The end of landlords: the surprisingly simple solution to the UK housing crisis
Speaking against his own government’s renters reform bill last autumn, the Tory grandee Sir Edward Leigh told MPs: “I was able to buy my first house – although it was a bit of a struggle – for £25,000. The opportunities for young people are so difficult now”. Younger people are “overwhelmingly reliant on the rental sector”, Leigh conceded, but the problem as he saw it was one of supply: “We have to build many more houses, and we have to free up the rented sector.”
What never seems to occur to Leigh, his parliamentary colleagues, or indeed his entire generation, is to look seriously at what has changed between their time and ours. The forthcoming general election is once again likely to be dominated by claims about a housing shortage and a dire need to build more homes. Housebuilding is an article of faith across the political spectrum.
The evidence, however, does not support this thinking. Quite the reverse. Over the last 25 years, there has not just been a constant surplus of homes per household, but the ratio has been modestly growing while our living situations have been getting so much worse. In London, as the Conservative Home blog notes, there is a terrible housing crisis “even though its population is roughly the same as it was 70 years ago”, when the city was still extensively bomb-damaged by the second world war.
In terms of the Organisation for Economic Co-operation and Development countries, the UK has roughly the average number of homes per capita: 468 per 1,000 people in 2019. We have a comparable amount of housing to the Netherlands, Hungary or Canada, and our housing stock far exceeds many more affordable places such as Poland, Slovenia and the Czech Republic. It is impossible to make a case for unique levels of housing scarcity in Britain, in comparative international or historical terms. What has changed for the worse is not the amount of housing per household, but its cost. And cost, in turn, has a great deal to do with the landlordism that is at the heart of the present crisis.
‘Housebuilding is an article of faith across the political spectrum.’ Photograph: Murdo MacLeod/The Guardian
In the 1970s, when Leigh’s contemporaries were buying their first homes, they were the direct beneficiaries of an imploding private rental market. Rent controls, secure tenancies and high interest rates had conspired to decimate the sector: it shrank from nearly 60% of dwellings in England and Wales in 1939 to just 9% in 1988, towards the end of Margaret Thatcher’s premiership. This was welcomed by Conservative governments and Labour councils alike: the former rejoiced that rack-renting landlords were having to sell up to new owner-occupiers, while the latter enthusiastically repurposed existing private lets into new social housing stock.
The project of “municipalising” the private sector enjoyed cross-party support. With landlords desperate to sell, and councils having access to preferential public loans and grants, there was not even a need for compulsory purchases, and social housing stocks could grow cheaply, sustainably and without a single new brick being laid. In the 1970s, Harold Wilson’s government issued circulars encouraging municipalisation, the chancellor Denis Healey made £200m available in the budget and Wilson’s “good sensible socialist government” criticised Edward Heath’s Conservatives for adopting municipalisation funding criteria that had been too generous: “Almost a carte blanche,” complained a Labour minister.
In 1973 and 1974 alone, Camden council acquired more than 4,000 privately rented homes through voluntary sales, which – at a stroke – reduced the London borough’s private rented sector by about 10%. A contemporaneous article proposed municipalisation as a route towards “the end of landlordism in London”, explaining that “with commitment it could be achieved in six years – it would be easy to do in 10”.
The word ‘gentrification’ was first used in the 1960s to describe replacing the squalor of urban rented housing with younger owner-occupiers. Photograph: Mirrorpix/Getty Images
And, of course, there was an upswing in owner-occupation, as Leigh’s generation dispossessed the reviled landlords of the post-Rachman era. In fact, the first use of the word “gentrification”, in the 1960s, was intended to describe this phenomenon of replacing the squalor of urban rented housing with a new class of younger owner-occupiers. Instead of (as it does today) connoting the ritualistic slaughter of social housing and the elimination of the urban poor, early gentrification was offset by radical councils such as Lambeth aiming to achieve a surplus of high-quality social housing in order to abolish the need for waiting lists and qualification criteria.
Even the Tories’ political education department had no real objection to the further reduction of the tiny private rented sector that existed in the 1970s. It wrote: “The accelerating decline of the privately rented sector is quite irreversible. The private landlord, as he exists now and has existed, will, within a generation, be almost as extinct as the dinosaur. There is nothing that can be done about this.” Conservatives in the 1970s merely sought to retain a handful of petty landlords, who ought to be entitled to a “fair return” if they let out a spare room or two, but they recognised that private renting tends to be an expensive, poor-quality and economically wasteful way of accommodating the population. The near-death of landlordism was one of the good news stories of the last century.
But the task that Thatcher and her successors set themselves was to undo that progress. The present system was designed, as the supreme court noted in a tenant’s 2016 human rights challenge, to ensure that “the letting of private property will again become an economic proposition”. It should have been obvious to everyone that a market that had achieved such positive effects by its collapse would produce equal and opposite consequences as it was reinflated.
We now find ourselves in a situation where one in every 21 adults in the UK is a landlord. We have four times as many landlords as teachers. As a consequence, virtually everyone struggles to afford a home that meets their needs despite a net gain in housing stock. Landlords are entitled to ask for whatever rent they think they can get, and insecure contracts drive a coach and horses through the concept of tenants’ rights. This is the market that Leigh, landlords and developers want to “free up”. Instead of confronting the horror of our situation and its causes, they pretend that there is an extraordinary shortage of homes. This is simply untrue, as the international and historical data shows.
One in every 21 adults in the UK is a landlord. Photograph: Sam Frost/The Guardian
Here, as in the US, we have been lured into a fruitless debate about supply. There is a confected dispute between anti-housebuilding “nimbys” and pro-housebuilding “yimbys”, led by energetic planning-law abolitionists, which seeks to distract us from talking about the ultimate sources of the housing crisis. The supply issue continues to dominate the discourse despite the US having more homes per capita than at any point in its history, and the UK’s homes-per-capita ratio actually exceeds the US’s.
The yimby argument has always seemed flimsy. Its strange logic is that speculative developers would build homes in order to devalue them: that they would somehow act against their own interests by producing enough surplus homes to bring down the average price of land and housing. That would be surprisingly philanthropic behaviour.
When we complain, rightly, that cities such as Vienna are so much more livable than anywhere in Britain, we must acknowledge that landlordism is holding us back. Our insistence on pursuing policies that ensure that letting private property is an “economic proposition” not only drives up prices for would-be homeowners, but it stands in direct opposition to a programme of municipalising and decommodifying the homes that already exist. It also inflates land values, making new state-led building projects unfeasible. If we want a Viennese-style existence we can only achieve this, as we did 50 years ago, by driving the landlords out. Which is only fair: we have given them a very good innings.
Despite a housing crisis that compounds itself every day, the government has indicated that its modest reforms to the private rented sector in England, proposed in 2019, will not be implemented in the foreseeable future. We are so beholden to landlords crying wolf that parliament has spent five years failing to do the one thing that, in 2019, every political party agreed needed to be done.
Renters face appalling conditions. Photograph: Stephen Shepherd/The Observer
Solving the housing crisis does not need to involve an ecologically unforgivable project of mass-scale housebuilding. It does not need to involve asphalting green belts, destroying precious amenities through “infilling”, converting office blocks into flats or wasting government money on quixotic home-ownership schemes. We simply need to relearn the wisdom of the last century: to acknowledge that landlordism is the enemy of affordability, and to ensure that the housing economy is not defined by the staggering rental yields that our unregulated market can produce.
Our recent history shows us that landlord abolition, while maintaining adequate levels of housing stock, is an entirely realistic ambition. It is so modest a demand that it has been subsumed into Conservative party policy. When we come across opponents of rent controls, it is worth considering that (by 20th-century standards) they are the ones with the bizarre and radical demands: the extremists, the profiteers, the landlord apologists who believe in an economy that involves skimming as much passive income from people’s incomes as possible. If they are against rent controls, they believe that rents should be set by the market, which (in the context of urban housing) tends to mean monopoly prices. They believe in a mechanism that necessitates rising poverty, and by which the already wealthy thrive on other people’s money.
Where Adam Smith and Karl Marx found common ground was in the idea that everyone’s interests are aligned against landlords: they are an economic deadweight. Even if we leave aside the appalling conditions and precarity that private renters face, anyone with an interest in lower taxes, lower wage bills and increasing the number of first-time buyers must equally be interested in smashing the private rented sector to bits. Homebuyers are now forced to compete with landlords, who chase sensational yields in our unregulated rental market, and £85.6bn a year (which comes, of course, from wages and taxes) is wasted on rent. A renewed collapse of landlordism would represent not just the tenants’ revenge for the housing crisis, but a much broader and more valuable moment of social progress.
Nick Bano is a barrister specialising in renters’ rights and homelessness law. His book Against Landlords: How to Solve the Housing Crisis is published on 26 March (Verso, £16.99).To support the Guardian and Observer, order your copy at guardianbookshop.com. Delivery charges may apply.
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