Monopoly board with houses and hotels. Image by Pontus Kjellberg from Pixabay

Renters Reform Bill – winners and losers

As the Renters (Reform) Bill passes its second reading, many housing campaigners in Hastings will be hoping that renting will become easier and more affordable. But it’s a complex picture, as Dee Williams has discovered. 

If you have ever played Monopoly you will know that housing is a valuable asset. If you have enough houses on the right streets you can simply sit back and watch your hapless colleagues go bankrupt as they struggle to pass Go and collect £200.  It wasn’t supposed to be a ‘winner takes all’ strategy game. Monopoly was first created by Lizzie Magie at the turn of the century and was called The Landlord’s Game.

The leftwing feminist hoped to teach people about the dangers of rampant capitalism by making a cooperative version of the game where all the players won once the poorest player doubled their funds. As we can see, this was not the version which went on to make a fortune for Charles Darrow, who essentially stole the idea.

Original Monopoly board designed by Lizzie Magie and called The Landlord’s Game

In the board game, all players start with equal funds and fear of going bankrupt tempers early bidding. In the real world, there seems to have been an invisible player at work. One who has endless funds at their disposal. International corporations backed by investment management companies such as Blackrock and Vanguard are gradually taking control of the board.  They already own most of the utility companies, they may not own the stations but they do run the train lines and even operate the jail.

Housing is a valuable asset. Property portfolios provide regular income via rents and financial leverage for future borrowing. Plus safe returns as they continue to rise in value. Before the 1980’s local councils could build and maintain their own housing stock and social rent was 50% of market value, greatly easing the private rented sector. Now, the same amount of public money is spent on paying private landlords through housing benefits and ‘affordable’ rent is 80% of market value.

UKHR Briefing 2024 – Chartered Institute of Housing

Small-scale landlords who rent one or two properties are being discouraged by recent changes to legislation which tend to favour corporate ownership. Under George Osborne (chancellor of the Exchequer 2010-2016), section 24 was introduced which taxed landlords on turnover and not profit. Previously, landlords could deduct mortgage payments and other costs prior to calculating tax. The section 24 change pushed many landlords into the 40% tax bracket and created cash flow problems as they waited for tax refunds which would only be paid back at the 20% rate. Large corporations, with dedicated legal teams, can more easily accommodate such tax burdens.

Changes to stamp duty in the last Labour budget will disproportionally affect small-scale landlords looking to purchase rental properties. Stamp duty is due to rise from 3% to 5% up to £250,000 and from 8% to 10% above that. Corporations are charged 17% stamp duty but can apply for exemptions for rental property.

The Build to Rent (BTR) market is receiving considerable funding, with companies such as Grainger PLC operating over 9,000 properties and Lloyds Banking Group hoping to acquire over 50,000 homes through its subsidiary Citra Living. Once the smaller landlords sell up, corporate rentals will have gained a monopoly on the market and they already let with a 10% premium.

The Renters Reform Bill is unlikely to end the misery of low-paid renters, nor help small-scale landlords stay in business. Although the removal of section 21, no-fault eviction, will grab the headlines, there is still a provision within the bill to evict tenants if landlords wish to sell the property, redevelop or there are rent arrears or anti-social behaviour. With fixed tenancies abolished, landlords (and tenants) only have to give two months’ notice, creating increased insecurity on both sides.

The most difficult proposal for small-scale landlords is that councils will be able to enter properties without notifying the landlord and have access to bank statements, and correspondence with accountants, including text messages and emails. Once again, corporate landlords will simply pass such requests to their dedicated management teams while private landlords shoulder the added burden of regulation.

It looks as though corporate lobbying could be influencing government policy, allowing the big boys to dominate the market. Meanwhile, family farmers can be seen driving their tractors to protests in London trying to avoid losing their land to inheritance tax. Land which could then be purchased by Blackrock and Vanguard on behalf of global corporations. Land prices and house prices go hand-in-hand and thanks to Lizzie Magie we all know the dangers of one group holding the monopoly share.

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