Imagine going to the shop tomorrow. You pick up some eggs, a bun or two and some fruit. You walk past the self-checkouts not willing to hear dreaded ‘unknown item in the bagging area’ again. You approach the cashier holding contactless card in your hand to make the encounter as quick as possible. The cashier does not start to scan your stuff; instead there is a questionnaire to fill out to see whether you qualify for shopping. And a small charge. And by the way there are two people willing to pay more for the eggs you want to buy, so you either outbid them or go without a breakfast. Would that make you mad? Would that made you shout and swear and throw random objects around?
Welcome to the private renting market in London. A place where you’ll be outbid, mildly humiliated, interrogated and forced to pay to run checks on you to make sure that you are able to afford mediocre standard but well overpriced roof over your head.
Shelter is one of the most basic human needs; perhaps more important than anything but food. And yet, in my opinion, property rentals are amongst least regulated markets of all in the UK. You start your journey by paying high agency fees just to check that you will be able to afford the property you’re about to rent. It does not quite matter that you’ve been paying just as much for the past 3 years… you need to be checked. Then there is rent. What would happen if all the major supermarkets decided to raise prices by 40% as of tomorrow? I suppose we would have millions of people on the streets. Somehow private landlords do that (slightly less rapidly) continuously and no one says a word. Landlords are quite aware that people have to live somewhere, so no matter how much they asked for the hole they have to offer there will be someone to take it. According to Guardian (http://www.theguardian.com/money/2015/apr/11/buy-to-let-landlords-earn-returns-of-up-to-1400-since-1996) landlords who invested in properties in 1996 have returns of up to 1400%. This is more or less five times more than any other kind of investment in the same period. Now, I believe that shelter – again, a basic human need, should ideally not generate any returns whatsoever. I can understand that for some that would be by far too radical an approach, fair enough. Nonetheless, whatever your views are you must acknowledge that in no circumstances providing accommodation for people should be the most profitable source of investment of all. It is just not right.
This is not all. I will not be able to delve into all the wrongs of the property market in one post, but I just wanted to signal a few of the things I noticed (and I am sure that there are some that escaped my attention). If you’re a landlord you are able to deduct the interest on your mortgage from your income tax. All the tenancy agreements are signed for a year and then extended as a rolling contract allegedly because this is suitable for everyone. In reality the tenancy agreement is the only protection for the tenant. Without it landlords can ask for their property back at any time with a 2 month notice. There is absolutely no defence against it and the landlords do not have to give their reason. In effect this means that often asking for repairs to be done or complaining about anything after your tenancy expires puts tenants at risk of losing their flat. I understand that there are many great landlords out there (and on that note all the best to D. wherever you are man) but there are loads of really shitty ones too and without property legislation there is no way to protect people from them. Effectively there are almost no standards (because there is always someone desperate enough to accept a flat in any state, hoping that the landlord might do something about it in the future), no regulations and no supervision. Building 200 or 300 thousands houses every year may well be the best way out of the housing crisis. However, regulating the rent market would provide an immediate solution, not one that really works in 2025.
How is that not the main story on the news every day? I don’t quite know…
It‘s the election time. As it’s customary for the species in that time, politicians of all options and parties try to prove how much they and how little their opponents do for the benefit of the country. Even I, hidden nicely in the impenetrable wilderness of Kent, have recently been disturbed by the Conservative
propaganda election pamphlet. One could think it ended up on my doorstep by accident if not for my name and address clearly visible on the front page; I must admit I am quite curious which of the suspicious ways they used to obtain it. Tempted by the promise that they WILL secure Britain’s future should I only decide to cast my vote in their favour, I opened the leaflet.
There are a few interesting points to make (e.g. did you know that you are going to get an in or out referendum on EU if you choose Tories for your next government?! Haven’t heard about that one…), but today I want to focus on something that I found in their ‘what we’ve done’ section:
‘Cap Welfare: So we’ve capped welfare – no out-of-work household can now claim more than the average family earns in work’.
Due to my innate kindness I will skip an ironic comment about their syntax and move on to more important issues. Do you see what they did there? Somehow people who are out of work did not make it to the category of family and became a dehumanised ‘household’. This becomes even more shocking (for the readers of the Sun) or imprecise (for everyone else) when I tell you who is actually affected by the welfare cap. It’s the CHILDREN – now that I have your attention I can move on to explain why they and only they are affected. The benefit cap is set at the following level – £500 for couples with or without children and for single adults with children, and £350 for single adults. For the sake of integrity I should also say that if any member of the household receives DLA or PIP (or a number of other less popular benefits; for the full list see https://www.gov.uk/benefit-cap ) the entire household is exempt from the cap.
Now the fun part – calculations. Let’s assume we have the stereotypical representation of the out-of-work household – a single person on jobseekers allowance claiming the housing benefit. JSA for long term unemployed comes to 72.4 a week. That leaves about 280 per week for the housing benefit. That should be enough to rent one bedroom flat in private rented sector everywhere apart from some areas of London. Things change when consider a family and a family with many children in particular. If both parents are out of work and claim jobseeker allowance that gets them 113.70 a week; if they receive employment and support allowance it may go up to about 240 per week. Then there is the child benefit – if we assume they have 3 children qualifying for the benefit they are going to get additional £47/week. And there is the child tax credit which can vary – up to £52 per child per week. Let’s assume they get an average of £25 per child – that gives them another £75. What we have now is a total of £235.7. So if the benefit cap is set at £500 and the benefits for living costs take £235.7 out of it then there is only 264.3 per week left for the family with three children to rent a property. Yes, I believe that’s quite enough for a three bedroom flat in most regions of the country, but it’s almost impossible in London. And then there are families with even more children than three, and they still have to manage with £500 per week. Again, for the sake of integrity, I should add that there is also social housing – with rents set at about 40% of the market price, and it is accessible to people who receive benefits. The problem is that there are simply not enough of these properties. Boroughs such as Lambeth or Southwark have as many as 20 000 people on their waiting lists. The bigger property you’re looking for the longer you’ll have to wait, and it’s possible you will not get it at all.
What I wanted to show is that the benefit cap looks very nice on the paper – it should prevent people out of work from claiming more than the average person can earn. However, it’s calculated in a way which affects almost solely families with many children, which leads me to quite an obvious conclusion that it affects almost solely children. For some families it means having to move away – families in London affected by the benefit cap are advised to move outside of the city to somewhere where the prices of properties are significantly lower. For those who decide to stay, it means living in poverty.
Capping welfare does not really mean we live in more just society; it penalises solely bigger families. It pushes more children into precarious living conditions. Is that really something to be proud of?