Rents Out Of Control: How Londoners Are Being Fleeced By Greedy Landlords – OpEd
Yesterday, in my article bemoaning the baleful effect on London of hosting the Olympic Games, I touched upon a story that had emerged last week, when the BBC reportedthat tenants in east London were being evicted as their landlords sought to cash in on the Olympics, charging up to 20 times the normal rent. The BBC noted that one estate agent “said properties typically rented for £350 per week were being marketed for £6,000 per week,” and the housing charity Shelter said it had “seen increasing evidence of landlords giving tenants little time to leave or increasing rents hugely during the Olympics,” and worried that “the situation will get worse as the Games approach.”
This is pretty disgusting, although it should come as no surprise really, as Britain has, over my lifetime, became a country where any means of making money is regarded as laudable, and wealth is, in many ways, the only barometer of success.
However, even without this particularly excessive behaviour brought on by the Olympics, the rental market in London is out of control. A shortage of housing, an excess of demand, the eradication of empathy, and the casual greed that underpins the buy-to-let mentality has meant that families and individuals unable to get on a housing ladder that is out of reach for many people — as prices in London and the south east remain outrageously high — are being thoroughly fleeced by landlords who are not bound by any rules and regulations, and who can — and often do — treat them with disdain while milking them of half their wages or more.
Sadly, however, the greed is so rampant that the thought that landlords — and rents — should be subject to any kind of control is apparently heretical, as is the notion that London’s housing bubble is so hideously overblown that, as well as making hard-working would-be first-time buyers suffer as never before, it is also diverting huge amounts of money from the economy as a whole.
To understand the scale of the problem, it’s worth noting that, in March, Shelter reported that “renting a two-bedroom home in London is unaffordable for families earning less than £52,000 a year,” and, that “in eight London boroughs, including Hackney and Tower Hamlets, families would need to earn more than £60,000 a year.”
Shelter also established that “almost one in four London families now rents from a private landlord — an increase of 70 per cent in the past two years,” and discovered that “the rate of inflation on private rents in London was seven per cent in 2011, almost double the rate of inflation on the average London wage,” meaning that, with the typical London household income at less than £35,000 a year, “growing numbers of families are at crisis point, paying up to half of their income in rent each month as they struggle to continue living and working in the capital.” Shelter’s report is here.
The scale of the problem is such that, last week, the Guardian‘s Amelia Gentleman produced a harrowing article about how people are now living in sheds. In Newham, she met a woman who pays £350 a month to live in a shed at the back of a “crowded HMO (house of multiple occupation),” where she lived before. She said she preferred the shed, which “has electricity and a tiny kitchen which leads into a bathroom, but there’s no hot water, so when she wants to wash she needs to boil two huge vats of water on the stove.” She “sleeps on a mattress on the floor, the furniture is broken, and the flat is heated only by a feeble electric radiator. When Newham council’s planning officials knocked on her door a few weeks ago, she was sitting dressed and wrapped in a duvet against the cold.”
As Amelia Gentleman noted, the rent that she pays to a Mr. McGuinness, alarmingly described as someone who “tends to go for the lower end of the market,” is, nevertheless, “at the limit of what [she] can afford.” When council officials asked her “if the rent seems fair,” she laughed and said she didn’t think so, “particularly when you take into account the man with mental health problems who lives in the main house and who regularly defecates in the garden, which is already scattered with detritus left by former tenants — old kettles and beer cans.”
Amelia Gentleman also pointed out that converted sheds “have become an increasingly mainstream — if illegal — part of the London property market,” because of “the explosion of property prices throughout the capital, and the huge shortage of supply.” As a result, “Landlords are subdividing family homes into smaller and smaller units, haphazardly extending plumbing and electricity connections from the main properties into the garden sheds and garages, which they have no problem in renting out.”
Newham’s mayor, Sir Robin Wales, said, “It’s big money. You get a few breeze blocks, sling up some crappy old shed in your back garden, and now you’re making hundreds and hundreds of pounds a week. It doesn’t take long for you to make a lot of money out of it, provided you are prepared to trade in human misery.” He added, “We found a walk-in freezer where people have been living, paying rent to live there. The record was one house with 38 people, of whom 16 were children.”
He also explained that many landlords — about 1 in 4 — insist on being paid in cash. “They just take the money and they don’t give a toss about the conditions the people are living in,” he said. “It is poor people who are being exploited by rogue landlords trying to trade on people’s misery.”
That misery is growing — not just in the people paying £350 a month or more to live in a shed, but also in the increasing numbers of private tenants falling into arrears and being evicted. As the Guardian noted two months ago, “The number of tenants being evicted through the courts by private landlords has increased by 17%” in the last four years.
For hard-pressed families, the government’s newly-introduced benefits cap is also a problem. Despite the malignant propaganda that accompanied it, portraying the unemployed as work-shy scroungers, taking huge amounts of money from the taxpayers to live in homes that workers can’t afford, there was no mention of the fact that it is the unregulated landlords who are taking all the money from the taxpayers, just as there was no mention of how benefits are, in many cases, all that separates the working poor from destitution — the working poor whose numbers are ever increasing as skilled jobs disappear and we become a US-style, minimum-wage wasteland of unskilled “service” jobs.
As the cap on benefits — a maximum of £250 a week for a one-bedroom flat and £400 for a four-bedroom property — begins to bite, evictions are already taking place. Last month, Amelia Gentleman reported from Marylebone, where officials at the county court had “started granting eviction orders to a number of landlords in housing benefit cases, allowing them to begin eviction proceedings against tenants who are no longer able to afford their rents as a result of the new cap on the amount the government will contribute to rent payments.”
During what was described as “a busy rental repossessions hearing,” one landlord, who had turned up “to evict a woman and her three children, the youngest aged seven, from the flat they have rented from his property company for the past two years.” It was his ninth eviction this year, and “he has a further 35 families that he has to evict over the next few months as the housing benefit cap takes effect.”
The landlord was unhappy. “The social cost is immeasurable,” he said. “Lives are being wrecked. I don’t like ethnic cleansing, and that is what is happening.” He explained that the tenants he was evicting were “exclusively non-white,” and added, “I don’t think that it will save any money and I am very worried about the social implications. What is going to happen to the kids? We have tenants in the office crying, regularly. Secure home life is important. See where this ends up in four years. See what social issues you are going to have … We are asking for trouble.”
With the cap making much housing unaffordable — not just for tenants, but also for councils — it was also revealed last month that some London councils have begun making plans to move housing benefit claimants outside London as the number of properties those on welfare can afford to rent shrinks considerably. Newham’s Labour council led the announcements, stating that it was planning to move 500 families who relied on housing benefit to Stoke-on-Trent. As the Guardian explained, “Tory-led councils such as Hillingdon, Croydon and Westminster have admitted either placing claimants outside the capital or said they were preparing to do so. Adverts have been placed in local newspapers in Berkshire asking for landlords to become part of a ‘three to five years guaranteed local authority scheme.’”
Given that I have heard from friends about the alarming and seemingly unstoppable rent rises occurring across the capital — one friend, a single mum with a young daughter, recently had her rent raised by £400 a month, without warning, and was left scrabbling around to find another property, for which she needed to secure a guarantee from someone she knew who was earning £36,000 a year — I was pleased to note that, a month ago, Owen Jones, writing for the Independent, reported first-hand on the unfettered greed in the marketplace, as he had to move unexpectedly, and discovered just what was passing for a fair rent these days. I’m cross-posting his article below, and afterwards I’ll bring the story up-to-date with recent developments.
I can afford to pay the rent — most people can’t
By Owen Jones, The Independent, April 20, 2012
I already knew that Britain was in the throes of an escalating housing crisis, but, on the move for the first time in two-and-a-half years and, having been protected from soaring rents by a benevolent landlord, I was in for an unwelcome meeting with reality. Looking for a modest two-bedroom place in London’s Zone 2 — with a housemate who, appropriately enough, works for a housing charity — I found that a standard monthly individual rent was £800, even £900. One estate agent asked what our maximum budget was: when I suggested £700 each a month, he spluttered down the phone. How many can actually afford — and I mean “have sufficient money left over to have a decent existence after paying the landlord” — these sorts of rents?
Inevitably, I took to Twitter to vent. I was stunned by the response. Hundreds of furious Londoners bombarded me with their renting horror stories. One had a 35 per cent rent hike imposed on them at Christmas; another was forced to desert their Stockwell flat after a 40 per cent increase. “My tiny flat in the East End went up by £200 a month for the next occupants when I left,” freelancer Scott Bryan tweeted me. “It was £600 already. Eyewatering.” Another abandoned their own “tiny flat” in Zone 3 after their monthly rent went from £720 to £950.
Private landlords can do as they please, of course. Having a roof over your head is a basic human requirement and, when there is a lack of houses to go around, it is a need that can be exploited. A landlord knows that, if their tenants don’t like an outrageous rent hike, their only option is to put themselves back at the mercy of the ever more pricey private renting market.
According to Shelter, annual rents in inner London went up by 7 per cent last year — or just under £1,000 for a two-bedroom house. When people’s wages are flat-lining, that’s a big hit. Of course, some landlords — like mine — can be benevolent; others ruthlessly profiteering. It is a complete lottery.
I’m no victim. I can afford a high rent, even if it rankles. That is not the case for most. The number of us privately renting has soared: One in six households now have private landlords. And it is no longer largely the preserve of students and young people. Indeed, the number of families with children forced to privately rent has nearly doubled in just five years to more than a million. They face the prospect of having to repeatedly move, disrupting the education and overall well-being of their kids.
Greedy landlords are fully aware that most cannot afford to pay their extortionate rents. But they also know that the taxpayer will step in and subsidise them with housing benefits. According to the Homes for London campaign, to get a two-bed place in Camden, you need an average monthly household income of £5,324; in Tower Hamlets — one of the poorest boroughs in Britain — it’s £4,333, way over double Britain’s median household income. It’s the state that tops up the difference. Back in 2002, 100,000 private renters in London were claiming housing benefit; it soared to 250,000 by the time New Labour was booted out.
But Cameron’s Government has decided to punish the tenant, imposing a housing benefit cap that will force many out of their homes. London is on course to be more like Paris: with a centre that is a playground for the affluent, while the poorest are confined to the edges.
Here are the consequences of Thatcher’s ideological war on council housing. Her mentor, Keith Joseph, argued right-to-buy would spur on “embourgeoisement”. Instead, it has left five million people languishing on social housing waiting lists, and millions at the mercy of private landlords. Council housing has been intentionally demonised as something to escape from, and the lack of stock to go around has left it prioritised for those most in need. We’ve come far from Nye Bevan’s vision of council housing supporting mixed communities, replicating “the lovely feature of the English and Welsh village, where the doctor, the grocer, and the farm labourer all lived on the same street”.
But rather than leave millions at the mercy of the mini-autocrats of the rented sector, a new wave of council housing would offer accountable landlords, without the absurdity of market rates. Instead of wasting billions on housing benefit, we could spend it on building housing, creating jobs and stimulating the economy.
We could learn a lot about private renting from Germany. Local government sets the maximum rent for flats. The landlord cannot arbitrarily impose dramatic hikes; increases can only come in regulated steps. Such a solution would be good for the British taxpayer, bringing down the housing benefit bill without kicking the tenant. This ever-worsening housing crisis is just a striking example of a society based around the needs of profit, rather than people.
We were told the free market would liberate the individual: instead, it leaves them trapped by the whims of landlords, financially less free, and banished from entire communities. It is a con — and an expensive con at that.
Just today, a highly critical report by the National Housing Federation, Shelter and the Chartered Institute of Housing pointed out that ministers “are failing to tackle the housing crisis and not enough new homes are being built, leading to rising rental levels and growing homelessness and overcrowding.” The report also “points out that while there has been a small increase in new builds, the 109,020 completed homes in 2011 is almost 40% below the 2007 peak of 175,560 — and less than half the number the government admits would be required annually to meet demand.”
The report also notes that homelessness is increasing, up 27% in the last two years, and that overcrowding is also “becoming an issue — with more families squeezed into ever smaller spaces.” The number of households living in overcrowded conditions has risen from 630,000 in 2009-10 to 655,000 in 2010-11.
For young people, a further threat from this savage government is to prevent under-25s from receiving housing benefit at all. That is not yet a policy, although it may become one, as there appear to be no brakes on the imposition austerity on the one hand and, on the other, a laissez-faire encouragement of ruthless opportunism that is of benefit to very few people.
There are voices calling for change — the Institute for Public Policy Research (IPPR), for example, has just issued a report suggesting “devolving power, resources and responsibility for housing to the mayor to ‘remove the worst iniquities which he spoke out against during his campaign.’” As the BBC noted, ‘When the housing benefit cap was announced in 2010, Boris Johnson said he would ‘not accept any kind of Kosovo-style social cleansing of London’ adding: ‘The last thing we want to have in our city is a situation such as Paris where the less well-off are pushed out to the suburbs.’”
In addition, Shelter’s Homes for London Campaign has some useful suggestions for the Mayor, although none of them go far enough. What is needed is an end to the absurd housing bubble in London and the south east, a return to controlled rents, and a huge project of building social housing, which would, as Owen Jones noted, also stimulate the economy.
But that particular course of action — stimulating the economy — seems to be something that, absurdly, the government, fixated solely on the slow death of the economy by a thousand cuts, is not able even to contemplate. In the meantime, as I have mentioned before, a sensible course of action would be for motivated activists to start a major DiY campaign of occupying empty land and abandoned commercial property, to show David Cameron what the “Big Society” means when you have nothing but motivation and creativity.
Note: See here for further details of “Take Over the City,” a movement in Milan in the early 1970s. I also urge anyone interested in this topic, and how it is manifesting itself in the US, to read “Out of Reach 2012” by the National Low Income Housing Coalition, “a side-by-side comparison of wages and rents in every county, Metropolitan Area (MSAs/HMFAs), combined nonmetropolitan area and state in the United States. For each jurisdiction, the report calculates the amount of money a household must earn in order to afford a rental unit in a range of sizes (0, 1, 2, 3, and 4 bedrooms) at the area’s Fair Market Rent (FMR), based on the generally accepted affordability standard of paying no more than 30% of income for housing costs. From these calculations the hourly wage a worker must earn to afford the FMR for a two-bedroom home is derived. This figure is the Housing Wage.” A map, showing how many hours workers on the minimum wage need to work to rent a two-bedroom apartment is here, and it shows that “In no state can a minimum wage worker afford a two-bedroom unit at Fair Market Rent, working a standard 40-hour work week.”
One thought on “Rents Out Of Control: How Londoners Are Being Fleeced By Greedy Landlords – OpEd”
Eradicated disposable income. Knock on effect, shops close.