Have you noticed a predilection socialists have for “smashing” things? Smash capitalism. Smash the class system. Smash the police. Smash the patriarchy. Of course, this is a characteristic more of various Marxist sects than of social democrats. “Smash the bankers,” has been a popular Leftist slogan over the years. Yet Gordon Brown gave them a smashing £500 billion bailout with our money.
But socialists in general do have a tendency to want to get rid of something without giving much thought to the practicalities of the replacement. One could make the opposite criticism of Conservatives, that temperamentally pessimistic, they are too passive in accepting what officials tell them, too deferential to the status quo.
One group that the socialists have been keen on smashing in recent years are the landlords. As they are an unpopular group – especially the “fat cat” buy-to-let landlords with multiple properties – the Conservatives have found it expedient to join in a bit. Yet the reason landlords are unpopular is because rents are so high. Fewer landlords, with fewer properties on the market, has meant even higher rents. If only there was an expert in economics who could have foreseen this. Lower rents would be achieved by an increase in the housing supply, including the private rented sector, with more landlords coming forward to compete for tenants.
Last month I noted a report from London Councils lamenting the shortage of rented accommodation that had resulted from the extra costs and burdens imposed on landlords. London Councils represents the 32 borough councils in London – most of them Labour. “Action on this issue can’t wait and the government must step in to solve this crisis now,” declared Cllr Darren Rodwell, the Labour leader of Barking and Dagenham Council, in a forward to the report. The “dwindling supply” has left councils facing “growing homelessness pressures”. Punishing the landlords has been effective, many of them have been driven away. But the consequences were not thought through.
This is not just an issue in London. In Wales, the Labour Government has naturally been keen to bash the landlords. But Sir Chris Bryant, the Labour MP for Rhondda, has spotted that this has caused some problems. He has produced a report into the matter. Guess what? Sir Chris has discovered there are “many fewer properties to let.”
He says:
“Landlords lack incentives to invest in the rental market due to caps on rent, reduction in tax relief for buy-to-let landlords and spiralling maintenance costs. This has led to a decrease in the number of new landlords entering the market, resulting in a shortage of rental properties for those who cannot afford to buy. Planning permission processes can also be lengthy and costly, and there are often restrictions on building in certain areas, making it difficult for developers to build new rental properties in areas where there is high demand.”
Sir Chris adds:
“On a buy-to-let property, you must pay tax on the rental income. You pay differing rates depending on your income, between 20 per cent and 45 per cent. You must pay stamp duty tax when purchasing the property and capital gains tax when selling it. Previously, borrowing money through a buy-to-let mortgage could be a tax advantage. However, now landlords can no longer deduct any of the mortgage expenses from their rental income to reduce the tax bill, with credit only being refunded at the basic 20 per cent tax rate, not at the top rate of tax. This means that landlords who are higher-rate taxpayers will pay double what they were required to prior to 2017.”
That’s not the only problem:
“There are concerns that landlords may leave the sector if no fault evictions were to be outright abolished. The process for evicting tenants and being able to buy and sell properties will become more difficult and the process longer. The UK government plan to scrap no fault evictions in the Renters Reform Act.”
Let’s remember not all landlords are hugely rich:
“Many ‘buy-to-let’ properties had been bought to provide retirement income for landlords with just one or two properties to rent. Such landlords assumed that they would be able to continue deducting the interest costs of their buy-to-let mortgages against rental income – and that tenants on housing benefit would see their benefit rise in line with inflation.”
Those issues are the responsibility of the UK Government. But in Wales there have been extra burdens, both on private landlords and on housing associations:
“The Welsh Government’s new Welsh Housing Quality Standard 2023 has raised the benchmark that rental properties have to meet in a way that many Rhondda properties cannot meet.”
For example:
“Bedrooms now must meet a minimum space requirement. As most properties in the Rhondda were built long before these regulations were in place, bedrooms in several properties are too small, making it illegal to rent them out and impossible or prohibitively expensive to alter.”
The Welsh Government has also widened the entitlement to accommodation, via local authorities, while imposing policies that reduce the accommodation available:
“The Welsh Government’s initiative to end priority need, while well-intentioned, has driven a sharp increase in the number of households deemed a priority. Whereas previously Local Authorities were only required to house those considered to be “Eligible Homeless and in Priority Need. The amendment to the “Priority Need Order” placed a new duty to accommodate those who are deemed homeless. Using Rhondda Cynon Taf County Borough Council as an example, the number of applicants the Council now has a duty to assist through the provision of temporary and permanent accommodation has increased by 50%.”
One can imagine the politicians in Cardiff Bay competing in their virtue signalling as they came up with all these rules. Each one showing they are more “caring” that the last by demanding ever larger bedrooms be found for an ever increasing number of people. Then just leave it to some poor sod at the Rhondda Cynon Taf County Borough Council housing department to deal with the impossible task of implementation.
Despite having quoted Sir Chris approvingly and extensively in this piece I would not want to give the impression I am his greatest fan. Not only has he made false allegations, but he has failed to apologise – for instance, his claims that Nigel Farage was being funded by the Russians. Sir Chris strikes me as quite unfit to be chairman of the Commons Standards and Privileges committee.
Yet could his comments be a sign that Labour is starting to confront the harsh realities of the housing market? Labour might not be learning to love landlords. But they just might have spotted the problem with “smashing” them, without providing an alternative.