David Renton introduces an exclusive extract of his forthcoming book, Jobs and Homes: Stories of the Law in the Lockdown
The following piece is an extract from my book Jobs and Homes. I’ve been invited to preface it here with a few words explaining why I wrote the book itself. The first thing I should explain is what I do for a living: I’m a barrister and, unusually, among lawyers I split my time 50-50 between two areas of the law. Half the time, I represent tenants funded by legal aid in cases where they are fighting to save their homes. The other half of the time, I represent workers supported by their unions, fighting discrimination or dismissal.
It doesn’t take long, working in these two areas of law, to see that the distinction between jobs and homes is artificial. Right now, one of the challenges facing society is the risk that millions of people could find themselves in court as soon as the pandemic ends, and hundreds of thousands could lose their homes. A housing lawyer will tell you that the problem is our housing laws which make it too easy to evict, compelling judges to evict housing association and private sector tenants if they are just two months in arrears. This figure no longer makes sense under our benefits system when almost every tenant supporting themselves with Universal Credit will start their tenancy with debts of this scale.
But if you see the same problems as an employment lawyer, quite different solutions suggest themselves. People are poor, you want to say, because it’s just too easy to sack workers. Especially in the pandemic, especially at a time like now when it will take the typical dismissed workers years to get their case heard before an Employment Tribunal.
What I’ve tried to explain in my book is that these two kinds of crisis – housing and employment – aren’t distinct. That the problems in our society are problems of poor jobs, caused by over-might employers, as well as the demands of landlords, who have had more protection from governments in the last 40 years than any class of people deserves.
I hope this extract will give you a flavour of the argument – some of the people I represent, and some of the people I find myself arguing against.
In one of cases, I represented a tenant in his fifties. He worked as a security guard in a warehouse and he lived in a basement flat in Hackney and the landlord had been ordered to fix the damp proof course ten years ago and the work was never done. So far, it was an utterly normal case. The thing that struck me most about the case was the Sex Pistols poster on the wall. An original, from the 1970s, my client insisted. I asked the tenant if he wanted to stay there and he said he did not. He had tried to move; he had looked at a dozen flats in the local area. But they were as expensive and as badly maintained as the one he had already.
Every time a court made an order against the landlord, he changed the ownership of the property. He created company after company and moved the house from one to another, so that whenever he was sued, he would close the company subject to the judgment and start a new one. No debts, no obligations, no laws applied to him. A decade before, when the tenant sued for disrepair, the landlord insisted he was the owner. Over the next ten years, he changed the ownership four times, with each company having a different legal relationship to him.
The landlord sued to obtain possession, using his own name. His lawyers wrote a dozen different letters to the court, a statement of case, a reply, various chasing letters, all signed, all insisting the property was his. When the landlord issued proceedings, the property was still owned by one of his companies, not by him. The company had the right to sue. But the landlord had no such right. He tried to amend the claim. He was given a deadline – he missed it.
My opponent, in her Reply said that our defence was “ill-conceived and misconstrued.” But the longer we spent in court, the worse it became for her. The judge asked, “Who owned the property when the case was issued?” and my opponent was incapable of giving the question the same answer twice. The case was so poorly presented that the judge agreed with us that the landlord was obliged to disclose how many other properties he owned.
The landlord would not say, he shook his head. It was sensitive, commercial information. “I don’t know,” he said, “I’ve lost count”.
He told the judge, “It’s north of 500.”
Ownership, on that scale, offends against the principle that anyone’s wealth ought to bear a minimum connection to what they have done with their life. The executive of a large business might justify their income by saying that they have chosen their subordinates’ ideas, brought them to the market, known which to promote and which to let go. Their position has brought them rewards – but at an emotional cost. Few private landlords of multiple properties could formulate a similar justification: their skill has been to hoard ownership of a resource, taking a rent at premium rates while often refusing to fund the building’s maintenance.
How is it possible for anyone to own more than 500 homes? To explain this, you must go back to the Thatcher governments of the 1980s, and right to buy. The Housing Act 1980 set out to transform home ownership from a collective to an individual experience. It worked by giving council tenants an option to buy the home in which they lived at a discount of up to 60 percent compared to the market rate, depending on how long they had lived in it. There was no guarantee that enough council tenants would buy their properties to make the scheme work. Some council tenants liked the idea of owning their own home. Others found the scheme repugnant. A third group were concerned only with the practical elements; with tenants asking themselves if they could afford to replace their own boiler if its maintenance was left to them.
The key to making right to buy work or to moving people from the third of these categories into the first, the Conservatives realised, was the extent of the discount. A tenant with a 20 percent discount could anticipate paying monthly mortgage repayments thereafter of a little less than council rents, making right to buy attractive to them but not decisively so. With a 60 percent discount, however, the tenant could expect their mortgage payments to be half or less of their existing council rent. Tenants really were being given money for nothing.
The right to buy scheme privatised a large part of the welfare state, in the process changing a group of Labour-voting renters into Conservative-voting owners. It succeeded because the funds were found to finance it on terms so advantageous that only the positively foolish would turn down what amounted to a massive bribe.
Right to buy generated significant sums for central government: £40 billion in its first 25 years. However, it devastated the public housing sector, withdrawing properties from stock and increasing competition for those houses and flats remaining in local authority control. It fuelled the mortgage boom of the 1980s and the repossession bust of the early 1990s. It also changed the social demography of council tenancies. Until the 1980s, both of our main parties had agreed that council housing should be available to everyone who wanted it. Right to buy transformed council housing for the worse, making it a scarce resource limited only to poor. In 1979 most council tenancies included at least one person in full-time employment. By 1995, however, 95 percent of those newly housed by local authorities were on benefits.
In the aftermath of right to buy, concerted efforts were made to stop local authorities from building new stock which might otherwise have been used to replenish the lost council homes or to prevent house prices from rising uncontrollably at the cost of those who did not own their own homes. Local authorities were prevented from borrowing to replace their stock. Some private housebuilding took place, but at levels incapable of meeting increasing demand.
Right to buy was accompanied by other housing laws which also harmed tenants. For more than 60 years, and ever since protests in Glasgow in 1915 against rent profiteering, Britain had had laws limiting the ability of landlords to increase rents (the Rent Acts). The Housing Act 1988 dismantled them, freeing private landlords to charge whatever rent they liked and also – with section 21 – granting them an expanded freedom to evict. Both private and social housing were subject to parallel processes. The government created an expanded private market, and one as unfavourable to new tenants as they could make it.
The outlines of this story are well known – politicians from all parties are willing to accept that too few homes are being built, that housing prices have been kept artificially high to the detriment of those who do not own, that the collapse of social housing has reduced our opportunities to house those in greatest need.
What is often poorly understood is how right to buy assisted a relatively small number of landlords to build up property empires. At the time, most people expected house prices to fall after an initial rise, while others did not grasp that (for example) by aggressively subdividing a building and converting it to multiple occupation by tenants on housing benefit it was and remains possible to pay off the price of buying a large building, in many cases, within just 3-4 years of purchase. Among the beneficiaries of right to buy were people who often had not owned much previous wealth but knew the property market and were well-placed to acquire homes at knockdown prices. In court, it is hard not to notice how many of today’s landlords were 30 years ago a local estate agent with a small neighbourhood business employing just one or two people. Being employed to advertise these homes that were now for sale, they saw an opportunity to purchase a first home and then a second, and in no time at all they had acquired a portfolio of properties and a massive income.
One 2017 survey found that that over 40 percent of former right to buy properties in Britain were now rented out. It has been for some time government policy to privilege the interests of private landlords, not just over tenants, but over other homeowners. In the mid-1990s, the banks introduced Buy-to-Let mortgages, which assessed buyers’ creditworthiness on the rental yield from the property, rather than the buyers’ existing income. This easy finance gave landlords a significant advantage over other people buying in the property market, including first-time buyers. Under both main parties, buy-to-let landlords have also enjoyed tax relief: Mortgage Interest Relief, and a Wear and Tear Allowance. These tax breaks have been reduced since then, but the broad picture remains the same. Landlords remain privileged over those purchasing to occupy. Although the UK’s 2.5 million landlords are a small minority in society (roughly one in twenty of all adults), because the market has been loaded in their favour, one in six of all homes sold and a quarter of all new homes are purchased by them.
One of the poster-boys for the landlord class is Islington’s Andrew Panayi. The owner of 180 units dotted around Islington’s Caledonian Road, he has been repeatedly in the news over the last decade, including for renting out unlicensed underground properties without any access to natural light. In 2014, 19 of his properties were found to have “category 1” hazards, in other words to be so small (at nine square metres) that they were unfit to occupy. In 2013, when his company Ploughcane was first in the headlines, it was reported that its accounts showed a turnover of £2.7m, of which £2.3m was operating profit, from which we can infer Mr Panayi was hardly exactly carrying out a great volume of costly repairs.
To put this income in context: by 2013, Mr Panayi’s one-man rental business already paid him fractionally more money than the Chief Executive of the Royal Bank of Scotland, or five times as much as the Chairman of Santander. Mr Panayi was not paid this money because he had invented some new technology which had changed all our lives, or because he had a skill as an artist or composer. I doubt any of his tenants could say that their lives had been enriched by knowing him – as opposed to a different, better, landlord.
If any left-wing government is going to change the UK housing market in future, one of its first tasks will be to prevent the wealthiest landlords from hoarding ownership on this scale.
David Renton is a housing barrister. His next book, Jobs and Homes: Stories of the Law in the Lockdown is published by Legal Action Group, and will be launched on 21 April, with other speakers including Sue James of LAG and Labour’s Liz Davies.
Subscribe to the blog for email notifications of new posts