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Housing: ending landlordism

The UK had a housing crisis before the pandemic struck. The crisis has left more people at risk of homelessness, while landlords have been protected. The housing divide is being deepened by the crisis and we need urgent action to protect tenants and ultimately to end landlordism.

1. Background

In the last decade the number of people sleeping rough on England’s streets has more than doubled, increasing by 165%. The street homeless are the tip of the iceberg of a far wider housing crisis that exists across Britain, but which is particularly acute in London, and other major cities.

There are now over 135,000 children growing up in temporary accommodation, without a home to call their own.

In London 40% of households have no housing wealth at all. Home ownership peaked at 71% in 2003, and has steadily declined to 64%. This decline in home ownership has been among younger households which have not been able to afford a home.

This trend means nearly a million fewer under-40s own their own home than was the case a generation ago. The IFS reported in 2018 that for 25-34-year-olds earning between £22,200 and £30,600 per year, home ownership fell to just 27% in 2016 from 65% two decades ago. The sharpest decline was in London.

In roughly the same period, the number of households renting in the private sector in England has doubled to 4.6 million. Many renters are also living in overcrowded accommodation. The right-to-buy policy, introduced under the Thatcher government in the 1980s, has resulted in the loss of hundreds of thousands of homes with secure tenancies and regulated rents. It is estimated that 40% of the council homes sold off in the 1980s are now owned by private landlords.

The average price of a UK home in February 2020 was £234,742, while median full-time earnings are £30,420 a year. So the average house price is nearly 8 times the median wage. Landlords have been crowding out first-time buyers in the housing market, as house price rises have outstripped wage rises for a generation – meaning only those with significant wealth are able to put down the necessary deposit in order to get a mortgage.

In 2010 housing benefit would pay the rent in full for homes up to the 50th percentile of the local housing market. That was cut to the 30th percentile and then frozen, meaning housing benefit has lost value in real terms and is paying a lower proportion of rent. The bedroom tax also took away further housing benefit from council and housing association tenants if the property was deemed to have a spare room. In addition the household benefit cap has socially cleansed low income renters from many areas.

And despite pledging to end no fault evictions in 2019, the Government has yet to bring forward legislation.

More than three years on from Grenfell, hundreds of thousands of people spent lockdown in homes covered in flammable cladding that had still not been removed.

2. Housing during the Coronavirus crisis

Most mortgage policies allow for a payment holiday – with the deferred payments added to the end of the repayment term or alternatively higher monthly repayments over the same term. The Government acted swiftly on mortgages in March to give all mortgage holders the option of a three month payment holiday, and extended support in May to give the option of a further 3 month payment holiday.

The Government later put a moratorium on evictions for renters. The government says that it intends to introduce a protocol on landlords to reach out to their tenants, discuss their situation, and try to find an affordable repayment plan, but landlords are not expected to accept any losses in rent payments in the long-term. This means that landlords have been protected like no other businesses – many of which have suffered huge losses of income. Landlords are neither productive nor job creators nor particularly vulnerable, and yet this is the sector that has been most insulated from any financial losses.

The Government restored housing benefit to the 30th percentile of the local housing market (but not to the 50th), but has left the benefit cap and the bedroom tax in place. For homeless people sleeping rough, the Government brought in an ‘Everybody in’ policy, working with hostels and hotels to try to accommodate all rough sleepers, but that policy was ended in May, and the Government has not confirmed what will happen to those former rough sleepers.

For many university students living away from home, they have continued to be charged rent on properties in which many are no longer living in, as they returned home. The London Renters’ Union is working to collectivise renters who are already unable to pay their rent, and have nearly 4,000 renters signed up to their ‘Can’t Pay, Won’t Pay’ campaign. Shelter estimates that 227,000 private renters in England have fallen into arrears during the period, while the StepChange debt advice charity estimated that by late May 590,000 household had fallen into rent arrears.

The temporary ban on evictions is due to end on 24 August, and many housing campaigners fear largescale evictions unless further protections are given by Government. The government committed itself in December’s Queen’s Speech to abolish s.21 “no fault” evictions but has failed to publish legislation or announce a timetable for doing so. This means that from 24 August, landlords will be able to start eviction proceedings against tenants without giving any reason to the court. And the Courts will be powerless to prevent the eviction, however unfair it may be.

3. Post-Coronavirus: Housing Justice

Millions of renters will exit lockdown with substantial housing debt. Many have either lost their jobs or been furloughed, losing 20% of their income. Unemployment has risen dramatically and is likely to stay high for some time.

There is no viable alternative to cancelling housing debt: an intensified homelessness crisis is not a price worth paying. The Government should legislate to cancel rent debt built up during the crisis – forcing landlords, not renters, to take the economic hit. No other business or worker has been insulated from the crisis. If, as the government claims, we are all in this together, then landlords must bear some of the burden too.

Housing benefit has been repeatedly cut over the last decade and it is insufficient to ensure people have a secure home of good standard.

Housing benefit should be restored to 50% of local market rent, the bedroom tax scrapped and the benefit cap abolished. The Government should implement recommendations of the House of Commons Select Committee on Housing, Communities and Local Government Committee to bring forward its promised legislation to abolish no fault evictions (also known as ‘Section 21’) and to give Courts the ability to consider the reasons for rent arrears when landlords claim possession on mandatory grounds. All grounds for possession should be amended so no one can be evicted for arrears accrued during the Coronavirus pandemic.

Housing campaigns, such as Crisis and Shelter, have called for the government to commit to emergency accommodation for all homeless people for a further year, for homelessness to be prevented by giving the Courts discretion not to evict where arrears were accrued due to coronavirus and for the benefit cap to be suspended. The moratorium on the Courts making possession orders or permitting evictions should continue until legislation protecting renters has been passed.

The crisis has proved that it is possible to end rough sleeping. Having allowed street homelessness to increase by 165% in the last decade, the government must now act to end rough sleeping permanently by providing emergency accommodation and support for all rough sleepers – and allocate 8,000 additional homes for people with a history of rough sleeping. But the Government cannot continue to shrug its shoulders about tenure. Ownership matters. The aim of Government should be as John Maynard Keynes wrote in 1936, “the euthanasia of the rentier” in the economy.

Landlordism is an even greater scourge today than it was when Keir Hardie wrote in 1907, “Socialism proposes to abolish capitalism and landlordism”. Around 11 million people in 4.6 million households rent from a private landlord, paying far higher rents than those in council or social housing, and often making higher monthly payments than mortgage holders. We should not be neutral, and must increase the taxes on property and rental profits, and bring forward new regulations that contribute to curtailing and ending landlordism. Housing should be a human right for all, not an investment opportunity for a few. There must be no evictions of tenants due to arrears accumulated during the Coronavirus crisis. Many renters do not have the financial capacity – especially post-crisis – to be able to make debt repayments. Landlords not tenants should be taking the hit.

Landlords have been able to take mortgage holidays for the duration of the crisis. And if they have no mortgage on the property they are renting out then they face no risk of debt. As well as reversing the burden of debt, the government should also restore rent controls and security of tenure in the private rented sector, and require councils to introduce landlord licencing.

Taxes and regulations to curtail landlordism could include:

  • Increasing capital gains tax on second homes
  • Banning the purchasing of homes by companies
  • Limiting the number of homes that can be owned by an individual

In the short-term, we must promote and encourage renters to join tenants’ unions like Acorn, London Renters’ Union, Living Rent and others. Councils must also be given powers and resources to licence landlords and enforce minimum standards to ensure all homes for rent are fit for human habitation.

The Government should also end the hostile environment in the housing market, which requires landlords to check immigration status – and results in greater race discrimination. The ‘no recourse to public funds’ policy denies basic rights to housing and support, and must end.

In 1945, the incoming Labour government promised to “proceed with a housing programme with the maximum practical speed until every family … has a good standard of accommodation”.

In the UK currently, millions of families are without a safe, secure and affordable home – and that figure risks growing unless urgent and co-ordinated action is taken.

Housebuilding will have ground to a virtual halt during lockdown, and UK construction of new housing was already insufficient to meet demand before the crisis began.

A nationally co-ordinated programme of mass council house building could help to ease the housing crisis, and to provide jobs and training. This programme needs to be part of a co-ordinated green investment programme to ensure all new builds meet a zero carbon homes standard. This should be accompanied by a new Decent Homes Standard programme by Government to ensure all homes for rent are of a decent standard, with improvements funded by landlords in the private rented sector.

This needs to be accompanied by the creation of a new agency with powers to purchase land and to make public land available for low-cost housing. In addition ‘use it or lose it’ taxes need to be applied to developers that are land-banking.

The Coronavirus crisis also showed that homelessness is a political choice. The Government provided the funding and resources to get every rough sleeper off the streets during a health pandemic. It can do the same to end the injustice of rough sleeping.

The Government must also fund the removal of all flammable cladding from residential homes. This was predominantly a failure of regulation, and should not be paid for by renters, leaseholders or even landlords. In the long term, this money could be recouped from any developers or builders found to have been negligent in installing the cladding. But the problem is too urgent to wait for lengthy court cases to be decided.

Government should also legislate to abolish leasehold, based on the five point plan put forward by Labour in 2019:

  1. End the sale of new private leasehold houses with direct effect and the sale of private leasehold flats by the end of our first term in Government.
  2. End ground rents for new leasehold homes, and cap ground rents for existing leaseholders at 0.1% of the property value, up to a maximum of £250 a year.
  3. Set a simple formula for leaseholders to buy the freehold to their home, or commonhold in the case of a flat, capped at 1% of the property value.
  4. Crack down on unfair fees and contract terms by publishing a reference list of reasonable charges, requiring transparency on service charges and giving leaseholders a right to challenge rip-off fees and conditions or poor performance from service companies.
  5. Give residents greater powers over the management of their homes, with new rights for flat-owners to form residents associations and by simplifying the Right to Manage.

Whether they are homeowners, leaseholders or renters, everyone must have the right to a safe, secure and affordable home.

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