Section 24 is the reason for rocketing rents – not landlords

Reply to the comment left by Jim K at 03/12/2024 - 11:52
I agree, those who are on good wages should not be subsidised by the rest of us. But the problem is, they are relatively few in number and administering a higher rent would probably cost more than the extra money it brings in.
A better approach would be to charge all tenants a sensible market rate (e.g LHA rate), enabling non-profit providers to use the money to build or acquire new capacity. Those on lower incomes would be subsidised through the benefits system just like private tenants. They are probably receiving UC anyway, so the extra bureaucracy would be negligible.

Reply to the comment left by Peter Merrick at 03/12/2024 - 12:10
". . . . extra bureaucracy would be negligible."
I would venture to suggest that it will cost no more than £12 per person!

Reply to the comment left by TheMaluka at 03/12/2024 - 14:49Isn't that the rather magical figure for the RRB? Obviously just registering and being monitored is going to cost more than that, never mind the cost of Section 8 vs Section 21 and upgrading to 3 months' free rent for all tenants before the landlord can do anything.
I wonder if the supermarkets will have to allow 3 months' free shopping before they can start to get rid of non-paying shoppers? After all, food is as essential as housing, so there shouldn't be a difference!

Reply to the comment left by Peter Merrick at 03/12/2024 - 18:45
San Francisco did something like this. It was called Prop 47:

https://growsf.org/blog/prop-47/

One of the effects was that the police couldn't arrest anyone if they shoplifted anything less than 950 dollars in value. The outcome was that it wasn't possible to run a shop - shops closed and crime soared. Parts of San Francisco became no-go areas.

If a really left wing government does some exceptionally stupid things (like for example putting you in a position where it's acceptable not to pay you rent as a landlord) then parts of the PRS could become no-go areas.

There are lots of reasons for rocketing rents.

These include both increasing finance costs and also taking away your right to OFFSET your finance costs against rents. They include anything that exacerbates the lack of supply. And they also include anything that increases costs. The budget proposal to raise employers NI will affect charities, including housing/homelessness charities. It will affect healthcare businesses. It will also affect housebuilders who are already struggling to build houses for a price per metre that enables them to make a sustainable profit after their own, rapidly escalating finance costs that many prospective house purchasers cannot afford to finance.

There's nothing in the budget that's going to deliver growth in the UK economy. Growth in the UK economy comes from small business:

https://commonslibrary.parliament.uk/research-briefings/sn06152/#:~:text=Businesses%20by%20size&text=SMEs%20are%20businesses%20with%20fewer,more%20employees)%20in%20January%202024.

SMEs account for 60% of employment and 48% of turnover. After the last financial crisis that's where most of the growth in employment came from.

I can't see anyone in the labour government really understanding this because as far as I can see, none of them has ever run a business. But some of these labour politicians are landlords and they must understand that they are putting up costs for landlords and pursuing policies that are likely to make the problems with supply even worse.

Reply to the comment left by Beaver at 05/12/2024 - 17:15
I'm sure that mostly they know exactly what they are doing. It's called ideology, short-termism, envy, greed, you name it.

But I must admit the San Fransisco experiment was monumentally stupid, to legitimise theft like they do to the PRS (as well as drug dealing and the like). But then the PRS does not really count as a legitimate business in their eyes, nor does it affect everybody like not being able to run a shop, so they don't care if landlords are forced out of business by unscrupulous tenants.

I guess the shopkeepers have gotten used to taking preventative measures by now, and landlords have to do the same by being extremely careful who we allow into our properties, lest they destroy our businesses and livelihoods.

Reply to the comment left by Peter Merrick at 05/12/2024 - 17:37
Yes....it's dogma. And I don't think it's blind pursuit of dogma....I think it's disingenuous (or just plain dishonest) politicians using landlords as a scapegoat for their own failed policies.

What it takes to avoid the damage, or even just mitigate it, is for renters to be able to see through the b******t, or for organisations that genuinely understand renters and represent them to point out that this pursuit of socialist dogma actually makes things worse for tenants because it restricts their choices and options. Hopefully some of the members of the Westminster parliament will be able to point these problems out as the RRB goes through both Westminster houses. Good luck to renters in Scotland...they're going to need it.

Historically, small landlords provided extra choice in the marketplace and small landlords tended to hold rent down a bit to encourage long-term tenants. I can't see why any tenant group in its right mind would be attacking them or arguing for that.

According to this link:

https://www.mybuilder.com/architectural-services/price-guides/cost-to-build-a-house

The average cost to build a house is somewhere between £1,500 and £3,000 per square metre in 2024. And according to this link:

https://urbanistarchitecture.co.uk/cost-to-build-a-house-uk/#:~:text=Input%20costs%20are%20key%2C%20with,should%20be%20taken%20into%20consideration.

40-45% of the build cost is labour. Putting up employer's NI is going to put that up and make the achievement of Angela's pie-in-the-sky building targets even less likely.

What this government did was to to get in, bleat about the deficit (that they were partly responsible for for lobbying for even more to be spent on Covid) and declare that they were going to grow the economy. They then implemented policies that were obviously going to slow it down. All in the space of just a few months. Anything that attacks small business is an assault on the economy.

Exactly how much of this s*******w is incompetence and how much is dishonesty I can't really be sure. But even if there is just a tiny amount of competence there then they must understand that they are driving rents up for tenants.

Reply to the comment left by Beaver at 05/12/2024 - 18:02
We ain't seen nothing yet. Just look at their EPC consultation it is worse than I thought. A new EPC every time a tenant changes!!

Reply to the comment left by Crouchender at 05/12/2024 - 19:48
It's not looking good. The government came in, gave junior doctors a pay rise (there may have been a case for that) and gave train drivers a massive above inflation pay rise without agreeing any changes on performance and even though they already had a four-day week. The expense of that change is exacerbated by increasing employers' national insurance, as is the expense of any above inflation public sector pay rise.

Angela Rayner has just introduced changes designed to give new starters the same rights as people who have been in a job for an extended period. That increases the risk of taking on staff for employers on top of the increase in NI and also creates further problems with retention...why stay in a job when you can just walk into a new one and get the same benefits?

Everything that they are doing hurts SMEs and that's where the engine of growth in the economy is....not in the public sector. They now appear to be saying that they need to attack farmers to pay for the NHS (which now costs more because of their increase in employer's NI). The truth is they aren't attacking farmers with changes to IHT...they are attacking all small businesses, including small businesses renting out properties.

But those changes punishing employers also increase the cost of building houses. The public sector doesn't build houses. Builders already have difficulty building a house and making a profit which is why so many go bust in a downturn.

It's just not possible to reconcile what they are saying about going for growth in the economy with what they are actually doing.

Reply to the comment left by Beaver at 06/12/2024 - 14:24
"Read my lips - no new taxes ...":
https://www.youtube.com/watch?v=0MW44jsYi0g

Reply to the comment left by Peter Merrick at 06/12/2024 - 17:23
The taxes may not be new....just a dramatic, inflationary increase applied to the taxes that are already there. 🙂

According to the Federation of Small Businesses:

https://www.fsb.org.uk/uk-small-business-statistics.html#:~:text=SMEs%20account%20for%2099.8%25%20of,%C2%A32.8%20trillion%20(52%25).

SMEs account for 99.8% of the business population (5.5 million businesses). SMEs account for three-fifths of the employment and around half of turnover in the UK private sector.

If the labour government attacks small business to favour a small minority of public sector employees, union-leaders and other cronies then it is attacking the whole UK economy.

It isn't possible to grow the UK economy this way. And the policies will also result in dramatic increases in rents.