ourEconomy: Opinion

British students have learned a crucial lesson: landlords always come first

Landlords hoover up wealth in the good times but expect to be sheltered during the bad. It’s time for a reset.

Laurie Macfarlane
7 October 2020
SOPA Images/SIPA USA/PA Images

For thousands of new students across the UK, the university dream has quickly turned into a nightmare. Instead of being overwhelmed by social and intellectual temptations, many have found themselves imprisoned in their accommodation with a group of strangers, unable to leave. And if living under house arrest wasn’t bad enough, they are being forced to pay rent for the privilege.

With most teaching set to take place online for the foreseeable future, many are asking a simple question: “Why are we here?

“My course is all online. I could have done this at home, but I’m paying for this accommodation,” one student told the BBC. “I don’t think it’s worth the money.”

“It feels as though we’re paying to be in prison,” another told The Guardian.

Despite being repeatedly warned that reopening university campuses would lead to coronavirus outbreaks, governments and universities across the UK decided to press ahead with their plans. The warnings were justified: at least eighty universities have reported outbreaks so far, and the number is growing by the day.

Follow the money

Why was such a foreseeable fiasco allowed to unfold? As ever, it helps to follow the money. Student accommodation is big business: there are 660,000 beds in the UK student accommodation market, and on average students spend around £6,000 a year on rent.

If students had been advised to stay at home rather than move into their university accommodation, landlords would have lost billions of pounds of rent. Universities themselves are among those landlords: in the UK’s increasingly financialised higher education sector, landlordism is a vital part of the business model.

And so students were lured back onto campuses, in some cases under false pretences that face-to-face teaching would continue. Whether it was intentional or not, the outcome is the same: as a society we have decided that the right of landlords to collect rent is more important than the right of students to live and learn in a safe environment.

Students probably haven’t learnt much else this term, but they have been taught a crucial lesson about Britain’s economy: the interests of landlords always come first.

The evictions crisis

Students are not alone. Even before the crisis, half of the UK’s private renters were only one pay cheque away from losing their homes – with no savings to fall back on.

But while homeowners and landlords have been offered mortgage holidays to assist with cashflow issues, tenants have received precious little support – despite being far more likely to face financial difficulties. As a result, Shelter estimates that 322,000 private renters have fallen into arrears since the pandemic started.

With unemployment soaring and millions more facing shorter working hours, many tenants face the impossible prospect of paying accrued arrears on top of what are already some of the highest rents in Europe.

The government’s guidance states that landlords should “show compassion” and negotiate with tenants “to agree an affordable rent repayment plan”. But this overlooks the tremendous power imbalances that exist between them. With the eviction ban in England now lifted, it is likely that tenants who can’t pay will instead be served with eviction notices. Indeed, councils predict that as many as half a million private-sector renters could be in danger of being made homeless in the months ahead. The disastrous social consequences of this would be felt for years to come.

Even after evicting tenants, landlords can pursue a number of legal avenues to collect unpaid rent from them, some of which can lead to personal possessions being seized or arrears being deducted from wages and benefits.

Given the desperate situation faced by many renters, one would assume that the UK’s progressive political parties would be rallying to their cause. But such support has been next to non-existent.

When campaigners called on politicians to back a temporary rent suspension, the Labour Party refused, stating that doing so would be “un-Labour” and would breach landlords’ human rights. Instead, the party proposed that tenants should be granted two years to pay back any arrears accrued during the pandemic. In other words: landlords must be paid in full, and the cost of the crisis should be borne entirely by tenants.

Rigged rules

It’s not just households that are on a collision course with landlords – many businesses are too. An estimated £4.5 billion of commercial rent has gone unpaid since the pandemic began, as high streets have been devastated by a rise in remote working and huge decline in footfall. As with housing however, the rules are rigged firmly in landlords’ favour.

Across the UK, it has long been standard practice for commercial rent reviews to be on an ‘upward-only’ basis. This means that rents can only ever increase, and can never be negotiated downwards.

The only way to break free from this arrangement is to declare insolvency, which a growing number of businesses are viewing as the only option. According to a recent market survey, 69% of hospitality and leisure operators are weighing up that prospect because they cannot afford their rent.

“We are seeing more company voluntary arrangements (CVAs), many of them unnecessary, because there is currently no mechanism for commercial rents to be revised down in the rent review process,” David Abramson, CEO of property advisors Cedar Dean, recently said.

‘Heads they win, tails we lose’

Under capitalism, investing is supposed to be about sharing risks and rewards. But when it comes to landlordism, it’s a one-way street. Landlords hoover up wealth in the good times but expect to be sheltered during the bad times. From the perspective of tenants, it’s ‘heads they win, tails we lose’.

This isn’t just morally dubious – it’s also bad for the economy. Every pound spent by households and businesses on rent is a pound not spent supporting jobs and investment in the productive economy.

If the government is serious about “building back better”, it must urgently act to stop landlords squeezing the life out of businesses and households. This means introducing measures to redress the balance of power between landlords and tenants, and ensure the costs of the crisis are more fairly shared. Without this, any economic recovery will be slow, unequal and deeply unjust.

The government won’t act unless it feels it has to. So it is crucial that tenants make their voices heard. A simple message should suffice: ‘Can’t pay, won’t pay.’

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