Book review: The Rent TrapPosted: March 27, 2016
How did we end up with a housing system dependent on at least 1.5 million small-scale private landlords offering millions of tenants little or no security and costing billions in housing benefit?
You couldn’t do much better if you set out to design the worst possible way of housing the nation in general and young people in particular. But the changes that now seem set in stone – a private rented sector that’s grown so fast it is now bigger than the social sector and home ownership shrinking back to the levels last seen in the 1980s – have happened in the space of one generation.
The Rent Trap, a new book by Samir Jeraj and Rosie Walker, is the best attempt I’ve yet read to explain how and why this has happened to a general audience. The subtitle – How We Fell Into It And How We Get Out Of It – reflects an even more ambitious aim.
The focus is inevitably on London, the epicentre of the housing crisis. I can’t help but contrast the housing options I enjoyed when I arrived there in the early 1980s with those available to young people in 2016. Back then, in what now seems like a different country as well as a different time, the options included getting a council flat (you could join the queue for a hard-to-let one), squatting in empty property and approaching one of the many small community-focussed housing associations. The 1980s saw two housing booms and busts but it was still relatively easy to buy on a normal salary once you’d worked long enough to convince a building society to lend you the money. It would never have occurred to me to go to a private landlord but if I had I would have had security of tenure and a regulated ‘fair’ rent.
Contrast that with a London where home ownership is a distant dream for those without help from their family, where council housing is shrinking fast, squatting is criminalised and those small associations have become part of huge social businesses. Private renting is the only option for most.
Much has changed over the last 35 years, some of it creating significant demand for more short-term rentals, some of it due to problems in the rest of the housing system, some of it having nothing directly to do with housing. But I’m not sure that even the architects of the 1988 Housing Act would have imagined a housing system in which 3 or 4 per cent (1.5 to 2 million landlords) can (effectively) evict 20 per cent (11 million private renters) for no reason.
The opening chapter of The Rent Trap tells the story of Corinne, 33, in a well-paid job but no hope of buying, who has just told her son they are moving to their fourth home in five years. There are no horror stories, cockroaches or dodgy wiring. ‘She is simply a private renter in 2015, and her story is an everyday one.’ Except that even everyday stories for tenants involve rent increases, Section 21 no-fault evictions and letting agents breaking the law but knowing they can get away with it.
The Rent Trap is full of other personal testimonies like this – Rosie Walker herself was once evicted by her landlord for asking for a new chest of drawers – but most of the book is about how we got to here. It’s a story of changes to the law and mortgage finance, of greedy landlords and rapacious letting agents and of local authorities too under-resourced to tackle them. It’s especially good on the lobbying activities of the landlord organisations and the rise of local tenant activism.
But it’s also a story that should make all of us look in the mirror. For me the best chapter in the book is one that features a series of anonymous interviews with landlords. Most see themselves as socially concerned and many vote Green or Labour. As they see it, they’ve become landlords by accident or through necessity, unable to sell their first home or unable to afford their current one without renting out a room. The truth is often more mercenary than that. The point is that the system allows those with enough cash to buy to get those who can’t to pay their mortgage for them, or enable them to give up work, or live in Ibiza. ‘In parts of the country where housing is in short supply, renter-landlord relationships have come not just to reflect inequalities but to produce them.’
There’s surely a broader point here: we like to think of the housing market as a way of meeting housing need when it’s also a complex system of incentives generating housing demand. That system made buy to let a one-way bet but there are similar financial incentives to buy as big a home as you can afford or to exercise the right to buy. As individual choices these may seem obvious but the sum of those choices has consequences:
‘The problems of private renting are not necessarily caused by a moral failure on the part of landlords, whether they see themselves as “accidental” or deliberate landlords. The “common sense” that rules renter-landlord relations is the result of the availability of buy-to-let mortgages, a relaxed approach to taxing landlords and the threadbare legal rights granted to landlords.’
The same logic applies to other parts of the housing system: to banks that find it less risky to offer buy-to-let mortgages to landlords than low-deposit mortgages to first-time buyers; to estate agents who can make more money out of the churn of six-month rentals than 10-yearly sales; and to developers that rely on off-plan sales to landlords and overseas buyers to fund apartment blocks.
Governments of all parties have until very recently been intensely relaxed about this process, even encouraging it as an apparently costless way of dealing with the housing problem. The result is a private rented sector asked to carry out a long-term role for which it is not designed or suited. Governments are at last waking up to the long-term consequences (the benefit bill for renters in retirement, for example) of a trend they are incentivising through the tax and legal systems. However, it remains to be seen how much the recent changes to the taxation of landlords and support for first-time buyers will really do to change things and who will really benefit from them. Only yesterday I came across the Rent a Room Mortgage, a product that looks potentially even worse than buy to let.
The final chapter covers a series of alternatives to private renting (property guardians, co-operatives, house boats) that turn out to be only short-term escape routes. Longer-term solutions must surely start with greater security for tenants and the imminent end of no-fault eviction in Scotland is a positive sign. However, history shows that there are limits to what regulation and the legal process can achieve on their own.
The Rent Trap is an important book that answers the first question in its subtitle more convincingly than the second. But understanding how we fell into it is surely the first step to finding ways to get out of it.
The Rent Trap is published by Pluto Press as part of the revived Left Book Club. To order a copy, find out about events and for more details, go here.