Boarded up houses in Kensington, Liverpool
Ukraine – what you’re not told
The Myth of the Good Landlord
… or, Why Landlordism is Inherently Exploitative
By Tom Lavin (@tomlavin13)
By way of an Introduction
This article was originally published on the Greater Manchester Housing Action website in June 2020.
I believe it deserves greater distribution as it argues, in a clear and accessible manner, the issue surrounding the existence of private landlords in Britain and what that means for those who are at their mercy.
The present difficulties from which private renters are suffering weren’t caused by the covid-19 pandemic – events of the last ten months or so have merely exacerbated the problem. At the same time the present ‘crisis’ has pointed the spotlight on a failing in British society which had been pushed into the background in the past by the obsession of ‘home ownership’, the ‘housing ladder’ (I’m still looking for the cretin who first came up with that concept, which apart from anything else helped to inflate housing prices) and the concern for the ‘first time buyer’.
The problem so many people have in acquiring decent, rented accommodation is only one of the issues they have to contend with in capitalist society. The majority of those who are forced into renting from private landlords are also more likely to be in low paid and/or insecure jobs, having to juggle their budgets through the uncertainties caused by short term or zero hours contracts. And in the present pandemic they are the people most likely to have lost their jobs – or had their hours reduced.
Such a situation has seen real suffering throughout the country resulting in the number of people dependent upon food banks going through the roof. As well as the growing dependence of so many people on food handouts so the arguments (and U-turns) which led to the extension of free school meals shouldn’t be considered a victory or a demonstration of a caring society. The UK is one of the top ten richest countries in the world and the admission that so many of its population (many of whom are in full time work) need such support to be able to live a basic life should be considered a disgrace. Politicians who proclaim the need for such support should hang their heads in shame – as indeed, so should the rest of the population who are not (yet) in a similar situation.
Some of us argued in the 1970s that a considerable minority of the population were just ‘one wage packet away from destitution’. It’s taken a pandemic to show the validity of that statement. It is hoped that people don’t forget it in the future.
After the outbreak of the pandemic it took weeks for the Government to declare that there would be a ban on evictions – and that only happened following campaigning work by those supporting private renters. On the other hand support for those with a mortgages, other proposals aimed at sustaining the property market and the shovelling of more public cash into property speculators’ bank accounts were announced within days.
Whilst billions of pounds have been handed over to private business, both big and small (and a not insignificant amount allowed to be stolen by fraudsters, gangsters and thieves, due to lack of due process and monitoring by government agencies) there has been no long term support for private renters, many some of the most needy in the present circumstances. Although ‘mortgage holidays’ have been agreed for home buyers rent arrears will continue to accrue for private (and social) renters but there is no support for those people who will find the payment of such arrears a near impossibility.
When the ban on evictions comes to an end there will be thousands of households in severe difficulties due to no fault of their own. The incompetence of the Government in its ‘handling’ of the pandemic has caused hundreds of thousands of redundancies, especially of those who rent their homes. The lack of understanding and sympathy by the Government to their plight over such an extended period will also be resulting in extreme levels of stress amongst most of those people – stress which can lead to other problems in the familial context.
Tenants and community unions such as Acorn (in England) and Living Rent (in Scotland) are preparing for the worst and expect an avalanche of eviction notices once the ban on them is lifted.
Frederick Engels on Housing
Even though it was written almost 150 years ago it’s worthwhile making reference to Engels’ pamphlet ‘The Housing Question’, which was first published in 1872. Although, obviously, the situation in Europe and Britain at that time was very different from what it is now there are still some general principles and ideas that are as valid now as they were then. (Those interested in housing issues could do a lot worse than reading this short booklet as he puts any local struggle into a much wider context.)
After examining the situation in various European countries Engels comes to the conclusion that;
‘Capitalism does not desire to abolish the housing shortage even if it could.’ p59
In the same way neither does capitalism want to see the end of unemployment, the end of discrimination, the end of poverty, the end of war – even the end of the pandemic. All those ‘social ills’ to the working class are what maintain capitalism by dividing the workers and also provide capital with its profits. So to do away with the ‘social ills’ would mean doing away with the profits – the reason for capitalism’s existence.
Engels further puts the struggle for decent housing for all into the context of a capitalist reality;
‘…. it is not that the solution to the housing question simultaneously solves the social question, but only by the solution of the social question, that is, by the capitalist mode of production, is the solution of the housing question made possible.’ p50.
He also argues that, in reality, there’s no real ‘housing shortage’, only the will to resolve the problem;
‘In the beginning, however, each social revolution will have to take things as it finds them and do its best to get rid of the most crying evils with the means at its disposal. … the housing shortage can be remedied immediately by expropriating a part of the luxury dwellings belonging to the propertied classes and by compulsory quartering in the remaining part.’ p51.
Or bring the thousands of boarded-up houses throughout the country up to a decent standard and make them available for use rather than their being the toys of property speculators.
There are limits to what can be achieved in the present reality when it comes to fighting for decent housing;
‘It is perfectly clear that the existing state is neither able nor willing to do anything to remedy the housing difficulty. The state is nothing but the organised collective power of the possessing classes, the landowners and the capitalists as against the exploited classes, the peasants and the workers. What the individual capitalists …. do not want their state also does not want. If therefore the individual capitalists deplore the housing shortage, but can hardly be persuaded even superficially to palliate its most terrifying consequences, then the collective capitalist, the state, will not do much more. At most it will see to it that the measure of superficial palliation which has become standard is carried out everywhere uniformly.’ p67
That doesn’t mean we shouldn’t be fighting for better housing (as is the case for other social conditions such as employment, wage levels, education, health and other social amenities). Engels is just pointing out the limitations.
Introduction: Good Landlord/Bad Landlord
Nominally ‘progressive’ housing charities, NGOs, politicians and newspapers are all quick to distinguish between ‘good’ and ‘bad’ landlords (for a particularly craven example). When they want to add a bit of drama, they enjoy describing the bad landlords as ‘rogue’.
Whilst it is necessary to identify subcategories within landlordism (clearly some landlords behave better relative to others) it is a mistake to describe the relatively better forms of landlordism as in any way ‘good’. To do so is to take renters for idiots.
An analogy: it is preferable to have £5 stolen from you than £50, but you would not describe the theft of £5 as being a ‘good theft’.
The Cotton Mills of Victorian Manchester
When Karl Marx and Fredrick Engels wrote about the exploitation of Mancunians working in Victorian cotton mills, they argued the relationship between mill owner and worker was inherently exploitative:
- When an employee worked in the mill, they produced something of economic value to the mill owner. This had to be the case, as a rule. If the worker did not do so, there would be no commercial sense in the owner employing them and paying their wages. To give a simplified example, a weaver in a mill might transform a bag of raw cotton worth £1 into cloth worth £3, creating £2 of economic value for their employer.
- For the employment of the worker to make commercial sense to the mill owner, the wages they paid the worker had to be less than the actual economic value of the employee’s work as a rule. Were this not the case, the owner would not make any money themselves as the economic value created by the worker (£2 in our simplified example above) would be immediately cancelled out by payment of £2 to the worker in wages!
Marx and Engels argued the fact there had to be a gap between the economic value of what the worker produced and the wages they received proved the workers were being exploited by the mill owners; their wages did not reflect the true value of their work.
The myth of the ‘good cotton mill owner’
Fast forward 150 years, and Mancunian children are taken on school-trips to a former cotton mill situated by Manchester Airport known as Quarry Bank Mill. The visits serve as a sort of civic rite of passage for young residents of a city once nicknamed ‘Cottonopolis’.
On guided-tours children are told, whilst there were many cruel cotton mill owners, the owners at Quarry Bank were some of the better employers of the era, providing half-decent workers’ cottages and an education for the child-labourers they employed (things their peers did not always do).
If we assume the tour guides’ claims are true and the owners were significantly better employers than their cotton mill owning peers, Marx and Engels would still maintain the arrangement the Quarry Bank owners had with their workers was inherently exploitative:
By paying wages that were less than the value of the labour being provided by the workers, they were ripping their workers off. To return to our theft analogy, they may have been stealing less than their fellow mill owners, but they were committing theft nonetheless.
The myth of the ‘good landlord’
Imagine the landlord equivalent of the romanticised Quarry Bank Mill owners, the idealised ‘good landlord’.
You are probably imagining a landlord who is prompt and attentive when there is disrepair in your home but at other times gives you ‘quiet enjoyment’ of the property. They do not charge a large sum for a deposit at the start of your tenancy and take a fair, common-sense view on the concept of ‘reasonable wear and tear’ at the end of it. Although they need to turn a profit for the arrangement to be commercially viable to them, they charge rent that is below the market rate for your area.
Even in this idealised, very rarely seen in the wild, scenario, the relationship between landlord and renter is still inherently exploitative if we apply reasoning similar to Marx and Engels:
If the landlord charged only what it cost them to supply the property to the renter, they would not make any money, making the arrangement a waste of time from their perspective. Therefore, for the arrangement to be commercially viable for the Landlord, they must as a rule charge the renter, a level of rent that is above the actual costs they incur in supplying the property.
Defences of entrepreneurialism
Marx and Engel’s views on mill owners have not gone unchallenged over the past 150 years.
Defenders of mill owners argue that, by being the people who had the initial idea to open a cotton mill, by taking a risk investing their money in machinery needed to weave cotton (when there was no guarantee doing so would be commercially successful) and by completing the administrative task of running the mill, they were justified in taking for themselves some of the economic value created by the employee’s hard work.
Each reader will have their own opinion on how much credence should be given to these arguments. (As an aside I would suggest anyone sympathising with the mill owners investigates how it came to be that a few individuals at that time had the wealth available to become cotton mill owners whilst everyone else had nothing!) If you are feeling unsympathetic towards mill owners, try instead to picture an entrepreneur you have some degree of admiration for.
It is perhaps hard not to respect the proprietors of the first curry houses on Rusholme’s Wilmslow Road, (setting up long before it was known as the ‘Curry Mile’).
Immigrants, new to rainy 1950s Manchester, an unfamiliar and sadly frequently racist place, risked everything to open restaurants, gambling that their fellow Asians, newly employed in textile mills across Greater Manchester and beyond, would travel to visit for a taste of home, and that the existing local population would take a liking to food from the other side of the world.
When you think of the risk and stress endured and the skill involved in running such operations, combined with all the cumulative joy the restaurants brought to the city, few would seek to deny the restaurant owners some financial reward for their contribution to society.
But the things that make us respect these curry house pioneers cannot easily be applied to what landlords do. In fact, when we try to apply the defences of entrepreneurialism to landlordism, it is remarkable how comprehensively they fall flat.
Applying the defences of entrepreneurialism to landlordism
No equivalent skill or ingenuity is required to buy housing, the only thing the prospective landlord needs is money or access to finance. To notice that there is a demand for shelter during a housing crisis requires about the same level of observation as noticing there is a demand amongst humans for drinking water.
A landlord might argue they possess a skill in predicting in advance when a residential area will ‘gentrify’ and that they use their skill to invest shrewdly in such areas to bring themselves greater profit margins. Such a ‘skill’ is of no benefit to society, so is unclear why it warrants financial reward.
Minimal bravery is required to invest in a buy to let property. In the unlikely event a landlord fails to find some desperate soul to rent their purchase to, they still have a capital asset that is likely to have appreciated in value.
The administrative burden of being a landlord is minimal when compared with running a cotton mill or a curry house. Arranging viewings, having to occasionally call a plumber, supplying annual gas safety certificates etc. are not arduous tasks. Despite this, many landlords either fail to fulfil their small role adequately or sub-contract to a letting agent (who is usually effectively paid for by the renter through further inflated rent).
The idea landlords might bring happiness or ‘spark joy’ for renters in the way restaurant proprietors might do for their patrons is of course risible, as every renter living in HMO Magnolia-land will be quick to attest.
Can an alternate ‘pragmatic’ defence of mill owners be applied to landlordism?
Mill owners might accept that the relationship they had with their workers was inherently exploitative, but argue any unfairness was ultimately justified by the productive nature of the arrangement and its results.
It is indisputable that mill owners’ employment of their workers saw raw cotton transformed into cloth on an industrial scale, that this was something society benefited from, and that the purchases of the cloth enabled the workers to receive a wage that was sufficient for (at least some of them) to survive. Without this arrangement, however unfair, how else would the workers have survived?
Whatever merits we believe this defence may or may not have in relation to cotton mills, it is difficult to see how it could be applied to the landlord and renter relationship. Landlordism is just not productive in the same way that a cotton mill is.
An indignant landlord might at this stage point to the millions of people in the UK living in rented accommodation as proof of landlordism’s productive output, but to do so would be a sleight of hand.
By the time a landlord takes ownership of a home, the home already exists. (There are a small minority of occasions where this is not the case e.g. a landlord who purchases a property at auction that is unfit for human habitation and carries out work to make it habitable could arguably be said to have brought a home into existence. For such landlords, the subsequent section does not apply.) The workers involved in the hard work of physical construction give society its housing stock and the renter their shelter, not the landlord.
Landlords are closer to Hand Sanitizer Hoarders than Curry House Pioneers
At the beginning of the COVID-19 crisis, opportunists bulk purchased hand sanitizer before re-selling it at extortionate prices. This led to widespread condemnation, even Boris Johnson denounced their ‘profiteering’.
These profiteers did not manufacture their own hand sanitizer, no additional hand sanitizer was made available to society because of their actions, they just took ownership of a limited resource leaving desperate people at their mercy.
The parallels with landlordism should cause landlords moral discomfort.
In fact, in certain respects, the behaviour of landlords is worse. The hand sanitizer profiteer eventually transfers ownership of the commodity they have hoarded, the landlord withholds the right of ownership from the renter, preferring to profiteer month by month for as long as they please. There is also something particularly repugnant about profiteering from those who are almost certainly poorer than you are.
What is the actual cost to the landlord of supplying a property to a renter?
Given the traditional landlord battle-cry “I’ve got my own bills to pay too don’t you know!” readers may be surprised to learn nearly half (45%) of landlords own their renters’ homes outright i.e. without a mortgage.
For these landlords, the ongoing cost of supplying a property to a renter is limited to the costs incurred keeping the property in a good state of repair and fit for human habitation.
In comparison to average rents these costs are negligible.
According to research by the insurer ‘More than’, the national average expenditure necessary on a three-bedroom home for repair work, maintenance and buildings insurance is only £73.17 per month. (£17.76 on buildings insurance and £55.41 on house maintenance)
In comparison, the average rent on a three-bedroom home in Manchester in 2018 was £895.00 per month, more than 10 times the average ongoing cost to the mortgage-free landlord in supplying the property.
To put it another way, such a landlord’s yearly costs would be covered by payment of their first months’ rent (with change to spare), with every payment thereafter pure profit.
But what about costs incurred by the landlord in acquiring the property?
In acquiring their asset, some landlords will have had the good fortune to have become owners of a property at no cost to themselves e.g. following an inheritance from a wealthy parent. Most, however, will have had to either invest savings or take out a mortgage to pay for their asset, or some combination of the two.
To the landlords who took out a mortgage and had renters living in the property for the lifetime of the mortgage, we can say with accuracy; the renters living in the property were the ones who paid off the mortgage, not you.
As outlined above, for an arrangement to be commercially viable for a landlord, they must as a rule charge the renter a level of rent that is above the actual cost they incur in supplying the property. The mortgage, deposit, stamp duty etc. are all costs incurred in supplying the property so are inputted into the rent.
It is therefore unjustifiable, once mortgage free, to use the original cost of purchasing the asset as grounds for charging rent above the ongoing cost of supplying the property. The original purchase price is a cost previous tenants have already borne. Despite this, readers will note landlords never issue their tenants with significant rent reductions once the mortgage is paid off!
But what of landlords who have used hard-won savings (we will be charitable and assume they have not just acquired wealth through inheritance!) in order to purchase their asset, or landlords who have an outstanding mortgage that they must make payments towards each month. Should the original cost of investing to purchase their asset and/or their outstanding mortgage payments be factors in a fair calculation when setting rent for their tenants?
“No taxation without representation!”
If landlords want someone else, i.e. renters, to cover the costs of acquiring ownership of their assets, it does not seem unreasonable to suggest, as a basic point of fairness, ownership of the assets are transferred to the ones doing the actual paying in exchange.
Under the current system landlords seek to have their cake and eat it at the renter’s expense.
When America was a colony of the UK, Americans fighting for independence highlighted a basic unfairness (that they were obliged to send taxes to the Crown but were not allowed to send representatives to Parliament to have a say how those taxes should be spent) with the rallying cry “No taxation without representation!”.
Renters could issue a similar, albeit less catchy, slogan; “No paying landlords’ costs of acquisition without transference of ownership!”
Landlordism should be actively discouraged
Under no duress the landlord takes it upon themselves to behave like a hand sanitizer hoarder.
(An argument could be made that there is a level of economic duress, that under the current system landlords are forced to make such investments and exploit renters to give themselves a pension. There may be a degree of truth to this (one way or another capitalism makes monsters of us all, how many readers can say with confidence the clothes they have on were not made in a sweatshop in conditions similar to a Victorian cotton mill?) but this is an argument to improve the state pension, not an argument for landlordism.)
They acquire ownership of a pre-existing home, simultaneously preventing anyone who might want to live in the property themselves from doing so, in the hope their ownership will enable them to make money out of those in need.
That they encumber themselves with mortgage debt or use up their savings to achieve this morally dubious aspiration, is their choice for which they need to take personal responsibility.
When landlords choose to behave in this way, society has no obligation to indulge or humour their behaviour. On the contrary, we have a moral obligation to deter such anti-social acts.
As Danny Dorling writes in All that is Solid: The Great Housing Disaster (Allen Lane 2014):
“If people hoarded food on the basis its value was sure to go up when others began to starve and would pay anything, we would stop their hoarding. But hoarding is now happening with shelter in the most unequal and affluent parts of the world”
It is unlawful for landlords to profit from re-sale of water, why is re-sale of shelter any different?
Sometimes, because of the layout of the plumbing in certain properties, usually old houses that have been sub-divided into flats, it is impossible for water companies to provide individual water bills for each household.
When this is the case, the landlord of the building will receive one water bill for the entire property and then invoice each household for their portion of the bill based on a formula set out in law that forbids the landlord from making a profit.
It is unlawful for landlords to make a profit from the re-sale of water as it is recognised it would be morally abhorrent to profiteer from something so necessary to human survival when the water company has already done so.
Given shelter’s own importance to human survival and given the builders and everyone else involved in construction have already been paid, there is no obvious reason why re-sale of shelter should be treated differently.
Our housing stock has already been paid for. That we continue to pay for it again and again in perpetuity is a form of collective madness.
Consider the housing in your neighbourhood; the workers who dug the clay that made the bricks have been paid for their work, as have the builders who laid the bricks, as have the loggers who felled the trees and the carpenters who constructed the floors, as have the workers who quarried the slate and the roofers who laid the tiles. Everyone involved in the physical creation of the housing stock of the nation has been paid. (William Sorenson uses similar imagery in his excellent article.)
Yet as renters we are, under threat of eviction and homelessness, forced to spend an unforgivable amount of our limited time on earth working to earn wages to pay and repay for perpetuity for this housing stock that has already been paid for!
Picture a renter who has lived in their home for 30 years. Over this time they will pay rent each month at a rate their landlord calculates is necessary to cover;
- The Landlord’s mortgage payments, deposit, stamp duty etc.
- The cost of keeping the property in a good state of repair and fit for human habitation.
- The Landlord’s profit– i.e. the amount on top of the cost of supplying the property that makes the arrangement worthwhile to the landlord.
After 25 years, the renter has paid off their landlord’s mortgage (of course, their rent is not reduced to reflect this landmark!). Several years later, the landlord retires and decides to sell the property to a new landlord. The new landlord takes out a mortgage to purchase their asset, and it is now the role of the renter to toil away to pay this off for them.
On and on this merry go round will go until housing is taken out of the hands of commercial landlords.
Breaking away from landlordism and moving towards a ‘People’s rented sector’
If we broke away from landlordism, our housing costs would be limited to the cost of keeping our homes in a good state of repair and fit for human habitation, alongside a small contribution to the costs of continually replenishing the nation’s housing stock. (This could either be done by a small surcharge applied to rent or, more equitably as part of a progressive taxation system.)
For most renters this would represent a life changing reduction in housing costs. We would then all have the choice to either use the money saved on things that actually bring us happiness or cut our working hours giving us more leisure time to do the things that bring us happiness. And we would do so living without fear of homelessness. The overall benefit to society would be immense.
Landlords currently own our homes, but this can be changed. The renters’ rights movement ought to see transference from landlords to common ownership as our ultimate goal, what Joe Bilsborough terms a ‘People’s Rental Sector’.
Under current laws, to bring our homes into common ownership landlords would need to be compensated but the cost would be nowhere near as daunting as you might first think.
The alternative to taking ownership away from landlords is to keep renters chained to an exploitative relationship for perpetuity. If we believe landlordism should end at some point, why shouldn’t it be in our lifetimes?
When Nye Bevan founded the NHS in the aftermath of the second world war, he remarked he was only able to do so and placate his detractors by ‘stuffing their mouths with gold’.
The post- COVID-19 global recession will offer fertile ground for radical change similar to 1945. If we want to free people from housing costs the way Bevan freed people from healthcare costs, a similarly pragmatic attitude towards compensating profiteers in order to break free from their control may be required. Just like the NHS, doing so would be worth every penny.
Tom Lavin is a member of ACORN Liverpool’s organising committee and a Justice First Fellow working in housing law at Merseyside Law Centre. He previously worked for Shelter as a housing adviser.
Acknowledgements: Many thanks to Alex Hendrikson, Hamish Reid and Isaac Rose who took the time to read an early draft and all gave very helpful advice.
8 June 2020
A printed version of this article has also recently been produced, available from Greater Manchester Housing Action.