Rachman, rogues and rentingPosted: May 14, 2014
Scandals hit private renting. With an election in the offing, the Labour opposition pledges help for tenants. There are definite parallels between now and the 1960s.
Everyone (especially those who oppose the party’s current modest reform plans) thinks they knows what happened in the wake of Rachmanism but the truth is far more complicated and so are the lessons for the future.
My interest in the period was first caught by a 2012 Radio 4 documentary called The Real Rachman – the Lord of the Slums. I thought I knew about Rachmanism but the programme told a much more nuanced and mysterious story that I blogged about shortly afterwards.
That blog prompted an email from Professor David Nelken, whose 1983 book on the aftermath of Rachmanism has just been reissued. The Limits of the Legal Process is a classic study of the sociology of the law that should be required reading for anyone involved in the current debates about regulating renting (or indeed regulating anything). The book is subtitled ‘a study of landlords, law and crime’ and it tells the story of the response to Rachmanism, first by the politicians with legislation, then by landlords with evasion and then by local authorities and the courts with implementation and enforcement.
The word Rachmanism has become a shorthand term for unscrupulous action by landlords against tenants. Rachman the man was already notorious as a landlord in Notting Hill but his name only entered the national consciousness and the English language following the publicity surrounding the Stephen Ward trial and the Profumo affair. He moved in the same circles as the disgraced minister and was a lover of both Christine Keeler and Mandy Rice-Davies but he died in 1962 and the trial was not until 1963. That meant that he could not be libelled in any of the reporting that followed.
Media exposure of the scandal of private renting and intimidation and harassment of tenants by landlords sparked first the ‘Rachman debate’ in the Commons in 1963 and the Milner Holland inquiry into housing in London, then the Protection from Eviction Act of 1964 and finally the Rent Act of 1965. This introduced security of tenure and ‘fair rents’ set by rent officers for furnished private tenancies. The system was extended to furnished tenancies in a second Rent Act in the 1970s after another series of scandals about profiteering by landlords during the property boom.
Much of David Nelken’s argument is about the social construction of crime and the constraints that shape legislative interference in commercial activities and property rights. What’s most relevant here is that his book is a case study of the way the legislation was framed and implemented and the consequences, intended and unintended.
‘Rachmanism’ was a portmanteau term for all kinds of unscrupulous actions by landlords. Many of these were actually the result of previous deregulation of private renting in the 1950s, as relaxation of strict rent control on new tenancies gave landlords an incentive to use any means necessary to get rid of their existing tenants so that they could bring in new ones on higher rents. ‘Rachmanism’ as it was understood at the time included not just harassment and intimidation and moving in anti-social neighbours but also subtler techniques such as ‘winkling’ (bribing tenants to vacate) gentrification (buying homes on controlled rents to sell for owner-occupation) and the abuse of improvement grants to increase rents rather than benefit existing tenants.
Rachman himself is said to have usually avoided open threats of violence. He made most of his money by buying houses on short leases and converting them to multiple occupation, by maximising rents while minimising repairs and by using a complex web of shell companies to evade enforcement action. He was only ever convicted for parking without lights and had actually begun to dispose of his residential property from 1959 onwards.
However, in the legislation that followed in the 1960s only harassment and illegal eviction were made criminal offences and those convicted of them were mainly resident, and often immigrant, landlords. Rachmanism in the sense of financial exploitation by large commercial landlords continued untouched. The new system of rent regulation was seen as a response to the perceieved failures of both rent control and decontrol. ‘Fair rents’ were meant to be what they said and were often much higher than the controlled rents of the past.
The restrictions that did apply proved all too proved easy to avoid for landlords clued in to evasion techniques and with access to professional advice. Where that did not work, landlords could simply exploit the power imbalance with tenants by ‘persuading’ them to sign up for tenancies exempt from the legislation. A rickety table and chairs became a furnished tenancy in the 1960s and a clause in the lease offering breakfast turned a furnished tenancy into a holiday let in the 1970s.
By the early 1970s a Conservative MP was complaining about ‘legal Rachmanism’, a technique used by commercial landlords to raise rent levels and therefore the mortgageable value of entire blocks of flats. Rent officers determined ‘fair rents’ by deducting scarcity value from the market rent for the accommodation but the system was open to manipulation. For example, a landlord and tenant could apply jointly for a new rent to be registered. If no tenant willing to pay a higher rent could be found then a landlord might make it a condition of offering a tenancy in the first place. Once the higher rent was established for one property it could be used as the norm for all the others in the block.
All of this and more can be found in David Nelken’s book. One of the key questions he addresses is how such methods used by a group as unpopular and politically vulnerable as private landlords could survive. He argues that what happened ‘strongly suggests inherent limitations on the extent to which the law can successfully be used to deal with behaviour which is in other contexts seen as legitimate business practice’.
The Milner Holland committee had concluded that landlord abuse was ‘a serious evil which should be stamped out’. Yet only a small part of ‘Rachmanism’ usually perpetrated by resident landlords was made a crime. Large commercial landlords were able not just to continue as before but to turn the legislation to their own advantage. David Nelken concludes that:
‘The political lesson of the Rent Acts is that the form and content of any given piece of legislation, even when it purports to be an exercise in administrative social engineering, is heavily influenced by the way it is forced to fit into the overall pattern of politico-legal conceptions, institutions and practices. This, in turn, is rooted in the structures and social relations of the society.’
So what do I take away from all this? Flash forward 50 years from the Rachman scandal and 25 years from the deregulation of the private rented sector in the late 1980s, and the Labour party is again proposing to intervene. As I’ve blogged for Inside Housing, forget the rhetoric about ‘Venezualan-style rent controls’. Now, as then, the policies being proposed are intended to stamp out the worst abuses at the same time as allowing the market to function. However, the story of the response to Rachmanism suggests this will be easier said than done.
One of the suggested reforms is to ban letting agents in England from charging fees to tenants (as they already are in Scotland). A Labour attempt to amend the Consumer Rights Act failed this week after only two Lib Dem MPs and one Tory voted in favour. A last-minute coalition amendment means that letting agents will be able to continue charging outrageous fees provided they are transparent about it. I was struck by a quote from housing minister Kris Hopkins defending the government’s position. ‘The vast majority of letting agents provide a good service to tenants and landlords,’ he said. ‘But we are determined to tackle the minority of rogue agents who offer a poor service.’
The quote effectively legitimises the highly questionable commercial practices of the ‘vast majority’ by constructing a minority of ‘rogues’. Arguably, the same thing happens when we talk about ‘rogue landlords’. The focus on them is understandable in campaigning but it ignores deeper questions about the power relations between landlords (and letting agents) and tenants and the inherent conflict between property rights and the right to shelter. The role of politicians and the law should be to establish a fair balance between the two but there are limits to the legal process.