Following the publication of his new book Against Landlords: How to Solve the Housing Crisis (2024, Verso), GMLC interviewed housing barrister Nick Bano about housing issues, including rent controls, what housing benefit increases on 1st April mean for tenants and landlords, and what Nick would change about the housing sector.
In autumn, the government announced that Local Housing Allowance (LHA) rates would be going up in April 2024 for the first time in several years to try and ensure the lowest 30% of market rents in each area are covered by LHA. Now the new LHA rates have been announced, and they have gone up significantly in many areas. Why is this change being welcomed by so much of the housing sector?
On a superficial level, it seems obvious that more generous welfare benefits rates will be a good thing. The intensity of people’s poverty ought to be lessened. But the real question is whether this actually means more money in tenants’ pockets, or whether it simply represents a larger amount of money being channelled from the state (resting, briefly, in tenants’ accounts) to the landlords.
It will be interesting to see how this plays out. When austerity was at its sharpest and LHAs were slashed, rents continued to rise (contrary to expectations) and tenants really bore the brunt of that. They stepped into the breach to support landlords when the state withdrew. Will this phenomenon reverse itself, or will landlords insist that LHAs go up and that tenants continue to live in the intense poverty to which everyone has become accustomed?
Rents have been climbing rapidly in the private sector for the last few years. Why do you think we have seen such steep increases recently, and what has it meant for tenants?
It’s really interesting. I can’t see how anything structural has changed. We are still seeing a modest growth in the number of homes-per-capita, and we are also still seeing a growing private rented sector. So it’s impossible to maintain (contrary to the insistence of the landlord lobby) that there’s a sudden and sharp supply-and-demand problem in the private rented sector.
I think landlords have been developing and flexing their muscles over recent decades, and they are now fully aware of their economic strength. They know, from experience, that renters really have to meet any demands that are made of them. So landlords are now coming up with ever more extravagant demands: higher rents, rents in advance, bidding wars, fees for securing viewings, etc. I’m not sure I’d enjoy looking myself in the mirror if I were a landlord benefitting from that system.
In your book Against Landlords you discuss Local Housing Allowance and how – whilst being essential to help tenants on benefits afford their rent – it’s also a massive giveaway to landlords and underwrites a huge portion of the national rent bill. Could you summarise this argument?
The argument runs that rents, particularly in cities, are monopoly prices: the price is set at the absolute maximum that landlords can squeeze out of tenants under given social conditions. Part of those conditions are defined by housing benefits. LHAs act as a guarantee that a large proportion of people will always be able to pay the rent, no matter how much they rise: those are the social conditions in which today’s landlords are operating. They have taken full advantage of this, and they have driven rents up so much that only three government ministries – Health & Social Care, Education and Defence – have departmental budgets that are larger than the DWP’s housing benefit bill.
To be clear, it is important not to oppose more generous local housing allowances. But if our objective is to reduce poverty, [increases to housing benefits] can only be sensibly implemented if the law regulates the pace of rent increases. Otherwise landlords have a licence to drive up state spending and taxes.
Do increases in Local Housing Allowance interact with rent inflation? If so, how could this be challenged by changes in policy?
We can go as far back as the Poor Laws in the 19th century. When there weren’t any rent controls or security of tenure, landlords would treat those early forms of welfare benefits as a blank cheque: they would simply raise rents to whatever amount the parish would pay without baulking. We’ve now replicated that system on a national scale, and with much bigger sums at stake.
For as long as LHAs are pegged to market rents, and for as long as market rents are unregulated, we create a vicious cycle. Or a very virtuous one, from the landlords’ perspective.
In your book Against Landlords, you write about rent increases and no-fault Section 21 evictions work together to discipline tenants, so they always fear being evicted if they refuse to pay a rent increase. We see this in practice every day when we’re defending evictions. Do you think abolishing Section 21 would help stop this mechanism from working? If not, why not?
In principle, abolishing section 21 would coerce landlords into using the section 13 rent increase procedure [serving a formal legal notice of a rent increase, which can be challenged at a Tribunal] or contractual rent increase clauses. This ought to at least dampen or slow the pace of rent increases. But I think the lesson from Scotland (where ‘no fault evictions’ have been abolished) is that this takes time. There’s a deep-rooted social expectation that rents will rise quickly and steeply, and renters no longer have much of a culture of resistance to this. As and when section 21 is abolished, legal aid lawyers will play a crucial role in helping tenants to rediscover their rights and their latent strength.
One problem we’re seeing here is landlords in the private sector accepting contracts with the Council to place homeless people in their accommodation on private contracts. For this, some Councils offer well above the market rate for the rent, often for quite poorly maintained properties or for homes that have been converted from family homes into more profitable Houses in Multiple Occupation (HMOs). This causes rent inflation in the poorer boroughs of Greater Manchester. What role do you think that local authorities play in inflating rents in areas where they place homeless people? Is this a widespread problem?
Manchester is such an interesting, useful example. There’s been a vast explosion in the supply of homes in the city and the region in recent years, but at the same time the housing crisis there – as you say – keeps getting worse. Manchester really does drive a coach and horses through the ‘build more housing’ logic.
In terms of local authorities, it’s easy to understand how hamstrung they are. They’re having to compete with other renters in order to meet their statutory duties to accommodate people. If they weren’t doing this, they’d probably have to displace families out of the area altogether. But at the same time, it’s obviously right to say that these sorts of activities intensify the housing crisis for everyone.
Landlords often claim that rent controls will drive down standards in the private rented sector, and that many landlords would take their houses off the market if rent controls are introduced. What do you think of this claim?
I suspect there is some truth in the idea of landlords leaving the market. I also think that’s an unambiguously good thing: the private rented sector is far too big. We need to repurpose privately-rented homes into owner-occupied and social housing, as we did when the private rented sector neared the point of collapse in the 1970s.
And if landlords can’t maintain standards in circumstances where they are charging unaffordable rents, that says something very troubling about the entire system of private renting. It also suggests that they have no business being landlords in the first place.
In recent years, there has been an enormous increase in numbers of households paying rents that exceed 30% of their income – which is classified as unaffordable by the standard measures. Do you think there is room for rents to continue increasing so far beyond wage increases, or is a crash in prices due?
It’s bleak, but there’s no hard ‘floor’ to housing standards. Instead, we just keep adjusting our expectations downwards as rising prices force ‘acceptable’ housing conditions to get worse and worse. And the frightening thing is, there are far worse situations across the world in rich and poor countries alike: tent cities and people sleeping in cars across the USA, ‘coffin homes’ in Hong Kong. Examples like these in developed economies suggest that prices could keep rising, and drive housing standards even further down.
If you could change one law or policy around housing tomorrow, what would it be?
Introduce the ‘buffet rule’ for homes: nobody can have two until everybody has got one.
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With thanks to GMLC campaign volunteer Brocho Nemesky for editing. Image credit: Craiyon, 2024.
