than they would have sold for on the day they were built. The same difference applies to the difference in a rent between now and the day they were built; i.e. Their rental value is worth a hundred times more than they would have rented for, simply because of successive governments' abandoning the gold standard and printing money.

A second variant is that many of the areas where you built houses will have become more fashionable. When an area was run down, derelict, a bit dangerous and un-cared-for, the market price to rent or to buy a home would not be particularly high. If it becomes highly desirable, with rich people eagerly competing to live there, then obviously the real market value of a home, to rent or buy, will be extremely high.

(There is a legal case which ought to be taken, when LA housing bodies refuse to make best use of their assets, as they ought under their Public Service Duty. One example was a site bang in the centre of a luxury area, right next to a B.R. station, right in the centre of the extremely trendy village. Achieving millions per house is easy. Developers could have traded a hundred houses to be council homes, within a short distance, for every plot permission in that prime site. Instead, the L.A. dogma allowed them to erect a council estate of one house per plot worth it's size in gold bars.)

A third variant is that all governments' interference in operation of the housing market has deliberately boosted prices, (using every means including encouraging unsustainable debt, pouring in money from the public purse and altering tax rates) In turn inevitably, this has boosted the market level for rents. Making a return on investment, for a private landlord, must be a mathematical sum based on the cost of the property. (Duh)

Actually it's so different from renting a car it's not even worth going into
It really isn't any different at all from a business model but those with an issue with landlords only to see them as business owners when it suits them.

This observation conveniently hides the fact that the property is an investment which is appreciating, the revenue from renting at it's just a 'face washing' exercise.
Landlording is an investment activity
And whats wrong with that? Do you have an issue with people who invest in a pension fund? Why is it so bad to invest in a property?

Those in social housing also have the option to buy at a discount and sell at higher price, hence making an investment profit.

But no, let's demonise landlords!

Those in social housing also have the option to buy at a discount and sell at higher price, hence making an investment profit

This is why I'm fascinated that it rarely receives any comment; the best we see is that "if they offer it someone will take it", which doesn't seem to me to be good enough

If there's a principle at stake here - and we're constantly told there is - surely those who've already got social housing might be expected to be the very ones keen to keep it in public hands?

@Yohoheaveho

Little to no profit from one property This observation conveniently hides the fact that the property is an investment which is appreciating, the revenue from renting at it's just a 'face washing' exercise. Landlording is an investment activity

That is often true in the longer term but if there is a mortgage to pay and/or a high turnover of tenants it certainly can be very low profit, even loss making. An individual might not be able to afford to keep it long enough to see the value rise.

In 1910 I think it was about 90% of people who rented from private landlords and hardly anyone owned their own place so I am not sure we are too far from the norm now.

I agree many properties are not going up in value. Eg the only buy to let properties we had (2 flats in London) sold in about 1996 sold for losses of 50% lover what we had bought them for AND lost money most month on the rent v the mortgage (the 11% interest rate mortgage) and we also spent about 100 hours painting etc so in a sense I was serving the needs of tenants at a loss - that is the risk you run.

@Xenia any business carries risk. People are entitled to whatever profits they can get. I don't see anyone getting angry at Chanel for charging £5000 for a bag when it must cost them only a few hundreds to produce and even if you account for their marketing costs etc, they are still making a mint which was why they could afford to return their covid stimulas money to the French government. People know Chanel is a luxury, its not a need. People wouldn't be angry at landlords for high rents/high profits if they were serving richer people i.e. young professionals who could afford to buy but choose not to as they want to live in Zone 1; expats, international students. People here are angry at landlords as they need (a) a place to live, and (b) have no other option. You can't really compare to 1910; we had workhousese then too and I don't know many people who want to reintroduce those.

Inequality is a scary thing and the way I see it, we can't have 40% of the population shut out of the most stable tenure of the UK housing system. Not in 2020 when people have the Internet and Facebook and can see how the other half is living. This leads to resentment and anger and after a while, populism and civil unreset.

In 1910 the housing provided by these landlords was in such poor condition that recruiting seargents in the war a few years later put pressure on the government to build houses that didn't endanger people's health. (The "homes fit for heroes" drive.) Not sure I'd hold up our previous experience of being a rentier economy with an unregulated landlord class as a shining example of a well run country.

@AngryFishes

In 1910 the housing provided by these landlords was in such poor condition that recruiting seargents in the war a few years later put pressure on the government to build houses that didn't endanger people's health. (The "homes fit for heroes" drive.) Not sure I'd hold up our previous experience of being a rentier economy with an unregulated landlord class as a shining example of a well run country.

This. And also the elite were concerned about potential spread of civil unrest. The Russian Revolution happened during WW1. The authorities didn't want to risk anything similar happening here.

There was desperate poverty with many housed in absolute slums. Which were also a public health hazard.

Who on earth, except for the likes of George Osborne (who I suspect salivates at the idea of workhouses) would want a return to 1910 - when vulnerable destitute people quite literally were left to starve on the streets.

Social housing wasn't provided because of altruism. Nor was the welfare state and the NHS.

Housing is a public health issue (as Covid has highlighted). Bad Housing kills.

@SheepandCow oh my, you are quite correct re how covid has highlighted the health risks from poor quality/overcrowded housing in a similar way to the WWI experience. We're even using the same language with talk of front line workers etc, who are the ones most likely to be in poor housing.

It would have been interesting, were we not about to spend the next few years pouring all of our money, time and expertise into the chemical toilet that is Brexit, to see if this would have had any effect on housing policy.

@SuperbGorgonzola agree that in theory a big investor should be better to rent from than some ninny jawing on about how it's so hard to afford a boiler repair and who takes every difficulty personally. I also think that this was possibly what was originally envisaged by opening the floor up to investors.

But it hasn't worked out that way and the lack of regulations mean that even those with the capacity to do a decent job don't always, because they don't have to.

There are plenty of regulations but they're not being enforced very strongly. I rent out one house and after refurbishing it then needed to (quite rightly) do gas and electrical safety checks, provide smoke alarms, protect the tenant's deposit (which could be no more than 5 weeks' rent), serve various specific pieces of paperwork etc etc, and obviously there's tax on it. I imagine I'll make a loss, but I've bought it as an investment and am glad to be able to house someone who needs it. I'm sure it's been pointed out up thread that the rules on taking back possession in the event of arrears etc were changed due to Covid (in tenants' favour). So while I trust my tenant 100%, I am aware that there are situations in which landlords have to battle to get their asset back, as well as situations where tenants have bad landlords. I rented privately for some years when I was younger and the landlords were all reasonably decent. Certainly none of them appeared to be making big bucks at our expense (rents were much lower though, as were expectations - we had to provide things ourselves in various properties that tenants definitely expect to be there nowadays).

So I think YANBU to hate private renting ,(although there's a place for it) but YABU to hate landlords. The fault is with the low interest rates on savings, thus lack of alternative investments.

There's no real regulation re quality, price or fitness to provide though, and that together with s21 means we have a pretty lax system overall. Not much comfort knowing you have an energy certificate if you could literally be renting from someone who's done time for murder.