A new book argues “the end of landlords” would solve the housing crisis.
Here Tom Entwistle digests this argument and makes a few comments of his own. The article is based on a pre-publication book review published in The Guardian newspaper.
Ending landlords would be a surprisingly simple solution to the UK housing crisis argues Nick Bano, a barrister specialising in renters’ rights and homelessness, in his new book: “Against Landlords - How to Solve the Housing Crisis” just released - 26 March.
As you may imagine, I’m not sold on this thesis. In fact, just the opposite; I would more likely be in favour of the Government giving more encouragement to private landlords to invest in more rental property. But there’s always two sides to every agreement, so let’s read on:
“Housing means prosperity and security for some; poverty, precarity and sickness for others. More people live in private rented accommodation than ever before, and rents rise without apparent reason. Homes are smaller every year, and nearly 20 percent of tenants live in hazardous conditions. Homelessness is at a new high. Yet the government's only solution is to promote homeownership,” Says Bano.
According to him, house building on a mass-scale - and presumably having annual targets for the number of houses built - isn’t necessary: “There is already enough housing stock. But we need to learn the wisdom of the last century when it comes to landlordism,” says Bano.
He gives the example of “Tory grandee” Sir Edward Leigh who apparently told MPs: “I was able to buy my first house – although it was a bit of a struggle – for £25,000. The opportunities for young people are so difficult now”. Younger people are “overwhelmingly reliant on the rental sector”, Leigh conceded, but the problem as he saw it was one of supply: “We have to build many more houses, and we have to free up the rented sector.”
Bano thinks that things are very different now for the current generation, compared to those conditions faced by Leigh’s post war boomer generation: “What never seems to occur to Leigh, his parliamentary colleagues, or indeed his entire generation, is to look seriously at what has changed between their time and ours. The forthcoming general election is once again likely to be dominated by claims about a housing shortage and a dire need to build more homes. House Building is an article of faith across the political spectrum,” he says.
Bano argues that really there’s no shortage of housing in London as the population there has not changed much over the last 70 years, in fact he says there’s a surplus of homes, but even so, there’s a “terrible crisis”.
That does not seem to tally, given the brief amount of research I’ve done, that the population is not growing, though I presume he did a lot more research for the book to extract his growth figure. Yes, inner London has stayed pretty much the same, even dipped for a while, but outer London is a different story, and the future projections are for a big increase. According to Trust for London, “London’s population has changed dramatically over the past century.” The indicator below shows just how many people lived in London throughout the later decades, and how the trend in population is likely to change in the future.
According to the Centre for Cities, “The UK’s chronic housing shortage is one of the biggest challenges the country faces. The Government is aiming to build 300,000 new homes every year in order to match demand and keep housing costs affordable, but less than 250,000 were built last year, the highest rate in a decade. Contrary to popular belief, there is not just one single national housing crisis. In many parts of the country housing is relatively affordable, and supply keeps up with the demand for new homes.”
The latest available figures from the Office of National Statistics (ONS) show the UK's national population between 2011 and 2022 grew by 6.7 percent - to 67.6 million. However, if you take England alone, the increase was 7.5 per cent - from 53.1 million to 57.1 million - a net increase of 4 million soles.
London and the South-east must account for a good proportion of this increase. If you take the Government's estimates that in 2022-23 the mean number of persons per household was 2.2 (lower than in 2019-20 when it was 2.4), you would need - as a crude estimate arrived at by simply dividing 4 million by 2.2 - 1,818,183 extra homes to house them all.
That seems to make sense to me; prices are very much a function of supply and demand in my book, so where supply is restricted - its common knowledge that our planning system does this - any market with a shortage in a particular location will result in higher prices.
The Centre for Cities claims that Britain’s housing supply issues began in 1947, not 1980 and it argues that there is a backlog of millions of missing homes in the UK. Compared to the average European country, it says, a backlog of 4.3 million homes is missing from the national housing market.
Britain, it seems, has many localised housing crises primarily focussed on its most economically successful cities, London being the prime example, but also other cities across the UK’s nations. This by the way is far from unique to Britain: the exact same situation applies throughout the Anglosphere: America, Canada, Australia, New Zealand all have similar problems with housing.
Migration is often pointed to as a significant factor in the increase in demand for housing in the UK. It seems to me that Britain's high, and increasingly unaffordable housing costs, have many causes, but migration must be one of the biggest causes.
If the population is being added to at the rate of a small sized city every year, it cannot be beyond comprehension that it is a major factor leading to a shortage of housing. House prices have come down a little, given the recent surge in interest rates. It’s making housing even less affordable and mortgage costs far more expensive. But despite this, prices have held up better than many expected because the demand is still there, while supply remains short.
According to migration watch, the Home Office has claimed a stock of 16,000 properties for asylum seekers, despite a severe shortage of housing for young professionals and families. Landlords are being offered five-year guaranteed full rent agreements to take over the management of their properties, as the Home Office rushes to relocate around 58,000 asylum seekers from hotels.
A Houses of Parliament study found that around 80% of foreign-born migrants resident in the UK for less than five years live in the private rented sector. This compares to about 20% of the UK-born population. Migrants with over a decade of residence have moved into ownership at similar levels to the native population. About 20% of migrants live in social rented accommodation, similar again to the UK-born population. Also, the shortages of suitable housing for all groups have been found to exacerbate tensions between established residents and new migrants and this hinders integration and community cohesion.
Bano says: it’s “impossible to make a case for unique levels of housing scarcity in Britain, in comparative international or historical terms. What has changed for the worse is not the amount of housing per household, but its cost.” And cost, in turn, he argues, has a great deal to do with the landlordism that is at the heart of the present crisis. He thinks that, “our housing stock far exceeds many more affordable places such as Poland, Slovenia and the Czech Republic.”
Bano argues that Sir Edward Leigh and his contemporary boomers benefitted from a dying rental market, due to the strict rent controls in force at the time. In the 1970s, these rent controls, secure tenancies and high interest rates decimated the private rented sector, “shrinking it from nearly 60% of dwellings in England and Wales in 1939 to just 9% in 1988 [that’s certainly true] towards the end of Margaret Thatcher’s premiership,” and the 1988 Housing Act.
This, he argues, was welcomed, “by Conservative governments and Labour councils alike: the former rejoiced that rack-renting landlords were having to sell-up to new owner-occupiers, while the latter enthusiastically repurposed existing private lets into new social housing stock.”
In fact, as I understand it, it was the 1980 Housing Act that introduced the Shorthold Tenancy under the Thatcher government, and it was during the course of that government in the 1980s that the private rental market in Britain started to revive. In fact, it was after the passing of this Act that I started letting flats, at that time pent-up demand for rentals was astronomical.
Bano argues that “municipalisation” the private rented sector – taking properties out of private hands and transferring them into council ownership - had landlords desperate to sell, giving councils, with access to preferential public loans and grants, no need to use compulsory purchase to grow their social housing stocks cheaply.
The consequent increase in owner-occupation, as Leigh’s example testified, and more council housing, according to Bano, “dispossessed the reviled landlords of the post-Rachman era. In fact, the first use of the word “gentrification”, in the 1960s, was intended to describe this phenomenon of replacing the squalor of urban rented housing with a new class of younger owner-occupiers,” he says.
Even the Tories, says Bano, had no objection to the continued reduction of the tiny private rented sector that existed in the 1970s: “The accelerating decline of the privately rented sector is quite irreversible. The private landlord, as he exists now and has existed, will, within a generation, be almost as extinct as the dinosaur. There is nothing that can be done about this,” quoting the Tories Education department of the time.
The Tories recognised, he says, “that private renting tends to be an expensive, poor-quality and economically wasteful way of accommodating the population. The near-death of landlordism was one of the good news stories of the last century.”
Bono says, as reported in The Guardian newspaper’s review:
“But the task that Thatcher and her successors set themselves was to undo that progress [forced decline of private renting]. The present system was designed, as the supreme court noted in a tenant’s 2016 human rights challenge, to ensure that ‘the letting of private property will again become an economic proposition’. It should have been obvious to everyone that a market that had achieved such positive effects by its collapse would produce equal and opposite consequences as it was reinflated.”
Now, as a result of this, says Bano, we have one in every 21 adults in the UK being a landlord; there are, according to him, four times as many landlords as teachers. This he thinks has resulted in “virtually everyone” struggling to afford a home that meets their needs. Landlords are entitled to “ask for whatever rent they think they can get.” They can “drive a coach and horses through the concept of tenants” rights.
Thus, as Bano’s argument goes, the likes of Leigh, the landlords and the developers are pretending that there is a shortage of housing which is “simply not true”. Doing this instead of “confronting the horror of our situation and its causes,” i.e., I presume he means metaphorically, killing off private landlords.
He seems to think that the whole of the Anglosphere has got itself fixated on the “shortage of housing” argument, which to my mind ignores basic economics. Would killing off the private rental market really have the effect of lowering property prices?
The Renters (Reform) Bill is without doubt dissuading landlords – it has them worried. The ending of the shorthold tenancy, which has proved successful in growing the rental sector in England over the last 30 years, won’t help.
Coupled with the removal of fixed-term tenancies and the Section 21 “no-fault” eviction process, landlords know that removing a bad tenant, tough as it can be at the moment, will get a whole lot more challenging. Not too bad if you own 10 or 20 properties, but if you own one or two and rely on the income, it could be a disaster.
Bano’s answer: “Despite a housing crisis that compounds itself every day, the government has indicated that its modest reforms to the private rented sector in England, proposed in 2019, will not be implemented in the foreseeable future. We are so beholden to landlords crying wolf that parliament has spent five years failing to do the one thing that, in 2019, every political party agreed needed to be done.”
According to him: “Solving the housing crisis does not need to involve an ecologically unforgivable project of mass-scale house building. It does not need to involve asphalting green belts, destroying precious amenities through “infilling”, converting office blocks into flats or wasting government money on quixotic home-ownership schemes.
We simply need to relearn the wisdom of the last century: to acknowledge that landlordism is the enemy of affordability, and to ensure that the housing economy is not defined by the staggering rental yields that our unregulated market can produce. Our recent history shows us that landlord abolition, while maintaining adequate levels of housing stock, is an entirely realistic ambition,” he says.
Bano even invokes Adam Smith and Karl Marx, arguing they “found common ground” with the idea that “everyone’s interests are aligned against landlords: they are an economic deadweight. Even if we leave aside the appalling conditions and precarity that private renters face, anyone with an interest in lower taxes, lower wage bills and increasing the number of first-time buyers must equally be interested in smashing the private rented sector to bits.”
The so-called housing crisis describes a situation where individual renters and families, most of whom cannot afford to buy property at their inflated prices, are also finding it difficult to find suitable rental accommodation at prices they can easily afford.
Bano’s rather drastic solution is to drive out private landlords I presume replacing them with council housing, which perhaps would even involve compulsory purchase?
There are several factors leading to housing in my view, and it’s not landlords: the supply-demand imbalance is perhaps the major one. A limited supply of land available for new construction, rising building costs, especially after Covid, and restrictive planning controls, all go to limit the availability of new housing.
From a demand perspective, a rapid increase in population, lack of growth in wages relative to increasing living costs, and a steady migration of particularly young workers from within the country to major cities, London being the main example.
With local authorities no longer doing “municipalisation” - building council housing in any great volume - and having a greater reliance on the private rented sector (PRS) for social housing, housing affordability issues are increasingly leading low-income families, as well as individuals, into financial struggles. They now need to allocate a far greater proportion of their income to housing costs than was hitherto the case, in some cases stretching their budgets to the limit.
Homelessness and food banks are symptoms of this housing crisis. Tenants who can no longer manage their finances and pay their rent, through no fault of their landlords, end up being evicted and housed in temporary accommodation by their councils.
As the demand for rental properties in many locations is now outstripping supply, rental prices have soared. This has been particularly the case in Scotland where changes to tenancy laws have been strongest. This shortage has been further intensified in England by a shift to Airbnb style short-term lets. Landlords, having felt the impact of less generous tax rules and regulatory restrictions have moved to short-term lets in droves, only to be thwarted again by recent rule changes in the Spring Budget.
In my view, the traditional long-term rental market has a significant role to play in balancing out housing supply and demand, it also acts as a supply of new capital into rental housing as private landlords use their own resources to either renovate or new-build housing.
If this sector of the market is removed, if Bano’s “reviled landlords” are deposed, then I think it would lead to a greater imbalance of supply-demand that would cause even further disruptions and distortions in property prices. A healthy rental market in my view provides flexibility (employee mobility) and stability, it contributes to maintaining what economists would call an equilibrium between supply and demand.
Where there is a healthy long-term rental market which attracts investment from individuals and organisations, the economy as a whole benefits in many ways. When the government allows it, even encourages it, where landlords are allowed to make reasonable returns for their risk taking and efforts, everyone gains in my opinion.
For the reasons stated above, house prices have rocketed over recent years. Most mortgage lenders look for lending based on around 4.5 times salary levels, when in practice house prices, particularly in the capital, are more like 8 to 10 times earnings – way out of reach for most borrowers. It’s not the landlord’s fault that this situation has arisen, most landlords simply want to provide reasonably priced accommodation and make a reasonable profit from doing so.
Eliminating the traditional long-term rental market would, in my view, be a disaster for tenants as much as for landlords. That’s not just my view, many in the private rental sector share that view. Here is a recent X (Twitter) post, a reaction to the latest dramatic changes to the property laws in Scotland:
“Our response to the new Housing Bill (just out)... I think the main thing to note is that we are in a housing crisis caused by a lack of supply. Doing stuff that will likely further weaken supply, as the Bill's measure will likely do, does not seem to make much sense.” John Boyle, director of research and strategy at Edinburgh agents, Rettie & Co
Nick Bano is a barrister specialising in renters’ rights and homelessness law. His book “Against Landlords: How to Solve the Housing Crisis” is published on 26 March, available on Amazon at £13.99
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