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Westlake Legal Group > Posts tagged "rent"

Ryan Bourne: To help grow prosperity, let’s focus on people and not places – such as towns

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

Stian Westlake describes it as the “Strange Death of Tory Economic Thinking”. Conservatives have ceased telling an economic story about why they should govern, and how. Sure, there’s still the odd infrastructure announcement, or tax change. But, since Theresa May became leader, the governing party has shirked articulating a grand economic narrative for its actions.

This is striking and problematic. From Macmillan to Thatcherism to deficit reduction, the party’s success has coincided with having clear economic agendas, gaining credibility for taking tough decisions in delivering a shared goal. But, arguably, deficit reduction masked a secular decline in interest in economics. David Cameron and George Osborne, remember, wanted to move on to social and environmental issues until the financial crisis and its aftermath slapped them in the face.

Now, with the deficit down, economics is in the back seat. Fiscal events are low key and economic advisors back room. To the extent the dismal science is discussed, it’s as a means to other ends, or a genuflect to “Karaoke Thatcherism.”

In short, I think Westlake is right: the Tories do not have an economic story and, post-Brexit, it would be desirable if they did. So we should thank both him and Sam Bowman (formerly of the Adam Smith Institute), who have attempted to fill the vacuum. In a rich and interesting new paper, the pair set out to diagnose our key economic ailments and develop a Conservative-friendly narrative and policy platform to ameliorate them, even suggesting reform of the Right’s institutions and think-tanks in pursuit of the goals.

Such an effort deserves to be taken seriously, though not everyone will agree with their starting premises. It is assumed, for example, that Conservatives believe in markets and want to maintain fiscal discipline, which bridles against recent musings from Onward or thinkers such as David Skelton.

But, again, the key economic problem they identify is incontrovertible: poor economic growth. Weak productivity improvements since the crash have been both politically and economically toxic, lowering wages, investment returns, and necessitating more austerity to get the public finances in structural order. And the nature of modern innovation, arising from clusters and intangible assets, means that growth that is experienced isn’t always broadly shared.

Their agenda’s aim then is to achieve both concurrently: maximize the potential of the economy by taking policy steps on planning, tax policy, infrastructure, and devolution, to increase investment levels, allow successful cities and towns to grow, and to connect “left behind” places to local growth spots through good infrastructure. None of their ideas are crazy. Indeed, I would support the vast majority of them.

And yet, something bothered me about their narrative. In line with the current zeitgeist, they too discuss “places” and their potential, as if towns and cities are autonomous beings. My fear is this focus – shared by those who want to regenerate “left behind” areas – creates unrealistic expectations about what policies can achieve in a way that undermines a pro-market agenda. Importantly, it warps what we should really care about: “left behind” people, not left behind places.

A people-centred narrative recognises that just as firms fail in the face of changing consumer demands and global trends, so high streets, towns, cities, and even regions will shrink too. As Tim Leunig once said, coastal
and river cities that developed and thrived in a heavy manufacturing, maritime nineteenth century world might not be best placed to flourish in a service sector era of air and rail.

A true pro-market policy agenda would admit -and that’s ok. Or at least, it should be, provided we understand that raising growth and sharing prosperity requires adaptation, not regeneration. That means removing barriers for people either to move to new opportunities or have control to adapt their situations to ever-changing circumstances. This might sound Tebbit-like (“get on your bike”), but really it’s just saying policy must work with market signals, not against them.

Today though, interventions actively work in a sort of one-two-three punch against inclusive growth and adjustment. First, we constrain the growth of flourishing cities. Tight land use planning laws around London, Oxford, and Cambridge contribute to very high rents and house prices, and prevent these places benefiting from growing to obtain thicker agglomeration effects.

This contributes to the “left behind” scandal, but not in the way people imagine. When rents and house prices are higher in London and the South East and we subsidse home ownership or council housing elsewhere, it’s low productivity workers from poor regions that find it most difficult to move given housing cost differentials. As a result, they get locked into poorer cities and towns that would otherwise shrink further. That’s why Burnley, Hull and Stoke are the most egalitarian cities in the country, whereas prosperous London, Cambridge and Oxford are the most unequal, even as inequality between regions has intensified.

Having restricted people’s mobility through bad housing policy, we then impose one-size-fits-all solutions and subsidies which dampen market signals further. National minimum wages, fiscal transfers, national pay bargaining, and more, might be designed to alleviate hardship, but they deter poorer regions from attracting new businesses and industries by trading on their market cost advantages. Then, to top that off, we compound the problem further by centralising tax and spending powers, preventing localities from prioritising their spending and revenue streams to their own economic needs.

Now, as it happens, Bowman and Westlake’s policy agenda is perfectly compatible with assisting  “people” rather than “places,” precisely because it’s market-based. They advocate planning liberalisation, a flexible right to buy, and stamp duty, all of which would improve labour mobility. They prioritise infrastructure spending based on benefit-cost ratios, making investments more profitable with sensible tax changes, and devolving more transport power to regions and localities. All, again, will help facilitate areas adapting to changed economic conditions, rather than reviving Labour’s failed top-down regeneration attempts.

But pitching this as a city and town agenda still risks creating the false impression that the net gains from “creative destruction” nevertheless can be achieved without the destruction, and that all places can thrive in the right policy environment.

One can understand why they framed it in this way. Their aim is to persuade the party and its MPs of their platform. Anti-market commentators would call them fatalistic and “abandoning” places if they acknowledged the downside, as if facilitating more free choice amounts to design.

Successful past Tory economic narratives, though, willingly acknowledged hard truths. Deficit reduction entailed tough choices to curb spending. Thatcherism entailed making the case for letting inefficient industries fail. If a new Tory vision is serious about raising productivity growth and spreading opportunity for people, it will have to confront the inevitable market-based adaptation for some places.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Neil O’Brien: Corbynomics – and why it means that your house, business and savings don’t really belong to you,

Neil O’Brien is MP for Market Harborough.

What is Corbynomics? It goes without saying that it’s a much more extreme economic programme than Labour have ever had before. And that government will spend, tax and borrow more. But Labour have a lot more damaging, half-baked and dangerous ideas.

No-one is thinking about them at the moment, but the scary thing is that within weeks these ideas could be affecting your house, your pension and your job.

For me, the most frustrating thing is that Labour have identified various important issues, but their proposed “solutions” would make matters worse. Let’s look at a couple of examples.

Seizing 10 per cent of all large companies’ shares

Lots of people, including me, worry that current corporate structures create pressures that make managers behave in a short-termist way, squeezing investment to hit short term profit targets and dragging down productivity growth. I’m concerned that publicly quoted firms are beholden to increasingly transient shareholders, interested in immediate returns. They certainly invest far less than privately owned firms who can take a longer-term view.

But my answer to this would be to change the tax treatment of investment, and increase capital allowances so that there’s no disincentive to invest.

Labour’s answer, in contrast, is to forcibly transfer 10 per cent of all companies shares to create a sort of employee-ownership-at-gunpoint.

This is a terrible idea, which would make investment into the UK dry up overnight. After all, if government can steal ten per cent of your shares, what’s to stop them coming back for the rest? Labour protest that the shares are not being stolen – just given to the workers. But that’s a lie, as they also propose that a Labour-run Treasury would take the great majority of the dividends that those shares attract. At the moment, these are owned by savings and pension funds – so the money is ultimately coming out of your pocket.

The total value of the shares stolen by government would be around £300 billion, according to the Financial Times. For comparison, raising the basic rate of tax by one per cent raises £4.5 billion a year, so you can see what a vast tax grab this would be.

Forcing people to sell their properties at a price set by government, and control rents

There are major issues about the balance of rented and owner-occupied property in Britain. We had a long period when the number of properties being moved into the rent-to-buy sector was outstripping the number built, meaning owner occupation fell dramatically. Between 1996 and 2016, the home ownership rate among middle income people aged 25-34 fell from 65 per cent to 27 per cent.

However, in 2015 the Conservative Government reformed the tax treatment of rent to buy and second homes, and in the years since we have seen homeownership rebounding upwards, with both ownership and the rented sector growing in a more balanced way. There are lots more things we could do to grow home ownership.

Corbynista Labour doesn’t really believe in home ownership. They are nostalgic for the world of the 1970s, where around two thirds of households in places like Islington lived in social housing. But they know ownership is popular.
So they have announced the “private sector right to buy”. This will give private tenants the right to make their landlords sell their properties to them at a discount.

In an interview last week, John McDonnell made it clear that government would set the price: “You’d want to establish what is a reasonable price, you can establish that and then that becomes the right to buy,” he said. “You (the government) set the criteria. I don’t think it’s complicated.”

It’s not complicated. But it is deeply unfair. It would be a retrospective raid on people’s assets. People, including some who are not so rich, have invested in property under certain rules, and would have their savings ripped off them, while other people who invested their money in other things would not. This is arbitrary and unreasonable and would I’m sure be challenged in the courts.

Labour would also set rental prices, promising in a recent document that “There should be a cap on annual permissible rent increases, at no more than the rate of wage inflation or consumer price inflation (whichever is lower).”

This is unworkable or will lead to under investment in rented properties. Why spend lots doing up a flat if you can’t charge more for an improved property? We would quickly be heading back to the 1970s, when there wasn’t enough rented accommodation to go round, and conditions were squalid because of rent controls.

Sectoral wage bargaining

With the National Living Wage, the Conservatives have introduced one of the highest minimum wages in the world. For the lowest paid, the National Living Wage plus the cuts in taxes for lower paid people mean that they take home £4,500 more than they did under the last Labour Government – while employment has soared to a record high. We should be really proud of our record.

However, the National Living Wage is still set by an independent body, and as percentage of average pay in the market, so there is a sensible link to what businesses can afford without sacking people.

In contrast, under Labour politicians would just set rates directly. Labour have also pledged to “roll out sectoral collective bargaining”. Labour said it would “fix the going rate” in each industry and “set fair conditions” for the sector. This would represent an end to the system whereby unions negotiate company by company and, instead, give them power effectively to set national standards on pay and conditions. A new government unit would work with unions to bring firms into line.

This means that if politicians or trade unions decide your business is part of a particular “sector” (a pretty subjective question) then you would be in line for a change in wages which your business might simply be unable to afford. The scope for union bullying and endless court cases and demarcation disputes is obvious. In the car industry, wages are high, so a sectoral wage would be high. If I make plastic bits for the car industry but also other industries, is my business in or out of the automotive sector?

Rebecca Long Bailey has also said that “Labour will also legislate to reduce pay inequality by introducing an Excessive Pay Levy on companies with staff on very high pay.” There is no detail on what the rules will be, but the idea of having wages directly controlled by Jeremy Corbyn is likely to deter inward investment.

What do these ideas have in common?

When New Labour left office, a million people had been thrown on the dole, we’d had the deepest recession since the second world war and government was borrowing more than at any time in our whole peacetime history. In the final year alone, they borrowed £7,900 for every family in Britain.

And that was New Labour. Imaging what the country would look like after Corbyn and McDonnell.

Where Corbyn’s ideas really differ from previous Labour leaders is that he doesn’t really believe in the rule of law. Your house, your business, your savings: all these things don’t really belong to you, in Corbyn’s eyes: you have them only as long as the government suffers you to have them, and they can be retrospectively taken away if he sees fit. In the week Robert Mugabe died, we’ve seen underlined just how important the rule of law is. But under Corbynomics, it would be the first casualty.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Kevin Hollinrake and Rosalind Beck: Rent controls would hit London hardest

Kevin Hollinrake is MP for Thirsk and Malton. Dr Rosalind Beck is a doctor of Criminology and a Conservative Party member in South Wales.

Most people assume when you have a shortage of a product, the answer is to create more of it. Currently, in the context of the UK housing shortage, however, this is not seen as the answer; instead, the thrust of policy is to play musical chairs with what already exists.

This is seen, for example, in policies to force the transfer of houses from one tenure (private and social rented housing) to another (owner-occupation), via punitive taxation and regulatory measures in the private rented sector (PRS) and by Right to Buy in the social sector. This does nothing to alleviate the original problem – a shortage of housing.

What’s worse, as pointed out in a recent report by Jacob Rees-Mogg and Radomir Tylecote, some of the ‘solutions’ in turn create new problems, for which further solutions must be found.

Theresa May’s sudden decision to scrap Section 21 notices in the private rented sector (PRS) is a case in point. If this knee-jerk decision goes ahead it will mean tenants gain indefinite tenancies; this is because landlords won’t be able to serve a notice on them unless they breach specified conditions of their contracts, which would have to be proved in a court of law. Scrapping Section 21 would be disastrous for the PRS and we are hoping that this will not be pursued by the new administration.

Of course, no sooner did Theresa May make this announcement, than George Monbiot, amongst others on the left, predictably called for the next ‘solution’ to the problems this will create:

“The government’s promise to repeal section 21 of the 1988 Housing Act, which enables owners of property to evict tenants without good reason, will achieve little if it does not come with a cap on rent rises: otherwise landlords can engineer de facto evictions by hiking the price.”

And so the clamour for rent controls began, notably with Sadiq Khan demanding powers to introduce them in London. He has made this his flagship policy, despite having no idea how it would work and what the impact would be.  Sadiq Khan’s team don’t know if leftie rent controls will help Londoner.

Although it is in the Labour Manifesto to introduce them nationwide, the more immediate threat is in London, so we will focus on that here.

The special case of London.

In recent years, it has often been stated that rents are soaring everywhere in the UK. This is false as rents have generally tracked inflation and in London rent rises are already well below inflation, increasing by just 0.9 per cent in the year to June compared to CPI standing at two per cent.

This is therefore a curious time to demand rent controls, as it could mean increases being capped at, for example, 2.5 per cent.  This could result in 2.5 per cent becoming a target and rents rising more than they would have otherwise done.

To support the policy of rent controls, emotive arguments are often deployed, especially about the experience of renters in London. One hears how expensive rents prevent them from saving so they can later buy a home of their own.

This is of course regrettable, but there are two sides to every coin and two sets of circumstances to look at; those of the recipient of the housing and those of the provider of it. Without the willingness of the latter, there would be no rented housing. However, in a currently febrile atmosphere, with hardly anyone willing to speak up for private landlords, their perspective is, rather stupidly, rarely considered.  Taking no account of landlords in this, is not only bad for them; it is extremely damaging also to the interests of tenants.

An analysis of the situation demonstrates that rent controls would in fact devastate the PRS in London, where the proportion of private rentals is higher than anywhere else in the country, at around 40 per cent of all housing.

To illustrate this, one only has to compare, for example, Bermondsey, in London, with Mountain Ash in the South Wales valleys.

In South Wales many two-bed houses can be bought for under £65,000 and be rented out for under £100 per week. This rent amounts to a gross yield of 7.4 per cent.

In contrast, a similar two-bed home costing £500,000 in Bermondsey would typically be able to command a rent of £1,550 pm. The gross yield here would be 3.7 per cent.

As one landlord explained to us:

“Some London tenants might think their rent should be capped or reduced to some arbitrary figure set by Government, so that they can manage without worrying. But on a £500,000 house, the landlord is likely to have put down a deposit of £100,000  from their own savings. They will only do that if they can get some return on their money. Does the Government and the tenant think that a previously unknown-to-them private individual – that is, a landlord –  is going to reduce their charges so that they make nothing or even a loss?  What landlord would agree to do this? How would this subsidising be sustainable over the long-term?”

Because £1,550 pm rent seems a lot to most people, Khan and others misrepresent this as though London landlords are committing some heinous crime in seeking a modest gross return of not much more than 3%.When other costs, including mortgage payments and maintenance, are taken into account the figure is more likely to be around one per cent, if that.

Somebody needs to explain business, yields, returns and commercial decisions to Khan, as he clearly does not understand the small margins involved in the PRS.

In a situation where yields are already so tenuous, if caps are put on what landlords can charge, many will make nothing on their investment. The new tax levy, known as Section 24, has already pushed many landlords into a loss. Caps would push this further and many landlords would be forced to sell up.

There are further complications. Rent controls would also be likely, for example, to mean that a time comes when rents no longer meet lenders’ requirements – which have become more stringent because of Government legislation – and the landlord may not be able to re-mortgage when their mortgage term come to an end.  In such circumstances, landlords will have to sell up, evicting the tenants in the process.

As Richard Lambert of the National Landlords Association has said:

“Sadiq Khan… needs to tell us why rent control won’t reduce the number of private rental homes available to Londoners, as it did before, and as it has done everywhere else it has been introduced.”

Some people might welcome this, thinking that first time buyers can buy the sold houses. They need a reality check; such homes are way out of most first-time buyers’ league and have been for decades. Indeed, it is only because landlords have been willing to let out such homes for a small gain (capital appreciation may also occur, but is not guaranteed), that any tenants can afford to live in these areas. This has been critical in supporting the London economy, but the contribution of private landlords has not only not been recognised; it has been derided as though they have done something wrong.

In addition, were caps to be introduced, not only would current landlords bale out, but this would lead to a complete halt on further investment. One need only look to Barcelona, where the Mayor, Ada Colau recently legislated to force developers to include a 30 per cent social homes quota in all new developments of a certain size. Colau boasted that this would lead to 300 new affordable homes in the city each year. Instead, as the quotas make new development unviable, building has collapsed in the city; developers have simply taken their investment elsewhere.

Similarly, who is going to choose to build homes to rent in London, when rent caps are in place, meaning scant, if any return on their shareholders’ investments? Why would they not just go elsewhere?

It is thus rather galling that this issue comes up time and time again with no-one learning from the international and historical experience of rent controls.

The lessons are:

  • Rent caps kill investment.
  • Rent caps lead to a contraction in supply
  • Rent caps lead to a lowering of quality in private rented housing.
  • Rent caps are not a solution to a problem.
  • Rent caps create new problems.

 

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Andrea Jenkyns: Help to Buy largely helped the better-off – instead let’s support those who really need it

Andrea Jenkyns is MP for Morley and Outwood.

Conservatives have traditionally been the party of homeownership, and Margaret Thatcher’s idea that owning one’s home gives them a sense of independence and a stake in their country it is still more than valid. While the Housing Act 1980 gave five million council house tenants the right to buy their own houses, it is now difficult for part of the population to secure their first property. We have just chosen a new Prime Minister in Boris Johnson: this is an unmissable opportunity to be the party that champions home ownership and puts in mechanisms to help people get on the property ladder, whatever their background.

There is a link between homeownership and social mobility, and these two are enshrined in the conservative ideas that hard work pays off. To regain our mantle as the party of homeownership, we need to again make it possible for people on lower incomes to have the opportunity to own their own home. Currently, it is too difficult for the aspirational working class to save enough money to buy their first home, especially if they do not have parents who can help them with a deposit.

I would like to see the introduction of a new housing strategy in the form of a ‘Social Mobility Housing Policy’. This would be aimed to help both those in social rented housing, who are unable to save for a deposit. and those in the private rented housing sector, who pay much higher rents than those in social housing and also struggle to find ways to save up to buy a house.

Government schemes to promote home buying have been successful but they are not reaching a large part of the population who aspire to own their own homes. The average household income of those benefitting from Help to Buy is £52,000.

The National Audit Office found that 60 per cent of those using the scheme could have already afforded to buy. Rather than enabling those who otherwise couldn’t afford it onto the property ladder, for many it simply helped them to buy a bigger house, sooner.

In my constituency of Morley and Outwood average pay is £26,500 but first-time buyers need to stump up nearly £25,000 for a deposit. Unsurprisingly, this is the main obstacle to owning their home.

I recently asked the previous Housing Minister what assessment he had made of the effectiveness of the Help to Buy scheme in supporting less well-off people to buy a home. He said that the scheme helps those who cannot raise a large deposit, with over half of buyers putting down only a five per cent deposit to purchase their home.

What about the hard-working families who can’t even raise this whilst they are paying rent each month? They remain stuck in the private rented sector feeling unsettled about whether they can put down roots and start a family. Millions of them could afford the mortgage repayments, which are on average less than private rents in every region, but they are held back by the initial, prohibitive deposit hurdle.

With Help to Buy coming to an end in 2023, we should now be planning a wider range of homeownership models that support families who couldn’t otherwise afford it onto the housing ladder.

One model that inspired me when I was PPS to the Minister of State for Housing, was a Rent to Buy Scheme, where tenants save to buy the home they are renting. Unlike other schemes, it doesn’t require an upfront deposit but rather takes into account the renters’ earnings and potential to save. Under the model, tenants move into a brand new, privately financed home, pay an affordable rent (80 per cent of market rent including service charges) and benefit from a long-term tenancy of up to 20 years. This enables them to put more money aside each month towards a deposit whilst they can settle in a house they know they will one day own. When they are ready to buy, they are further supported by a gifted deposit worth ten per cent of the property’s market value.

To significantly increase homeownership, we must support innovative schemes like this that really tackle the barriers for those who are less well-off. I hope that the new Prime Minister will make home ownership a priority.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Can hotels refuse to rent rooms to ICE?

Westlake Legal Group Marriott Can hotels refuse to rent rooms to ICE? The Blog rent marriott Immigration and Customs Enforcement illegal aliens hotel rooms detention

This probably sounds like an odd question, but it came up when I was reading a report at the Daily Caller about various hotels being “pressured” by liberal groups to not rent out rooms to Immigration and Customs Enforcement (ICE) for the temporary detention of illegal aliens awaiting court hearings. It’s apparently not all that common of a practice, but it is an option that’s available when normal detention centers are overcrowded or the detention takes place at a location far from one of the normal facilities. Some hotel chains, including Marriott, have been buckling to this social justice warrior pressure and stating that they would prefer not to accept the business.

Unions and advocacy groups are pressuring hotels not to assist Immigration and Customs Enforcement in housing detained migrants, in the latest showcasing of how the private industry is being dragged into the political battlefield of immigration.

Marriott, Hilton, Choice Hotels, Best Western, Wyndham, Hyatt, IHG and MGM Resorts all released statements explaining they do not wish to participate in the detention of migrants following President Donald Trump’s announcement of illegal immigrant arrests scheduled for the weekend of July 13, The Associated Press reported.

While the corporate position is made clear by each company’s statement, individual hotels are not necessarily barred from housing migrants since their franchise agreements do not prohibit migrant housing, according to AP.

This phenomenon isn’t limited to hotels. As the linked article notes, transportation companies including Greyhound, United Airlines and American Airlines have issued statements saying they would refuse to transport detainees to detention centers.

This leads to two obvious questions. First of all, on what basis can a private company offering public accommodations refuse such services? This is clearly a politically motivated decision. Is Marriott saying that they could also instruct their workers to refuse a room to anyone wearing a MAGA hat or a Bernie Sanders t-shirt if they find such things offensive? Seems to me that they would wind up on the losing end of a lawsuit fairly quickly if they did.

This doesn’t seem to be a case of a company declining to bid on a government contract (which they could obviously do) but rather individual cases of detainees needing a place to stay. That assumption is reinforced by the fact that Marriott admitted that individual franchisees could choose to ignore the guidelines and rent the rooms out. Since when are such businesses allowed to turn away paying guests based on their detention status or the law enforcement agency accompanying them?

The second question is why any supposedly “progressive” activist would want the hotels to turn them away. These groups are allegedly outraged that some detainees are kept in “cages” or left to sleep on cold floors. I’ve been to many Marriott rooms. (In fact, I’m a platinum level member of their reward program, though I’m reconsidering that now.) I can assure you that even in the most modest of their accommodations, the rooms are more than nice enough, with comfortable beds and clean bathrooms and showers. Would these activists prefer that the detainees be stuffed into a truck for an overnight ride to the aforementioned “cages” and put there? One would imagine they might like these illegal aliens to have a nice room and a shower.

Partisan liberal nonsense aside, the original question remains. When can companies deny service to paying customers based on the fact that they don’t like the completely legal, government jobs the officers hold? Most of the people they will be turning away would be from Mexico, Central or South America. Sounds kind of racist, doesn’t it?

The post Can hotels refuse to rent rooms to ICE? appeared first on Hot Air.

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Sponsored Post: Richard Lambert – Housing is too important to be used to create a legacy 

Richard Lambert is Chief Executive of the National Landlords Association (NLA). This is a sponsored post by the NLA.

Why has the Conservative Party turned its back on the self-sufficient, the entrepreneur who is prepared to work hard and plan for their future?

The Thatcher Government inherited a dysfunctional housing market, and opened up the sector, fast-tracked home ownership and liberalised the laws around private renting. Over the ensuing three decades this has paid dividends. The UK’s flexible workforce is able to move to where jobs are, students can move to study in other parts of the country and, at the same time, people have been able to restore previously destroyed pension pots. These are Conservative values which Theresa May undermined with an announcement to try and create a legacy.

Private renting has gone from strength to strength, and we have all benefited from the flexibility that it provides, which is why Number 10’s proposed abolition of Section 21 ’no fault’ evictions in April was met by landlords with dismay and outright anger. Anger at a policy that has not been thought through and is based on a news cycle, rather than solving the issues that do exist in the private rented sector. The announcement shows a basic misunderstanding of the private rented sector in the highest echelons of government. Landlords’ anger has yet to dissipate; instead it is now accompanied by incredulity at the lack of consideration Theresa May has shown for the likely outcomes of this proposal.

The importance of Section 21 is not so much in its use – only around 11 percent of landlords have used Section 21 in the last five years, according to YouGov. Section 21 provides landlords with a process through which they can be certain of vacant possession, as long as they comply with the legal requirements to give appropriate notice to tenants and in providing a safe home. As no evidence of fault is required, landlords can follow an accelerated possession claim and avoid attributing blame to an individual and stigmatising them. It also avoids putting both parties through a court hearing, in an already over-stretched court system.

Ministry of Justice statistics show that from July to September 2018, there were 5,183 accelerated possession claims using Section 21 which did not require a court hearing. During the same time period, there were 5,781 private landlord claims heard in court through the standard route. Without Section 21, the courts could see a dramatic and potentially catastrophic increase in the possession claims they would need to hear.

This is compounded by the lack of funding for courts, which has seen 90 out of 240 county courts close between 2010 and 2018, and increased pressure placed on those that remain. Is the Treasury going to reopen these courts and adequately fund the legal system? May’s government has repeatedly underplayed quite how dire the situation currently is for users of the courts system. National Landlords Association members take an average of 145 days at a total cost of £5,730 to regain possession using the courts. The lengthiness, cost and uncertainty inherent in using the courts has resulted in the reliance on no fault eviction.

The reality is, wholesale reform of the court process is a necessary precursor to any changes in possession procedures. A new housing court or tribunal needs to be introduced if the new Prime Minister wants to continue May’s headline-grabbing announcement. There would need to be a meaningful and successful change to the way landlords regain possession. Those involved in the tribunal will need to have specialist knowledge of housing law to ensure clarity and consistency with decision-making; something which is currently lacking. This cannot be accomplished on the cheap; who is going to fund it? Doing nothing will not be an option.

Removing Section 21 and failing to address the courts means piling more and more risk on the households who need the most help. Those who can’t access the social rented sector and who have no realistic opportunity to access finance for a mortgage are the ones who are going to find it increasingly difficult to rent a home. The Government is committed to ending homelessness; this one policy will undermine all the work that has been done and is being done by councils and central government.

The next leader of the Conservative Party has an important decision to make when it comes to housing. Does he want to lead a government which promotes aspiration to property ownership and self-sufficiency or one that can only look to recreate the mistakes of the 1970s? Scrapping Section 21 may seem bold and popular, but in reality, it is a policy that Sir Humphrey would describe as brave, perhaps even courageous.

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Howard Flight: Ministers must embrace supply-side reform to revive home ownership

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

The main domestic policy which helped keep the Conservatives in power in the second half of the 20th Century and especially under Thatcher was both supporting the principle of Britain being a property owning democracy, and also making it continue to happen.

In the 1980’s we achieved in excess of 70 per cent of the population owning its primary residence.

The last 20 years have seen house prices increase to levels pricing many out of the market. As people need to be housed, notwithstanding prices, this in turn led to a major increase in the buy to let market, providing in total some eight million housing units. Much of this had been achieved by entrepreneurial individuals spotting local opportunities.

While it was under the 13 years of Labour Government that the property owning democracy started to decline, measures taken by the Conservatives since returning to power in 2010 have messed around with the housing market, in several areas causing serious harm.

It has been clear for some time that it is the supply side which has been allowed to get out of kilter, largely as the result of cumbersome planning laws and requirements. If supply is less than demand for a continuous period of time, it is not surprising when house prices go on rising.

The Government’s measures to streamline the planning process have had only mixed success. A lot of the ‘Interest Group’ environmental requirements, complicating the planning process – for example ‘bats in the loft’ – have not been sensibly simplified and are causing serious supply side pressures.

The shortage of supply is likely to see rent rises of three per cent per annum over the next few years as the result of the demand for new homes outstripping supply.

Where I would have thought the most important thing for Government to be doing now is increasing the supply, we are now seeing measures which may serve to worsen the supply shortage further.

The major growth in the private rented sector with children living within it has led to much greater scrutiny of how the sector operates. It is vital that tenants and landlords both have the confidence that they can ensure their respective rights are upheld in a timely and effective way through the courts. The evidence shows, however, the court system failing to ensure that this happens.

What is needed is the establishment of a single, dedicated housing court as a matter of urgency. As the sector grows it is vital that tenants and landlords both have the confidence that they can ensure their respective rights are upheld in a timely and effective way including through the courts.

For tenants the system is far too complex. The web of different types of courts and tribunals enforcing the laws can make it difficult for a tenant to navigate the system. As a previous report by Citizens Advice noted: “the time involved in taking a disrepair claim to court puts off just under half of tenants whose landlord took longer to complete repairs than is normally reasonable”. More than half said the complexity of the process stops them.

For landlords who seek to repossess a property through the courts, for reasons such as rent arrears or anti-social behaviour by the tenant, it can take many months between applying for an order to it being enforced. Such lengthy legal limbo is not good either for the landlord or the tenant. Figures supplied by the Ministry of Justice in response to a written question from Kevin Hollinrake MP show that the average time to progress from a claim in possession in 2017 was 22 weeks across England and 25 weeks in London.

The Government has announced its intention to overhaul the way that landlords regain possession of their property to provide greater security for tenants. While it is fair that no landlord should evict a tenant without good cause, it is deeply worrying that the Government’s plans could lead to new forms of rent control.

Finally, under George Osborne’s period as Chancellor, the Treasury persuaded him that increasing the tax burden on smaller buy-to-let operators would reduce buy-to-let activity and so make available more properties for owner occupiers to buy. This has ignored the evidence that there is very little competition for the same properties between buy-to-let and owner-occupier purchasers.

The decision in 2015 to restrict mortgage interest relief for the sector was a big mistake. The argument that the tax system favoured landlords over and above home owners was simply wrong, as the Institute for Fiscal Studies noted at the time. The main effect has been to reduce the supply of buy to let properties, where as a result rent levels have increased. For the time being the priority should be to increase the supply of residential properties, and the best bet to this end is still buy-to-let. But we are in a crazy situation where landlords wanting to add to the net supply of homes to rent are being stung by an extra three per cent stamp duty.

The Government’s schemes for first time buyers are surprisingly generous, but can be no more that a short term palliative. It is blindingly obvious that what is needed is an increase in supply of residential property, which in turn needs both considerable streamlining of the planning system and a more positive approach to private sector landlords.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Steve Norris: Commonhold? Here’s a better idea – and one that doesn’t force management on occupiers

Steve Norris is a former Vice-Chairman of the Conservative Party and Conservative candidate for the London mayoralty.

The Housing, Communities and Local Government Select Committee recently published its conclusions on the issue of leasehold reform. They rightly recommended that the Government stop the really nasty practice by some home builders of charging ground rents which appear innocuous to inexperienced buyers, but which double over ten or 15 years, this causing real distress to their owners. The department very promptly accepted that recommendation, and as far as houses are concerned the practice will be stopped.

But the committee went further. They questioned the whole issue of leasehold ownership – particularly of flats which they described as, too often, leading to tenants being exploited through ground rents and service charges which have little to do with the quality of the building and a great deal to do with profit for the unscrupulous landlord. They were clearly right to highlight the way that tenants can be exploited under the law as it stands but their remedy – a transition from leases to commonhold – was quite simply wrong.

Some time ago no less august a body than the Law Commission also recommended commonhold as the answer to tenant concerns. Both bodies see this as a way to cut out the landlord – which, to be fair, commonhold does. In simple terms, it means that the occupiers of a building in multiple occupancy own the building collectively. They buy a share of the building, rather than a lease. The committee describes this as “free from ground rents, lease extensions, and with greater control for residents over service charges and major works.”

It goes on to say they are “unconvinced that professional freeholders provide a significantly higher level of service than that which could be provided by leaseholders themselves.” The committee may be right that, in theory, multiple occupiers can manage a building as well as a professionally qualified person. But they are seriously missing the point.

In reality, multiple occupiers of a single building, whether they are leaseholders or commonholders, face the same challenges. Few, if any of them, will live in the property for the whole of its life. They will have differing views on how the building should be maintained. The elderly couple who contemplate no more than another ten years in the property might not be happy to contribute to a sinking fund for roof repairs that they will never see the benefit of. The young couple next door might see that issue very differently.

By one means or another, commonholders will still need to decide among themselves how the building should be kept in decent repair, which their number is going to take responsibility for procuring the work – and, even more to the point, collecting the necessary contributions from their neighbours. Even assuming that one of them was a) professionally qualified and b) willing to take on the responsibility, those other all too obvious hurdles will still need to be jumped.

What happens in practice is that the commonholders invariably do go to a professionally-qualified managing agent to take on all these responsibilities – and thus are to all intents and purposes in exactly the same position as leaseholders. The managing agent has no interest in how the tenants afford their bills. The tenants have little exposure to how the agent determines who gets the work and at what price. In the worst cases, this itself is a practice prone to abuse.

The fact is that the answer is neither leasehold or commonhold (which is, incidentally, available now but seldom used because, one can only assume, ordinary occupiers see the risks that elude the great minds of the Law Commission and the Select Committee). Instead, it is quite simple – namely, to ensure that occupiers get appropriate, decent service from suitably qualified professionals who will be in a contractual relationship that will ensure they deliver best value for money.

That means regulation – which despite the leading voluntary industry body, the Association of Residential managing Agents (ARMA) calling for it, still hasn’t happened. But last month a group of freeholders, managing agents and developers signed a public pledge to bring about positive change in the residential leasehold sector.

Backed by James Brokenshire, this commitment to raise industry standards feels like a watershed moment to reform the current of leasehold ownership in a practical and sensible way that will really address the issues that all occupiers of multiple apartment buildings face. As part of the pledge, the Government made a firm commitment to “work with other freeholders and stakeholders to develop a comprehensive Code of Practice which establishes the responsibilities of freeholders and enshrines the highest standards for the management and maintenance of properties”.

This is much more like it. A mandatory Code of Practice is in the pipeline. It should establish clear, high-level minimum standards, and should outline how all the relevant stakeholders should conduct business and catches all the players in the market. Together, the pledge and the Code of Practice, if given legal backing, should ensure that freeholders act as long-term responsible stewards of properties, holding managing agents to account. Being mandatory, it catches the cowboys – which is exactly what is needed. Ironically, this is a point acknowledged in the HCLG Select Committee’s report.

Like most gut Conservatives, I instinctively dislike regulation. But as a pragmatic one, I also accept that there a huge numbers of instances in which it is quite simply the best answer to many of society’s challenges. As a minister in the Major government, I trawled through quantities of regulation looking at what we could dispense with and what we needed to keep. The issues were almost all about public safety and consumer protection and, in a very large majority of cases, I came to the reluctant conclusion that regulation was the necessary and inevitable response.

Ultimately, effective regulation, such as is envisaged here, is the best way of ensuring that tenants are given the right degree of protection, and that owners of buildings are able to ensure their buildings remain in good condition throughout their life. Most of us simply don’t want to be heavily involved in the running of complicated apartment buildings, and neither are we qualified to do so. Forcing communal management on occupiers with all its flaws and potential for conflict cannot be the answer. Time surely for the Law Commission and the select committee to think again.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Potemkin legislation

Westlake Legal Group Screen-Shot-2019-04-17-at-07.25.35 Potemkin legislation Work Women and equality Women wages Treasury ToryDiary Stella Creasy MP sport Sam Coates (The Times) Sajid Javid MP rent Public Sector Northern Ireland NHS Local government and local elections Local Elections (general) Liz Truss MP Julian Assange jobs James Brokenshire MP immigration housing Home and family Highlights healthcare Health football Family and relationships exports employment Elizabeth Truss MP Economy DUP divorce disability Diane Abbott MP David Gauke MP David Blanchflower Conservatives Abortion

The ten most recent subjects covered by the Conservative Party’s Twitter feed are as follows: record employment, the provision of free sanitary products in primary schools, Conservative councils recycling more than Labour ones, more statistics about work and wages, record women’s employment, workers’ rights, an exports increase, more disabled people in employment, an end to no fault evictions, Conservative councils fixing more potholes than Labour ones, banning upskirting, funding more toilets at motorway service areas to help people living with complex disabilities, Sajid Javid criticising Diane Abbott over Julian Assange, kicking out racism in football, and a new law to protect service animals.

One might pick out three main themes, local election campaigning aside.

The first is the vibrancy of Britain’s jobs market and the country’s robust recent record on employment.  The aftermath of the Crash and the Coalition’s slowing of public spending growth, a.k.aa “austerity”, didn’t bring the five million unemployed that David Blanchflower believed possible.  The Government has to keep shouting about our employment rates because people have got used to them.  A generation is growing up that cannot remember the mass unemployment of the 1980s.

Then there are a battery of announcements aimed disproportionately at younger women voters, who were more likely to switch to Labour at the last election.  Those of a certain disposition will argue that some of these are trivial, and that women and men both want government to get on with addressing big issues: Brexit, health, the economy, immigration, education and so on.  But part of the point of banning upskirting, say, or providing more free sanitary products is gaining “permission to be heard”, in order to make some voters, in this case younger female ones, more receptive to what Conservatives are doing more broadly and widely.

Which takes us, third, to law-making – not admitttedly the only means, or even necessarily the main one, by which government can act, but indispensable none the less.  Under which category we find a new law to protect service animals and the proposed end to no fault evictions, about which James Brokenshire wrote on this site recently.  The two may seem to have nothing in common but, on closer inspection, tell part of the same story.

Namely that, as Sam Coates keeps pointing out, the Government can’t get any plan which is remotely contentious through the Commons.  Only the most uncontested ideas, such as providing police and other service dogs with more protections, can make it through the House. And this new service animals measure isn’t even Government leglislation.  It came about through a Private Members Bill tabled by Oliver Heald and then backed by Ministers.

Meanwhile, the proposal to end no fault evictions isn’t contained in a Bill at all.  The headline on gov.uk about the plan refers to an “end to unfair evictions” and “the biggest change to the private rental sector for a generation”.  But the text of the announcement refers to “plans to consult on new legislation” and refers to an earlier consultation, on Overcoming the barriers to longer tenancies in the private rented sector, to which it has now published a response.

As with housing, so with divorce.  On ConservativeHome today, Frank Young makes the point, in his article on the Government’s plans to ensure that no fault divorce can take place more frequently, that “it remains to be seen if the Justice Department’s enthusiasm for new legislation will be matched by government business managers and the ability of the current government to get any legislation through”.  For David Gauke has unfurled not a new Bill, but a White Paper.

Ditto Liz Truss’s announcment on a £95,000 cap on exit payments when public sector workers leave their jobs. “Six-figure taxpayer-funded public sector exit payments to end,” gov.uk’s headline declares.  The sub-heading is more candid than the one beneath the housing headline.  “A consultation has been launched outlining how the government will introduce a £95,000 cap to stop huge exit payments when public sector workers leave their jobs,” it says.  The Treasury confirms that legislation will be required.

Now think on.  As Sam goes on to say, Theresa May’s successor may take against these ideas or indeed all of them.  In which case, they will doubtless be quietly put to sleep.  And that successor may be in place soon.  (Regretfully, we have to add: as soon as possible after European Parliament elections, assuming these happen, please.)

Conservative MPs don’t want a general election.  Nor do we.  But the more one ponders the state of this Parliament, the more one sees why one is the natural solution to this impasse – and would be knocking on the door, were it not for the Fixed Terms Parliament Act.  These recent announcements are Potemkin Legislation.  They cannot be put to the Commons without risk of them being amended out of their original intention.

Nor can the Government legislate easily elsewhere.  Consider any proposals affecting women – to take us back to near where we started.  Up would pop Stella Creasy, looking for a means of changing the abortion laws in Northern Ireland.  Which would further strain the Conservatives’ relationship with the DUP, such as it is.  Prepare, when Brexit isn’t before the Commons, for many more Opposition Days.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Potemkin legislation

Westlake Legal Group Screen-Shot-2019-04-17-at-07.25.35 Potemkin legislation Work Women and equality Women wages Treasury ToryDiary Stella Creasy MP sport Sam Coates (The Times) Sajid Javid MP rent Public Sector Northern Ireland NHS Local government and local elections Local Elections (general) Liz Truss MP Julian Assange jobs James Brokenshire MP immigration housing Home and family Highlights healthcare Health football Family and relationships exports employment Elizabeth Truss MP Economy DUP divorce disability Diane Abbott MP David Gauke MP David Blanchflower Conservatives Abortion

The ten most recent subjects covered by the Conservative Party’s Twitter feed are as follows: record employment, the provision of free sanitary products in primary schools, Conservative councils recycling more than Labour ones, more statistics about work and wages, record women’s employment, workers’ rights, an exports increase, more disabled people in employment, an end to no fault evictions, Conservative councils fixing more potholes than Labour ones, banning upskirting, funding more toilets at motorway service areas to help people living with complex disabilities, Sajid Javid criticising Diane Abbott over Julian Assange, kicking out racism in football, and a new law to protect service animals.

One might pick out three main themes, local election campaigning aside.

The first is the vibrancy of Britain’s jobs market and the country’s robust recent record on employment.  The aftermath of the Crash and the Coalition’s slowing of public spending growth, a.k.aa “austerity”, didn’t bring the five million unemployed that David Blanchflower believed possible.  The Government has to keep shouting about our employment rates because people have got used to them.  A generation is growing up that cannot remember the mass unemployment of the 1980s.

Then there are a battery of announcements aimed disproportionately at younger women voters, who were more likely to switch to Labour at the last election.  Those of a certain disposition will argue that some of these are trivial, and that women and men both want government to get on with addressing big issues: Brexit, health, the economy, immigration, education and so on.  But part of the point of banning upskirting, say, or providing more free sanitary products is gaining “permission to be heard”, in order to make some voters, in this case younger female ones, more receptive to what Conservatives are doing more broadly and widely.

Which takes us, third, to law-making – not admitttedly the only means, or even necessarily the main one, by which government can act, but indispensable none the less.  Under which category we find a new law to protect service animals and the proposed end to no fault evictions, about which James Brokenshire wrote on this site recently.  The two may seem to have nothing in common but, on closer inspection, tell part of the same story.

Namely that, as Sam Coates keeps pointing out, the Government can’t get any plan which is remotely contentious through the Commons.  Only the most uncontested ideas, such as providing police and other service dogs with more protections, can make it through the House. And this new service animals measure isn’t even Government leglislation.  It came about through a Private Members Bill tabled by Oliver Heald and then backed by Ministers.

Meanwhile, the proposal to end no fault evictions isn’t contained in a Bill at all.  The headline on gov.uk about the plan refers to an “end to unfair evictions” and “the biggest change to the private rental sector for a generation”.  But the text of the announcement refers to “plans to consult on new legislation” and refers to an earlier consultation, on Overcoming the barriers to longer tenancies in the private rented sector, to which it has now published a response.

As with housing, so with divorce.  On ConservativeHome today, Frank Young makes the point, in his article on the Government’s plans to ensure that no fault divorce can take place more frequently, that “it remains to be seen if the Justice Department’s enthusiasm for new legislation will be matched by government business managers and the ability of the current government to get any legislation through”.  For David Gauke has unfurled not a new Bill, but a White Paper.

Ditto Liz Truss’s announcment on a £95,000 cap on exit payments when public sector workers leave their jobs. “Six-figure taxpayer-funded public sector exit payments to end,” gov.uk’s headline declares.  The sub-heading is more candid than the one beneath the housing headline.  “A consultation has been launched outlining how the government will introduce a £95,000 cap to stop huge exit payments when public sector workers leave their jobs,” it says.  The Treasury confirms that legislation will be required.

Now think on.  As Sam goes on to say, Theresa May’s successor may take against these ideas or indeed all of them.  In which case, they will doubtless be quietly put to sleep.  And that successor may be in place soon.  (Regretfully, we have to add: as soon as possible after European Parliament elections, assuming these happen, please.)

Conservative MPs don’t want a general election.  Nor do we.  But the more one ponders the state of this Parliament, the more one sees why one is the natural solution to this impasse – and would be knocking on the door, were it not for the Fixed Terms Parliament Act.  These recent announcements are Potemkin Legislation.  They cannot be put to the Commons without risk of them being amended out of their original intention.

Nor can the Government legislate easily elsewhere.  Consider any proposals affecting women – to take us back to near where we started.  Up would pop Stella Creasy, looking for a means of changing the abortion laws in Northern Ireland.  Which would further strain the Conservatives’ relationship with the DUP, such as it is.  Prepare, when Brexit isn’t before the Commons, for many more Opposition Days.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com