Blain’s Morning Porridge – 24th March 2023: An Open letter to the Mayor of London, Sadiq Khan, and the Housing Minister, Rachel Maclean
“In a society rigged in favour of landlords over tenants, to rent privately is to be deprived of security.”
The Crisis in London Rents
Dear Rachel and Sadiq
I am writing to you both to demand immediate cross party, (and cross government), action to address the looming rental crisis across London. Accommodation costs in London have never been so loaded against its workers and young people. A revolution is brewing – we can either mitigate it now, or it will overwhelm us.
Outrageous rental increases and the naked greed of professional landlords will result in a dearth of young workers priced out of London. It will destroy the City’s economy and negatively impact the UK even more conclusively than the Luftwaffe, political mistakes, global banking crises, pandemics or recession.
The London Economy can only thrive if its workers; the nurses, the junior doctors, the engineers, the teachers, the bus drivers, the train teams, the young executives, the shop-keepers, the hospitality chefs and servers, and everyone in between, have sufficient disposable income to live, consume and enjoy the great city in which they live. Without the people, London will be nothing.
It is over four years since the government promised reform of the rental market. It still has not happened – a “Brexit Benefit” caused by a distracted government that has accrued to greedy Landlords. Private tenants across London are living with insecurity, rental demands well above inflation, and deteriorating conditions. It is mental torture and cruelty affecting millions of our citizens.
20% plus of London workers live in rented accommodation. That rises above 50% for workers below the age of 35. Inflation at 10% plus has eaten into Londoners take home earnings with energy, food, and especially rentals seeing the largest rises. 80% of London’s renters now say they struggle to meet their rent each month. No matter how carefully workers plan their finances, few can withstand double digit rent increases on top of rising taxes. Few young workers will ever benefit from plans for tax give-aways to higher earners, or pension handouts to the richest 1% of the workforce. They find themselves increasingly strapped in terms of their immediate discretionary spending.
No doubt some idiot reading this open letter will bray about young workers living within their means, or can’t they simply buy their own homes. They might as well suggest they go eat cake.
Average professional earnings in London are around £55k – but even a four-times salary mortgage plus a 10% deposit means most young workers aren’t close to owning their own homes. Bleak single room bedsits on motorway verges within distant commuting distance of town command prices above £250k. Aside from the fortunate few with parents wealthy enough to buy them a pad, few young workers, London’s future, have any choice but to rent.
The average individual’s rent now exceeds 50% of take-home pay – that is unsustainable. It makes it impossible for young workers to save. Pensions are a tomorrow issue. Our professional workers are additionally crippled by the highest tertiary education charges in Europe, financially shackled by the loans they took to pay for it. They have no choice but to rent – trapped within the system.
Meanwhile, the rental market has contracted dramatically. Rightmove reckon 25% of the rental housing stock has been pulled from the market, largely by the small, amateur Landlords who have given up because of tax changes and the increasingly onerous regulatory burden upon them. In their place are large rent-seeking private professional landlords in the market purely to maximise the rents they can extract from the sheeple forced to dance to their tune.
These avaricious bloodsuckers are exactly like the private equity, venture capital and private debt parasites that have used financialisaton to extract the value out of Britain – leveraging companies with massive debt to pay their new owners, and then leaving them to collapse. These landlords have commoditised London’s workers as targets to be milked financially. Being sucked dry by faceless landlords is the bleak reality for millions of young Londoners.
It is time Government stepped in.
This should not be a party issue – even the most Tory True-Blue country squire will agree with the campaigning inner-city socialist that enabling workers to work and paying fair rents will be an enormous economic benefit to the nation.
Rental prices are rising well above the level of inflation, between 17-25% across London depending on area according to property firms in 2022. Rightmove say the 16.1% rise they recorded in 2022 was the largest jump in London rentals on record. It is set to double this year as the professional firms exploit the scarcity of supply. According to housing charities, the quality and state of repair of rental properties has declined dramatically in recent years as Landlords gouge young workers with enormous rent increases, hoping to raise their incomes with higher-rated and higher earning professionals.
This is 2023 not 1823.
The importance of young workers to the economy must be recognised. They have a right to the enjoyment of their lives and not to be constantly in fear of the next rent demand or the eviction notice. It is time for the Government of London and the UK to Act together.
Last week professional global investors lost over $17 bln when the Swiss banking regulator insisted Credit Suisse bank wrote off certain capital instruments. These investors are bleating how unfair, how unreasonable, how detrimental to their wealth these losses are. They get the front pages of the financial media.
In contrast, a young teacher overwhelmed from spending 60% of her income in rent (before bills), while paying off a student loan, feasting on cold beans, being evicted to make way for higher paying Chinese students, gets nary a mention when she attempted suicide because of her dire financial position.
As CEO and Chief Risk Officer of The Bank of Dad (“TBOD”) I am acutely aware of the London rental crisis. My daughter has a fantastic job she loves in London. Her salary is someway short of the London professional average, but she is smart, clever and watches her spending carefully. Yet every month her overdraft at TBOD rises as she draws down her standby facility from Dad to meet the rent.
My girl shares a flat with 2 other girls. This week they received a notice of rent increase from £2400 per month to £3200. That is a rent rise of 32%. It is a small, three bed flat in Hackney Wick. The Landlord appears to be a small company – the registered owner of which will shortly be receiving a visit from my solicitor regarding the last set of accounts filed at companies house. The reality is the block its run by a professional landlord firm. It was erected for the Olympics in 2012. No one has ever met the Landlord or knows anything about them. The block of flats is supposed to be affordable housing for key London workers.
My recommendations to National and London government are simple:
- Nationalise professional landlords in London with immediate effect.
- Any landlord who has tried to gouge tenants by raising rents by more than 5% should be nixed. Compensate them nothing. Stop them functioning in London. Take over their assets. Let these owners starve – with prejudice – for their greed.
- Freeze all London Rents prior to a full rental review at pre-pandemic levels until further notice.
- Instruct the courts to cease all evictions if the renter is still paying rent at the lowest level over the last five years to retain their tenancy. Subsequently, takeover any professionally run property not up to the highest standards, and seek enhanced damages from its directors.
- Identify the CEOs and CFOs of these firms are leave their heads on spikes on Tower Bridge for a few years…
Let’s see the London Assembly enable and encourage renters to form action committees and refuse to deal with greedy landlords. After we’ve purged the Rackman Landlords, let’s incentivise the better housing associations to build, maintain and keep rents low, not just in London, but across the UK!
Bandiera Rosa! Stuff the Landlords – painfully.
Strategist – Shard Capital