When Margaret Thatcher was Shadow Housing Minister, Simon Jenkins offered to show her some good council estates. She declined saying ‘there are only bad ones’. Thatcher curbed local authority housing and promoted private landlordism with her 1988 Housing Act, paving the way for a rapid expansion of the sector.
Bad landlord stories now permeate the media but the government portrays the problem as a few ‘rogue’ landlords tarnishing private landlordism’s image. It has stepped up regulation but, following years of local government funding cutbacks, proceedings against ‘rogue’ landlords are rare; we have ‘regulation without enforcement’.
Moving away from ‘rogue’ landlords to more representative information on private renting reveals widespread problems:
- The private rented sector has the highest proportion of non-decent homes (25%), the social rented sector the lowest (13%).
- 14% of the private rented housing stock has a HHSRS Category 1 (serious) hazard compared to 6% in the social rented sector.
- The private rented stock has an average SAP rating of 61, compared to 68 in the social housing sector and a much higher proportion of privately rented homes (22%) are in the lowest of energy efficiency categories (E-G).
In 2018, the Housing, Communities and Local Government Committee quoted statistics showing that 82% of private tenants were satisfied with the quality of their homes. However, in response to the question ‘is your tenure a good way of occupying your home’, 35% of private tenants replied ‘no’ compared to 2% of owner-occupiers and 18% of social renters. Private renting is not a tenure choice: in 2016, 81% of 25–34 year olds, 75% of 35–44 year olds and 80% of 45–54 year olds wanted to be homeowners.
Private Landlord Economics
Landlords aim to make a profit. Nothing wrong with that, neoliberals will say: is not our basic need for food satisfied by the many profit seekers involved in the food industry? But housing is different. There is a global supply of food but land availability in the UK is restricted so a market cannot operate. As Bentley has pointed out, local authorities cannot obtain land through compulsory purchase at its existing use value, and, knowing that their land value is unlikely to decline, there is no incentive for landowners to sell until the price is very high.
Home ownership expanded rapidly from the 1960s to the early 2000s and homeowners have increasingly used the planning system to defend their interests, sparking a ‘vicious circle between homeownership and housing supply’. Homeowner opposition to new homes is almost double that amongst social and private rental tenants and is highest amongst those over 65. Low levels of land release have contributed to land forming an increasing proportion of home prices. Private landlords have benefited from enhanced land and house prices and form a large part of the demographic most likely to object to new developments.
The proportion of households privately renting in England increased rapidly from 2003 to 2017 – from 11.8% to 20% – paralleling a decline in owner occupation. Private landlordism is accelerating in the ‘family market’ with private renting amongst households with dependent children increasing from 8% to 26% between 2003 and 2017.
Private landlordism, as it is currently operates, does not promote the public good.
There are many reasons for this expansion in private renting, such as the boom in student numbers and migration, but private landlordism has had an in-built momentum. High private rents generate a ‘rent trap’ making it difficult to save for a deposit, thereby adding to the renter pool. On average, private rent payments were 33% of household income (or 37% excluding Housing Benefit).
The mean resident owner deposit in England was £44,635 (£25,000 median) in 2017–18 and, unsurprisingly, 64% of first-time buyers are in the upper two income quintiles. However, as many private landlords have become cash and asset rich, buying a property has become less problematic for them. A 2018 private landlord survey found that 39% of landlords had no debt or borrowing. Having examined secondary property ownership in Europe, Wind, Dewilde and Doling (2019) state:
In liberal welfare states, the recent upswing of buy-to-let landlordism is a manifestation of the concentration of housing wealth and limited access to homeownership for starters, which makes SPO (Secondary Property Ownership) an ever more attractive investment.
Income and Wealth Distribution
The impact of the growth in private landlordism on wealth and income distribution has been significant. Scanlon and Whitehead have revealed that the landlord median gross income, including rental receipts, was £60,000–69,999 with 18% of buy-to-let landlords having an income of more than £100,000 per year. 36% of landlords had portfolios they valued from £200,000 to £499,999, 22% from £500,000 to £999,999 and 18% at £1 million or more.
The private landlord profile replicates the ethnicity and age dimensions of the owner-occupation divide. The majority (89%) of landlords are white; 59% are aged 55 or above and one-third are retired. Private landlords and outright owners form a large part of the ‘baby boom’ generation. Savills, in exploring trends in wealth distribution, has stated:
Private landlords and owners without a mortgage have been the big winners: accounting for 95% of the total growth in private housing wealth since 2007 ... housing wealth is increasingly concentrated in fewer, older hands – notably owner occupiers who own their homes outright and private sector landlords. Together they have seen their housing equity grow by £1.4 trillion over the past ten years.
A minority – albeit a large one – of private landlords are ‘bad’ in the sense of providing poor quality housing standards for exorbitant rents but most landlords are profit-seeking within the bounds of respectability. Nevertheless, the private landlord sector now forms a major element in housing commodification – homes exchanged as an investment good – in a broken housing market that has produced enhanced inequality in real incomes and wealth. New Labour’s 2000 housing green paper praised private renting as providing additional housing choices ‘for people who do not want to, or are not ready to, buy their own homes’, but private renting is no longer a ‘waiting room’ for homeownership or a tenure choice, especially for the 1,724,000 households with children now living in the sector. Private landlordism, as it is currently operates, does not promote the public good.
‘Classic’ rent control – rent freezes and ‘fair’ rents – would curb the private landlord sector but a quicker option would be to substantially increase the 3% extra Land Stamp Tax Duty on second homes. The number of rented properties would decline but the houses would bought by first-time buyers and aspiring ‘second steppers’. There is also a case for paying Housing Benefit on the mortgage interest of low-income homeowners to promote a property-owning democracy.