Tuesday, 29 June 2010

Once Upon A Time.

This is a delayed reaction caused by extreme shock. I knew it would be really bad. By ‘it’ I mean of course the new regime. By regime I mean of course Grant Shapps, George Osborne and Ian Duncan Smith - aka The Three Stooges.

Over the years, I grew chillingly cynical, to the extent that I think I am being sarcastic even when I talk to myself. So why am I so incredulous at the latest pronouncements on housing? I thought I was immune, and am checking to see whether I’ve missed the point, or my brain fell out of my ears, or if all those ‘stupid’ tablets I've taken are starting to happen.

Here then, is the story. In the beginning, there was the housing market, which was quite deliberately cranked up, with humungous price rises seen as undeniably a good thing (naysayers were stoned to death.) A multitude of amateurs from the tribe called The Neophytes invested in property, because they didn’t have a pension. Rents rose.

Meanwhile the expansion in buy-to-let construction created vast swathes of identikit one or two bedroom flats, but as for much needed family housing – dream on, you deluded peasant. And yea, the rents rose. And then they fell, as flats were too numerous. And lo - the investors did go bankrupt. There was a plague of letting agents in Ipswich, and swarms of value consultants descended upon Birmingham. Verily we were being punished.

Given the climate of increasing job insecurity and pensions falling through the floor, I’m not convinced it’s the fault of the people who invested in property – I even suspect this is a deliberate ploy to undermine the working people, as those on short term contracts become more malleable, pliable, and simultaneously – breakable.

And still people just wanted somewhere to live. But jobs were hard to find. And through no fault of their own, people who didn’t expect to visit those lovely chappies at that marvellous Jobcentre+ thingy found themselves existing/subsisting/clinging to dear life on £64.30 per week (“…HOW much?”)

And then they lost their houses, but landlords were still ramping up rents and tenants had to claim Local Housing Allowance which didn’t cover all of their rent, and they had to top it up, because the landlords, the government, the banks – everybody actually - had encouraged rents to rise.

And then...and then…the new coalition government slipped into power. And they did spake unto the people exiled as ‘scroungers’ punished them with a budget that put a cap on the rent allowance: £240 a week for a one bed flat – even in London (really! I am being serious, I am not making that part up.)

What happened next? People couldn’t pay the rent, and fled to the imaginary social housing that was never built, or the pretend council houses that were all transferred or that never actually existed, or to the private rented homes they could afford, but which were miles away from friends, family, safety and jobs. Failing that, they became homeless.

This fairy tale does not have a happy ending. It is a horror story.


another_pleb said...

I think you might be surprised by the effect that capping LHA has on rents. LHA has been keeping an artificial floor on all private rents even if the tenant isn't claiming LHA. This effectively makes housing benefits a stick with which to beat private renters who earn too much to qualify but too little to be described as "rich"

If landlords start to have trouble finding tenants, they'll either be forced to cash in their chips and sell up, possibly making a loss, or else reduce the amount they charge for rent to a more reasonable amount, and accept a lower margin on their investment.

I don't think the budget wen nearly far enough in some areas such as capital gains tax or charging people more money to run a second home.

RenterGirl said...

Even if rents are too high (which they are) I just don't think squeezing vulnerable people is the way to remedy it. Why bring in fair rent tribunals? Oh right. We used to have them. They were called Rent Officers.

Dazzla said...
This comment has been removed by the author.
Dazzla said...

I know I'm preaching to the converted* here, but I do think that we need a fundamental reappraisal of our priorities. Neither of my bank accounts have paid any interest since mid 2007 mainly because interest rates are so low. So what does this mean? It essentially means that people who save money are subsidising those who borrow it. It also has the effect of keeping asking prices artificially high. Interest rates need to rise.

And I'm not sure that the HB cap specifically will mean that HB claimants are out of a home en-masse, just that landlords will have to accept lower levels of rent for HB claimants.

Of far greater impact on vulnerable people is the VAT rise. This will take money directly out of the pockets of the poor and is disastrous, and all but invisible to most voters.

*Although to balance this, I've taken up posting in the comments threads for The Daily Telegraph.

Anonymous said...

"£240 a week for a one bed flat "
Seems quite fair to me. People can live in the suburbs of London you know.
My family used to live in the centre of London but we moved out -it was too expensive. What can't others do the same.

RenterGirl said...

Because moving house is disruptive and expensive. Because rents are too expensive through being deliberately ramped up. Because if tenants are unemployed for any length of time, they find that landlords do not want them as tenants. Because there isn't enough housing in the areas where there are jobs. I'm glad your life was straightfoward, but others just don't have things that way.

Dazzla said...

And because (as of three years ago) a season ticket from outside Zone 6 into Central London cost £280 a month. This is expected to rise to over £300 within the next couple of years.

Take your cheaper rent from the suburbs and add £300 on to it. Does that look like something someone who works at Starbuck's or Next, or even a nurse or teacher could afford?

Shoe said...

another_pleb - good points. We have a similar system here in Ireland, colloquially called "rent allowance" or officially, supplementary welfare allowance for housing.
Unlike the UK benefits system, your dole (which is more than 2.5 times the UK rate in any case) is considered to have a housing portion, though where housing exists for 25 euros per week, I don't know.
Like the UK, you have to prove you are "habitually" renting for 6 months before claiming the allowance. However there are stringent lmits to rents payable which have effectively become the market baselines.
The problem has been for a long time that a) lots of landlords simply wouldn't accept RA tenants and b) the baseline forced up market rents for everybody, including welfare tenants, but it effectively creates a "tax" on those who pay their own.
The former resulted in a concentration of RA tenancies in the "slum" end of the market, especially in rural areas, but these are still effectively charged a minimum rent which - surprise, surprise - is almost always the max payable under RA.

Tenants who miraculously manage to find a place on a rent beneath the RA ceiling don't get to keep the difference, and there is powerful colloquial evidence that landlords force most such tenants to pay cash top ups over the RA limit. Where they do not do this, landlords have many inventive schemes to inflate fees from tenants in other ways - installing electricity meters with charges above the utility rate (this is perfectly legal and happened to me some years ago), adding extra to waste collection charges, parking, laundry, heating etc. Some even have the gall to charge the tenancies board registration fee straight back to the tenant!

What this has effectively done is turned much of the private rented sector into a form of high-cost social housing, and artificially props the market, inflating rents for everyone, and making it very difficult for welfare tenants to get a job as they stand to lose anything up to 1000 euros per month (the max rate for a family). This has ensured that dole rates never fell beneath 4%, even when employment was theoretically "full."

Of course what it also did was force tenants who had the option of purchasing a house to do so at catastrophic prices, simply because in most cases they were paying about the same on a mortgage as they would on rent, with the difference of control over living standards. Its amazing that for all the reports being published recently about the banking crisis not one of them recognised the fact that those who bought housing at the highest prices did so because they were caught in the catch 22 of equally extortionate rents for substandard accomodation.

RenterGirl said...

We have a system that encourages rents to rise. The system also encourages short term contracts, and low wages, and job insecurity. So: then we punish the people who lose their work through no fault of their own. Homeless people used to be able to stay in B&B accommodation. Thanks to Edwina Currie, that changed. Nobody listened when people argued that it would create homelessness - and within months there were more and more people sleeping rough (which a less common sight than now.) These changes are going to be nasty.

Anonymous said...

"£240 a week for a one bed flat "
That doesn't sound too steep to me, either.

At the risk of being castigated for being one of those people who bought-to-let a second flat instead of a pension [and there are sound reasons for this... chiefly that pension funds have become a scam: you must have heard examples of this over the last 20 years?], we let out our big 2-bed flat in Harringay for £900 PCM. And that's the price the slimy estate agents recommended.

RenterGirl said...

Maybe if you live in Hackney already, that's reasonable. Otherwise you'd have to move - maybe from a home you've lived in for years. And also - do you accept tenants when they are unemployed? I doubt it.

Anonymous said...

I live in Walthamstow (zone 3, east London), not out of choice obviously, and our 2 bed flat is £185/ w. We're both about average wages, for which we pay full taxes that support housing benefit, which allows those able to get HB to price us out to Walthamstow. If the cut in HB was just reinvested in building up the supply of homes i'd be 100% behind it, but i know it's not

Dazzla said...

"...pension funds have become a scam..."

Then invest in gold or government bonds, which have a similar long-term appreciation rate, don't require maintenance and don't need fiscal policy distortions to keep their value.

I'm not 'castigating' anyone, but the change in perception of our homes from being homes to being 'properties' or investment vehicles is at the root of every problem discussed on this blog.

Anonymous said...

What irk's me the most about this is that there seems to be a demonisation of the recipients of Housing Benefit.
The real benefactors are the landlords, the claimants are merely conduits through which public monies are siphoned off to private investors, to the detriment of all renters - employed or not.

As these benefits are withdrawn, the tenants will again will be at the frontline, being forced to move on to slummier accommodation or fork out the extra from their other income.
Somehow, I foresee the return of the dreaded B+B's from the 90's for benefit claimants, and no guarantee of a better deal for employed private tenants.

Anonymous said...

Doh - I meant what irks.
Apologies for the grocer's apostrpohe

RenterGirl said...

I agree: this is the tories using the bankers appropriation of the public funds they so disdain when used elsewhere to activate their dream: public bad-private good. But Landlords are private. If people still had decent pensions they wouldn't have bought so many dovecots. If they hadn't bought so many dovecots (and gone bankrupt)then we wouldn't be in this mess. Private here has been a disaster.

spacecadet said...

This post rings very true for me. (they nearly all do actually, but this one especially).

I've moved countless times, and not through choice. My hand is forced by unreasonable negligent and greedy landlords who have no respect for the tenant. We are just their cash cows. I lost my job recently and i've been temping ever since. So i moved out of my overpriced 250pw flat cos i could no longer afford it. I'm not eligible for housing benefit because of savings, but no-one will rent me anything without a permanent job. I'm resigned to staying in hostels and begging friends for spare rooms. All the while my belongings move from pillar to post and i hire van after van. Every time i move i pay a small fortune to do so.

I can't settle, i can't even concentrate on finding a 'proper' job because i don't have a place to call home. I can't plan anything, certainly not a holiday. I live from hand-to-mouth all the while, and everything is impacted, my diet and my health included. Even writing this i'm getting emotional. This is just me but others must be going through similar. And now i keep thinking, "what if i was to get sick tmrw, i wouldn't even have a home to get sick in". Technically i am homeless now, yes, i really am. It really is the reality.

RenterGirl said...

Space cadet - I am so sorry to hear that you are forced to live in such an insecure way. A safe home ie where you are obliged to move on every 6 months is a basic human need, and should be a basic human right. This is going to get worse with a government hell-bent on de-regulation, or 'light-touch' regulation (ie no regulation at all) for landlords and letting agents, and increased reliance on the private sector. I wish I could help. All I'll say is - some private landlords who don't use agents are more likely to accept a tenant if you show wage slips, and have a good reference. And don't forget to put your name down for Housing Associations and the council (same thing now, really.) Good luck, stay safe, and please know how things turn out for you. All the best.

Dazzla said...


Have you tried websites like Gumtree and spareroom.com (I hope this doesn't count as advertising. I'm not connected with either in any way). I found my current place byu bypassing agencies. You might at least find a short-term (three months or so) let there. Not ideal, but better than your current situation.

spacecadet said...

Thanks for the kind words.

@Rentergirl - you do help, by writing this blog. It saves me from going mad. I dream that one day, when things change for the better, people will cite this blog as something that helped change things. You deserve that.

@Dazzla - i'm on Gumtree all the time. Internet access can be a trial in itself tho. I bought myself a netbook to stop paying for internet cafes. Thank god i have savings. I'm keeping my eye out for affordable short term rents.. but it's still so hand-to-mouth tho isn't it. (i know, you meant well tho, for sure) I've lived in London all my life but i feel totally priced out (renting or buying) My savings are for a mortgage deposit, ironically.

I'll end up moving out of London altogether, i know it. It's imminent. I've moved about 12x homes in 10 years, and i'm at breaking point now. Your whole life is impacted when you don't have a home. Christ only knows what the future holds for everyone. I worry so much for those with children.

Shoe said...

I understand your predicament, spacecadet, as I got laid off 2 weeks ago and am back living in my parents boxroom (really does a lot for your ego at the age of 37, but there is simply no other alternative). The reason I had to go was because my landlady was charing me 38 euro a week more than our equivalent of housing benefit charges, and anyway it would eat into my dole as we have to contribute as I pointed out above.

What really bugs me is really dumb friends who misshear that I am living in my parents boxroom and congratulate me for not moving home, as if somehow there was an infinite number of generous friends with lots of spare space just waiting for friends to pop in for an indeterminate length of time, rent free.

Then I get them bemoaning the fact that I moved back to Dublin, God help them for missing my company.

Funnily enough, some of them are, wouldn't you know it, amateur landlords themselves.

I really do wonder how people without family somewhere nearby survive, until I recall crashing on a series of floors and eventually a tatty hostel in north London, 8 years ago . . . we are going to see horrific homelessness in the cities especially as everything that can possibly be done will be done to hold property values and therefore middle England investments, artificially high.

RenterGirl said...

Shoe I am so sorry to hear about your job. You are completely right about the smug assumptions made. Those in long term work can be very quick to blame others for suffering from a system that has stoked up insecurity (short rental agreements, short term employment contracts) and is now starting to punish those who suffer from this policy. Not everyone ha s family. Many friends are living in tiny flats with no spare sofa. Homelessness will rise. Good luck in the future, and please let me know how you get on.

MattW said...

The whole housing system is wrong! Council Housing still needs reforming to address the housing needs of those with low and moderate incomes.

I've sold my flat with a view to renting privately due to an iffy employment situation. However, many Letting Agents would rather I have a permanant full time job (despite the fact that I will have significant savings once I complete). Council Housing is out because it will take me 10 years to be accepted for a place (I'm single & no kids).

Looks like I'll end up in my parents' small bedroom like Shoe.

This country fails to meet the needs of its own citizens in housing need. Meanwhile, a Somalian refugee complains that his central London £2k a week house is inconveniently located for shopping and the school his children attends

RenterGirl said...

Housing is in a mess. But the whole story about the Somali family is a ruse: that is such an unbelievably rare occurance, but was leapt upon by the rightwing press. However - renting is a nightmare, there is no council housing and you are right about waiting lists. I am pining even more for a Continental attitude to length of agreements and notices. And everything. But no matter who you vote for - they just don't care about tenants.

Dazzla said...

"a Somalian refugee complains that his central London £2k a week house is inconveniently located for shopping and the school his children attends "

Where did you read this story, please?

RenterGirl said...

Before announcing the cuts to LHA (Housing benefit as was) the government and their stooges were aghast at some reported cases, many of which have now blurred into Urban Myth. It's getting like the days of planted, erroneous stories about black-bin liners being banned, or man-hole covers being renamed personhole covers etc etc. All tenuous at best, lies at worst.

Dazzla said...

Not sure if you're aware of this:


But it deals with exactly the sort of lies, misrepresentation and incitement to racial hatred that I think you're referring to.

I suspect that the story above was just such an example. It's amazing how quickly such headlines fall apart, often with no other reference than the story printed below them.

The tabloids have fastened themselves onto Cameron's coat tails (an apter metaphor than ever). Opposition to government policy is almost non-existent in the media at the moment.

Bought and sold, we are.

RenterGirl said...

The damage is done. There was a Guardian article on how the level of benefits needed to rise and how it was impossible to live on Income Support. But apart from that...

Anonymous said...

Here is the story from the right wing paper the Mirror

Renter girl do you think that HB should have no limit? If not what should it be £6K per week?

RenterGirl said...

Housing benefit to have a limit? That case is so rare. It is the case that is so unusual it will be picked upon and highlighted. Punishing claimants by putting a ceiling on allowances is not the way to go. landlords are encouraged to crank up the rents, and then people are not given sufficient money to keep a roof over their head.

Anonymous said...

"Housing benefit to have a limit? That case is so rare. It is the case that is so unusual it will be picked upon and highlighted. Punishing claimants by putting a ceiling on allowances is not the way to go. landlords are encouraged to crank up the rents, and then people are not given sufficient money to keep a roof over their head."
Who encourages Landlords to increase rents? If not the Government saying that we will pay whatever you think is fair?

I used to work in Woking - I did not earn enough to live there so I had to travel. Bizarely pro single mums could afford to live there - even though they did not work!!

RenterGirl said...

Dear Anonymous - the fact that working people cannot afford to live in city centres is scandalous - travelling costs a lot, as was pointed out above.

But it isn't housing benefit: sky high rents are the result of:
(1) Greedy landlords and letting agents
(2) desperate landlords sucked into the property bubble
(3) the philosophy of companies Iike Inside Track who insisted that rents could rise and rise.

Housing benefit does no more than allow people to stay in a home, and housed. Where else are people to go - moving when you've lost a job isn't easy - landlords/agents don't want you, and then there's the deposit, fees etc.

Dazzla said...


That's exactly the sort of article I mean. It's not verifiable anywhere else and it doesn't quote any sources (apart from 'Abdi Nur', which isn't even a full Somalian name). It isn't journalism. It doesn't prove or demonstrate anything at all.

I'm going to stick my neck out and say that this particular Abdi Nur didn't exist until The Mirror invented him to serve as prollbait.

ps: The Daily Mirror isn't really very 'right wing'. It was the only tabloid that supported Labour during the election, so I think that technically makes it the most left-wing newspaper on the mass market.

Imagine that...

Shoe said...

Thanks Rentergirl for your kind comments. Things are actually ok for me really as at least I do have somewere palatable to go, and my family are far too busy squabbling to mind or really notice, which suits me fine.
Actually the Mammies boxroom experiment has been a revelation in realising just how much it actually was to work in a normal, slightly above average paid job, and pay everything out of my own pocket. I worked out I'd save at least 1000 a month by not living on my own in a place by myself, in fact the real figure is a lot more. Technically I could live here on 20 quid a week. It actually is educational to see how expensive it is to do simple things like pay rent, high utility bills, petrol (or public transport, which has mysteriously crept to a level where its probably cheaper to drive) and council tax/water chrages/bin charges etc. In fact I'm starting to wonder how I managed.

In fact spacecadet makes a real point - how do you live on a short term basis? I found the old leasing system very unfair and restrictive. There is a real need for low cost but reasonably priced short term accomodation options that don't tie into leases. Oddly enough they allow providers of student accomodation (that was a huge crisis until ridiculously huge tax breaks came in to flood that market) to rent out accomodation during the summer months at very cheap levels - why can't this be incentivised for non students? You can get a week in a place like this - single room in 4/5 bed place, good facilities and proper management - for as little as 65 to 80 quid a week? I don't see why this cannot be encouraged instead of "over the shop living" schemes and "urban renewal".

RenterGirl said...

Shoe if common sense was valued, and applied correctly we wouldn't be in this mess. We could all of us be given notice on a whim, which is a nightmare if it happens at a vulnerable time eg when the deposit is tied up and you just can't hold of another wedge of money. I'm glad things are working out. Good luck - hope they get even better!