Member guest blog: Landlords must get with the programme
After the news that the government planned to abolish 'no-fault evictions', our postcard campaign to save Section 21 was signed by over 7,800 people. But not all landlords felt the same way. Andrew, a longtime NLA member expressed the desire to provide an alternative view that was in favour of the Government’s decision to revoke S21. While we strongly believe that the Government decision is misguided, we welcomed the opportunity to foster a debate on the issue.
These times they are a-changin'. The private rented sector has spent decades running their businesses with the freedom of Victorian mill owners. Just as capitalism eventually caught up with bosses sending children clambering through fast-moving machinery, so too will it catch up with landlords. If the industry fights these winds of change, it will be seen as a social pariah and will be shut out of the critical negotiations. Only by embracing the move towards a more responsible form of capitalism can landlords hope to defend a viable business model, in the face of the forthcoming regulatory onslaught.
Much of this change centres around the swelling political power of generation rent. The financial crisis left a large number of professional people growing into their middle years with no realistic prospect of ever owning a home. These are not footloose 20-somethings at the start of their careers. They are people who want to settle down and have families, enjoying all of the security and stability that older generations experienced. What's standing in the way of these entirely reasonable demands is the broken relationship that Britain's landlords have with their tenants.
In the UK, we have a heartless, inefficient rental property market, which places the rights of landlords above all else. The current system of renders the tenant vulnerable and powerless – as once an AST comes to an end, they lose all meaningful security over their home. Don't like the cut of your tenant's jib? Chuck them out! Fancy raising rents well above inflation? No problem! These actions may be legal, but they are not responsible. The commercial sector does not tolerate these abuses - and that market works fine. Here, rents are tightly regulated, with fair and impartial external reviews – as opposed to the crude rent controls now advocated by the Mayor of London. Commercial tenants also enjoy long term security, and have extensive rights to modify the buildings they occupy – just as many continental residential tenants do.
Contrast this with the lack of security and freedom offered to UK residential tenants, under the ubiquitous AST system. Here, tenants have legitimate fears of tenancies being arbitrarily ended when they have children, make a complaint, or start to claim benefits. When it comes to protection against abusive rent increases, the existing external review process is an irrelevance. Landlords can and do use their power of eviction to bully tenants into taking unfair rent increases. I’ve been in the industry well over 15 years, and I cannot recall hearing of a single case where a rent increase has been successfully challenged, using an external review. I doubt most tenants even know it’s possible to appeal.
In the commercial sector, well-established rights give huge benefits to tenants, in terms of reduced disruption and costs. Not only do commercial tenants have security of tenure, but a landlord can't use the high cost of moving as a means to coerce a tenant into paying above-market rent increases. In domestic properties, homeowners also enjoy far greater security than tenants – even if they do not meet their financial obligations. You can be months behind on your mortgage, and still keep your home. Not so in the private rented sector - where even modest, temporary arrears are seen as perfectly good grounds for termination of a tenancy. This disrupts lives, jobs, homes, and schooling - even if it's not the tenant's fault.
Yes, I'm a landlord. Yes, I'm a capitalist. But capitalism doesn't have to permit abuses of the powerless, in order to function properly. We can embrace a new playbook for the private rented sector – one which allows tenants real, long term security over their homes, and which protects them from abusive, above-market rent increases. We can also do this while also allowing landlords to continue to invest profitably in the sector – shunning the crude, damaging rent controls of cities like New York (and possibly soon London).
Politicians are no longer able to ignore the wishes of generation rent. They can, however, ignore the wishes of landlords. That would be bad for housing, and bad for the economy. A stubborn and uncooperative lobbying effort is the last thing anyone needs, when such dramatic changes are afoot. It's time that we landlords embraced the inevitable change, instead of fighting against it. We should support scrapping Section 21, normalise independent rent reviews, and call for workable legislation that gives tenants long-term security over their homes. We don't need to resist any of these things to have a vibrant private rented sector – just like we no longer send six-year-olds up our chimneys.
Do you agree or disagree? See here for the NLA's rebuttal, or logged in members can leave their thoughts in the comment section below.