In Defence of Landlords
Landlords are back in the Government’s crosshairs. In a hastily-assembled bid for a graceful swan song, Boris has taken aim at this age-old foe. Yet this feckless decision will achieve little more than fanning the flames of a roaring housing market inferno.
The ‘Renters Reform Bill’ is set to greatly reduce the power of the ‘scrooge of common folk’. Cooked up in a recent whitepaper, this Bill unfairly targets private landlords through diminishing their ability to determine terms of rental tendencies.
This serves a great affront to liberty. Private property is a necessary condition for a free society. According to Lockean philosophy, our natural rights are the right to life, the right to liberty and, fundamentally, the right to property.
Our right to property derives from the fruits of our labour. If private individuals cannot freely own property and decide on its usage, what liberty do such individuals have? An absence of private ownership will eventually lead to the disregard of one's life, for what can he do without the fruits of his labour.
Landlords should not be treated as an exception to this. Part of one's liberty must surely be the decision to allocate his income according to his preferences and invest savings into long-term projects (i.e., in commercial property). To eliminate this form of liberty is effectively the socialisation of resources and a feature in all communist societies. Landlords invest their stored labour—savings—at risk and with the knowledge that they won't recoup their money for some time. In creating or renovating rental properties, they aid those who can't store their labour yet—tenants and labourers.
The Conservatives are pushing the boundary of expectation, showing there truly is nothing they won’t do in the name of self-preservation. Subtle Marxism (if such a thing exists) is the flavour of this latest gung ho attempt to win favour with the electorate. Punishing private landlords with a wasteland of red type is enough to make any Comrade teary-eyed.
Particularly worrying is the abolition of Section 21. This provision allows for a landlord renting through an assured shorthold tenancy to possess after the expiry of the fixed term of the tenancy upon giving two months' notice.
Where there are breaches of a tenancy agreement, landlords can rely upon section 21 to mitigate any risk, while tenants have security for the fixed term of their tenancy. Despite section 21 having a reputation as a "no-fault" eviction clause (as landlords don't have to give a reason for taking repossession of the property), in practice, tenants who are paying their rent and observing the terms of their tenancy are seldom evicted. One survey by the National Residential Landlords Association (NRLA) showed that over 70% of landlords issuing Section 21 notices did so because of rent arrears, with around the other third due to property damage.
The abolition of section 21 means that landlords won't be able to regain possession of their property unless there is a "genuine" reason for doing so, and any eviction will have to be made through section 8, which often involves lengthy legal procedures which amass vast financial losses for landlords.
Landlords will therefore have to take steps to mitigate this additional risk. This may take the form of requiring payment of rent for 6 or 12 months upfront, requiring additional or enhanced vetting of tenants at the outset of the tenancy, and charging higher rent to offset the risk of losses occasioned by non-rent breaches of tenancy, or similar. This simply frustrates access to tenancy and marks a renting death knell for poor, vulnerable people.
The Recent rental reform act serves one purpose; to weaken the liberty of landlords in deciding how to use their property. Long-term fixed tenancies are set to become highly risky, damaging all parties involved. This only creates the incentive for landlords to sell up and abandon the sector altogether, which will decrease the supply of varied accommodation, thereby driving up rents for tenants and reducing the variability of housing available.
On this recent flatulent whim of a supposedly ‘conservative’ government, we are venturing further down the road to serfdom. With it, Friedrich Hayek’s words ring truer than ever before: "The system of private property is the most important guarantee of freedom, not only for those who own property, but scarcely less for those who do not."