Over the last few weeks, we have become increasingly concerned regarding the portrayal of Private landlords, by Campaign Groups, particularly on mainstream TV. The fact that the BLA requested landlords to help NHS staff with rent-free periods and landlords, in turn, offering free accommodation to NHS staff has not been reported. This article is based on statistics with references and not mere opinion.
Before I proceed in the main body of my article, I think it would be useful for readers to understand my brief experience, and my experience is not unusual. This may go some way to better understanding problems with our housing market:
Our defaulting tenant, who abandoned the property without notification, after signing a 24-month contract, left us with just over £9,225 in un-paid rent and damages.
In their haste to leave the property, the tenant left behind opened documentation indicating unpaid Council Tax, Utility Bills and debts with other credit agencies. The tenants held down full-time employment, yet they received Housing Benefit, Working Tax Credit and a 25% reduction in Council Tax. One of the tenants was also receiving JSA Allowance even though they had informed us they were employed at a local manufacturing company.
It would appear good, competent landlords, providing safe and secure homes for their tenants do not further political agendas or careers. Nor are they significant in number to guarantee re-election. They do not fill column inches or offer good viewing material for TV, and therefore, Campaign groups and the promotion of ‘rogue landlords’ appear to dominate the headlines.
We have found a growing resentment on social media towards private Landlords and found myself asking were my concerns legitimate or was I being over-sensitive?
Shelter claim someone becomes homeless every 4 minutes?
Utilising figures, stated by Shelter UK, that someone becomes homeless every 4 minutes, then simple mathematics allows us to calculate, that 131,400 individuals/families become homeless every year. If that figure is reliable, then it is indeed a disturbing figure. However, is this purely down to the actions of private Landlords, and are Landlords simply evicting individuals as suggested within a recent TV ad?
In an attempt to understand the vilification of private landlords I thought a quick review of Government-issued statistics and reports may shed some light.
Landlords simply evict tenants whenever they want?
Ministry of Justice (MOJ) Mortgage and Landlord Possession Statistics indicate that.
- Mortgage possession claims have increased, year-on-year for the last two years (6 consecutive quarters). Mortgage orders for possessions have increased by 24% to 4,459 and repossessions by 9% to 1,149. (Ref 2)
- The general fall across landlord possession actions continues, and the long-term decreasing trend has been seen since April-June 2014. Landlord possession claims are down 12% to 25,438, orders for possession down 12% to 20,549, warrants down 20% to 12,787 and repossessions down 9% to 7,528. (Ref 2)
- Landlord possession claims and repossessions are highest in London
4 In 2017-18 local authorities reported that 5,500 evictions were carried out by court bailiffs, a decrease of 6% on the previous year. (Ref 3)
The statistical evidence refutes claims made by Campaign Groups and some politicians that private Landlords simply evict tenants in huge numbers. Evictions across Private and Council properties are comparable when adjustments for market share are made. It could even be suggested that the trend for possession in the private sector is reducing at a faster rate than the Council evictions.
It is simply not good business to simply keep evicting tenants.
What is interesting, and has gone unmentioned, are the increased repossession activities of Banks and Lending Companies over the last two years. Have we forgotten how the financial crash came about? Where is the clamour for greater legislative control of the financial sector? More importantly, what is Government doing to stem this increase? Why are Campaign groups not demanding a salary cap for Bank Executives?
Do private Landlords charge extortionate rents?
MOJ Live rents statistics reveal that average weekly rents are:
£85.97 Table 702 Local Authority Average weekly (social and affordable) rents
£95.12 Table 704 Rent: Private Registered Provider (PRP) rents (Ref 4)
It is easy to state the obvious that PRP rents are 10% higher than their LA counterparts. However, these figures would also rebuke the belief that Private Landlords “exploit the housing crisis to charge eye-watering rents for substandard accommodation.” (Jeremy Corbyn, The Guardian 2019)
If we take a more measured approach and consider rent debt figures stated below, there is a debt arrears balance of £974 million pounds existing attributed to the Private Landlord & Housing Association. If we apportion this figure equally between the two parties, then a £487 million pound rent arrears total is comparable to the £336million pound rent arrears owing to Local Authorities when the market size and slightly higher rents are taken into consideration.
It is naïve and misleading for Politicians and Campaign Groups to simply say that Private Landlords are a major contributing factor in Debt creation, without accepting that there is a National Debt issue and massive housing shortage.
[bctt tweet=”Private Landlords are a major cause of Debt within the UK? ” username=”Landlord_UK”]
Private Landlords are a major cause of Debt within the UK?
To understand the concept of Debt and its distribution, I reviewed the National Audit Office 2018 Report.
- £15 billion total outstanding mortgage arrears in 2018 (NAO)
- £2,589 million Benefit overpayments and advances (DWP accounts)
- £577 million Social Fund loans (DWP accounts)
- £7,158 million Tax Credit overpayments (HMRC & DWP accounts)
- £3,022 million Government Council tax arrears (MHCLG)
- £336 million Government Rent arrears to local authorities (MHCLG)
- £1,065 million Energy arrears (Ofgem)
- £2,200 million Water arrears (Ofwat)
- £974 million Rent arrears to private landlords and housing associations (Citizens Advice)
(Ref 5 pgs 4, 23)
The summary report states: “Our analysis of debt charity data found, that people report more problems with debts owed to the government, as the fiscal year progresses, a pattern not observed with private sector debts”(Ref 5 2 page 9). The proportion of problems reported to Citizens Advice, relating to government debts, such as council tax or benefits increased from 21% to 40% between 2011-12 and 2017-18, while for utilities and rent it increased from 21% to 26%. (Ref 5 page 20)
If this statement is true, why do Campaign groups, some politicians and the media only ever comment on debts accrued within the Private sector?
It is also a generally accepted, by all stakeholders that Debt is a major contributing factor in homelessness, and the inability to pay rent is a contributing factor.
Indeed, it could be suggested that the rent arrears to Private Landlords, is indicative of “extortionate rents within this sector. However, this figure must be broken down further, to reflect rent arrears within the Social housing market.
It could be suggested that as Councils become more aggressive in their approach to rent collections, that they have become more efficient in that activity. However, the £3022 million debt in Council Tax arrears, would be indicative of deeper procedural issues, within Government departments.
Of more significant concern, is the fact that 4 in 10 people, almost 50% of the population, cannot manage money well on a day to day basis. The Organisation for Economic Cooperation and Development (OECD), measures financial capability internationally. In a recent study, it found that UK scores were below average, compared with other OECD countries, primarily due to lower financial knowledge (Ref 5 pg 28).
The report suggests that people struggling with basic numeracy, are less likely to save money and more likely to fall behind with their bills. Herein lays the social moral and political conundrum; who is responsible for this situation? Do Campaign groups and Political parties, really believe they can hold private Landlords accountable for this apparent social inability, to make financial decisions?
There is a NATIONAL DEBT problem, which needs to be addressed. It is simply too easy to lay this issue at the door of Private landlords.
Do we need greater legislation of the Private Rental market?
Campaign groups and other societal pressure have seen the Government commit to Legislative changes that will include the removal of SECTION 21: No-Fault Eviction Notice. I believe a better term for this would have been a SECTION 21: Expiration of Contract Notice.
Polly Neate, of Shelter, said: “For decades renters have had to live with the fear of being evicted from their home for no reason. Labour and the Conservatives have made clear that they will scrap this outrageous practice and give renters the security and stability they deserve.” (The Guardian 2019).
If we refer to my own personal case and to figures within the NAO statistics above, where is the call for greater legislative control of defaulting tenants, allowing landlords to recoup unpaid rents?
As taxpayers, we would like to know:
How do we recoup £2,589 million pounds in benefit overpayments?
How do we recoup £7,158 million pounds in Tax Credit over-payments?
How much of the £3022 million pounds, owed in Council Tax arrears are written off?
What is the cost to the Taxpayer in rectifying these administrative errors?
IT systems, and legal barriers to data-sharing, are preventing Government Departments, from sharing information on individuals who owe money to different departments (Ref 5 pg9). Until the Government can resolve these issues, the Taxpayer picks up the bill.
Campaign groups continue to highlight cuts to funding, and Private landlords become easy targets, deflecting public attention away from the real social issues.
However, the impact of this decision will have other Political and legislative ramifications, and to that end, I refer to the Ministry of Justice vision statement is:
To protect and advance the principles of justice. Our vision is to deliver a world-class justice system that works for everyone in society.
One of the fundamental underpinning pillars of a democratic society is the Freedom of choice.
The removal of a Section 21 Notice denies the owner of a property, the free choice of what they can do with their own assets.
It will be interesting to see if this action will be challenged by Landlords and Industry Bodies, under Human Rights Legislation.
If a Tenancy Agreement is a legally binding contract that sets out service provision for a set fee; that both parties enter into willingly agreeing on a start and completion date at the outset, why is there a need to remove the notification process that merely identifies that this contract will not be renewed? It will be interesting to see if this change has implications to other areas of Contract Law. After all, a Tenancy Agreement is merely a contract to provide a service
The logical next question is, should the Justice system itself challenge this proposed change in legislation, as was the case with Business Rates Legislation, under Woolway vs Mazars (2015)?
As taxpayers, we should be allowed to challenge statements made by Campaign Groups, without the fear of vilification. I also believe that the media who claim to present a balanced and impartial view of the world should give a voice to those less heard.
Is it possible, that this is merely the beginning of greater legislative control of the Private Rental Market? If so, where is the evidence that greater legislative control will improve rental housing standards, without increasing rental housing costs?
Where is the evidence that supports the notion that greater legislative control, will result in fewer evictions?
How is the Government Dealing with the Debt caused by private Landlords?
It has been suggested by many, that successive Governments have failed, in the development of a Cohesive Housing Strategy for the future. A point repeated on numerous occasions by numerous Campaign groups and politicians alike.
The simple identification of Private Landlords, as a primary root cause of housing shortages by the very same Campaign groups and Political parties, is naïve, to say the least, and I have found little empirical evidence to substantiate this notion.
Understanding the impact of Debt is essential for policymakers, across Government in order to formulate strategies moving forward. However, if the Government has no estimate of the extent to which Debt leads to increased use of public services or the resulting cost to the Taxpayer, (Ref 5 page7 ) on what basis of knowledge can it introduce new legislation that explicitly targets Private Landlords as a casual factor of that Debt?
Referring to the notion that 4:10 of us cannot manage money, where benefits are payable to recipients, surely the default policy decision should be to pay Landlords direct. This will alleviate the recipient of the anxiety to manage money; thereby reducing the adverse effects on mental health; rent arrears are reduced as are repossession actions by Landlords.
The Government itself appears to be a significant source of creating personal Debt. Benefit overpayments, Council tax and Council rent arrears are indicative of issues within Government regarding the management of the benefits system. These debts far outweigh Debt in the Private rental sector.
Is the introduction of legislation targeting private Landlords, an attempt to mask more significant concerns? Is it an attempt to drive down property prices, in the face of mounting pressure regarding the housing shortage?
We suggest that all stakeholders have a responsibility to present a well- balanced and well-informed forum, for discussion that allows for the development of long term sustainable national strategies. This is currently not the case.
To summarise and to utilise a phrase much used at this moment in time, if you follow the science, the information suggests that:
- We need to revisit the narrative, surrounding the role of private landlords, and the role they play in the housing market. Statistics produced by Governmental Departments, reviewed and presented above, indicate a landscape where most Landlords are not behaving in the manner portrayed by Campaign Groups and the media. Landlords have a right to protect their assets, like Housing Associations and Local Authorities, do, when it comes to evictions and rent collections. The evidence indicates, they are no more robust in their actions, than Housing Associations or Councils, when it relates to evictions.
- The Justice system should be there to protect all of society in a similar fashion. The rights of individuals to protect and manage personal assets are being eroded.
We need to challenge inaccurate statements and fake news
Industry Bodies, who are established and purport to protect member views and rights, need to do more. They need to challenge the perceptions of Landlords espoused by some politicians and Campaign Groups. To accept the negative perception of landlords, so often perpetuated in the media is no longer an option.
When we discuss, theorise and reflect on the moral and social injustices in our society, I was a hardworking, grounded and balanced individual ask this final question, where does the greatest moral injustice lay?
- Is it with private landlords, who allegedly purchase all available housing stock, demand extortionate rents for sub-standard accommodation and evict tenants at a moment’s notice without good reason? I suggest that the overview of Government statistics presented above would indicate that this is not the case.
Or is it
- The fact that renting my property at £495 PCM generating an income of £5,940 pa and paying appropriate taxes, simple maths indicates that it would still take me over 21 years at full occupancy to achieve one year’s annual salary of some of the Chief Executives of Campaign Groups demanding the greater legislative control of my assets?
Author: Des O’Neill
Date: 2nd of September 2020
1 Office for National Statistics: UK: private rented sector 2018. Last updated 18 January 2019.
2 Ministry of Justice Mortgage and Landlord Possession Statistics in England and Wales, October to December 2019 (Provisional) Published 13 February 2020.
3 Ministry of Housing Communities and Local Government Local authority housing statistics: Year ending March 2018. England Date of next publication: January 2020.