Rent, Covid and the Housing Crisis

A war of words has emerged after yesterday’s vote in the Scottish Parliament against support for tenants in the Covid-19 crisis, as dividing lines in what ‘social justice’ means in Covid-19 Scotland grow increasingly clear.

Scottish Greens MSP Andy Wightman had proposes a series of amendments aimed at financial support for tenants, which included a tenancy hardship fund, that rent arrears accrued during the crisis can’t be used as grounds for eviction when the eviction ban is lifted, and that rent prices are frozen for two years.

These are by no means radical measures, when considering the number of people claiming unemployment benefit in Scotland rose by 75,000 in April, a 66.9 per cent increase. And that’s not including the over 300,000 who have been furloughed. The vast majority of these workers, many of whom are or were in low-paid, precarious sectors like retail and hospitality, will also be tenants who rent. Research by the Resolution Foundation has found renters are 40 per cent more likely than the population at large to be in workplaces that have been shutdown during the pandemic.

Financial support for tenants is needed now, and one of the most direct and impactful routes the Scottish Government has within its power to support them is through reducing the rent burden.

Wightman’s motions were defeated, with the SNP and the Scottish Tories teaming up to vote against all of them. The responses to the vote are telling.

“Huge relief,” said David Bookbinder of the Glasgow and West of Scotland Forum of Housing Associations (GWSF), adding that he believed Wightman was trying to “extinguish” rent liability, which would have been “catastrophic”, saying £20 million in income could be lost per week if rents stop being paid.

Mike Dailly of Govan Law Centre, which backed the motions, responded to GWSF by saying: “Unfortunately this is a misleading, inaccurate and simply wrong description of Andy Wightman’s

Bill amendments. These issues are likely to return for parliamentary debate as underlying problems continue to grow in society.”

The STUC said it was “disappointing” the SNP and Tories voted against, while SNP Glasgow activist Rory Steel said that he “can’t understand why SNP didn’t back a single one of Andy Wightman’s amendments.”

He went on: “Tenants have been hammered for decades and now they’ll be exploited to make up the shortfall in landlords’ incomes. Private rented sector needs urgent overhaul with rent freeze and rent controls.”

Scottish Government Minister Mike Russell responded, claiming the government “have done and will do a great deal to help tenants and others but alas legislation isn’t just a wish list”.

Division between social landlords and housing rights lawyers, between SNP Ministers and SNP activists, over who should pay for the Covid-19 pandemic should not be a surprise. Everyone is for ‘social justice’, for ‘tackling poverty’, for ‘a wellbeing economy’, when it’s in the abstract. It’s a different matter when you have to pick a side over who pays: landlords or tenants?

Here’s five things we should consider in light of this new debate about housing in Scotland.

1) Landlords have power over tenants

First, landlords are in a position of power over tenants. They own assets, tenants pay for use of those assets. One lives off its wealth, the other his/her wage. This should be obvious, but there have been attempts to equate the two as equally vulnerable, when workers cannot work or are sacked while financial assets remain in place. One industry survey found buy-to-let landlords in the UK on average earn just short of £60,000 from rent payments alone, more than twice the average salary. This is not a relationship of equals.

2) The private rental sector should not be muddled-up with social housing

Second, in opposing the amendments Housing Minister Kevin Stewart sought to use the words of GWSF as a shield against measures to support tenants across the rental sector, making no differentiation between private rental and social housing (here’s the transcript). We should not make the same mistake. From 2010 to 2019 private rental tenants have seen a 46.3 per cent rent rise in Edinburgh and a 38.3 per cent rise in Glasgow. In Scotland as a whole over those nine years, rents rose by one quarter. In that time, Scottish workers under-went the longest wage squeeze since the Napoleonic Wars. To be honest, there’s a solid basis for arguing that a rent freeze goes nowhere near far enough in supporting tenants in the private rental sector.

Private landlords already are being financially supported. The Scottish Government established an “aid for private rental landlords” scheme, so that if any tenants go into arrears they can take out an interest-free loan. Meanwhile, the furlough money at 80 per cent pay that hundreds of thousands of Scots are now receiving does not include a 20 per cent cut to their costs, such as housing. The IPPR have calculated UK-wide that “13 per cent of state spending on the furlough scheme is likely to end up in the pockets of landlords – amounting to £2.8bn under a three-month lockdown”. So the government support isn’t even-handed at the moment, never mind supporting the group which is actually in financial need (tenants). As Laurie Macfarlane, one of the authors of the IPPR paper, has written:

“While many households and businesses are facing severe financial hardship, there has been almost complete financial protection for ‘rentier’ income: that is, returns gained by extracting value by virtue of owning assets that are scarce or monopolised.”

3) Housing Associations should not be weaponised by government against tenants

Third, when First Minister Nicola Sturgeon joined many others in opposing Labour’s housing stock transfer in Glasgow in 2002, one of the largest housing privatisations in Europe, one of the many arguments against the decision was about democratic accountability. Foreseeing a day when Housing Associations would be weaponised by the state as a means of justifying why it can’t support tenants in need, many argued at the time that it was no longer really social housing if the state is not accountable for ensuring it is affordable and a decent place to live for all tenants, and funding it on that basis. If Wightman’s modest proposals really would be “catastrophic”, as Bookbinder has argued, that is not an excuse to not support tenants – it’s a reason to look seriously at the system of social housing we have in place and ask whether it needs be brought back into public sector ownership and control.

If action is “catastrophic” for HA’s, what is inaction for tenants? Six in ten tenants have suffered financially from the crisis in the UK, with one in five of those having to choose between rent, food and bills. At the end of the day, tenants are people, HA’s are institutions – which matters more? Social housing rents in Scotland rose 7 per cent above CPI inflation from 2013/14 to 2017/18. They have the power to borrow at rates much cheaper than tenants, who will be at this moment entering into a spiral of debt to pay the rent. Many of those tenants are paying for housing services that they are not currently receiving; the Living Rent tenants’ union has reports from 16 separate HA’s showing cleaning services abandoned since the pandemic began, leaving hallways and lifts filthy. But Stewart never once mentioned the opinion of tenants’ when justifying his decision to oppose Wightman’s amendment, as if the only voice that counts in social housing is the Housing Association’s.

This is not a zero-sum game when it comes to social housing funding. The Scottish Government has spent £100 million over 2019/20 and 2020/21 on the “help-to-buy scheme”, a fund proven to simply push up prices, and thus is simply an effective subsidy to private housebuilders. The Scottish Government runs a Rental Income Guarantee Scheme through Scottish Futures’ Trust, which guarantees 50 per cent of private house-builder rental income to encourage them to build. Even AirBNB landlords have access to financial support in this crisis, on top of the rates relief they already enjoy. When the Scottish Government is dishing out subsidies left, right and centre for the private housing market, it’s rich to argue that support for tenants is financially out of the question.

4) We need talk about democratising housing

Fourth, we need to talk about democratically controlled public housing, where tenants are empowered to have a voice in the housing system. A letter signed by over 3000 scholars in 600 universities worldwide has called for work to be democratised. We can add to that democratising housing. Any housing system where tenants’, who understand their homes better than anyone, are systematically ignored is not fit for purpose. The answer is not to go back to bureaucratic council housing, but to combine the principle of housing being a public good with empowering the tenant in the management of the home.

5) The more inaction from the Scottish Parliament, the more tenant resistance will grow

Finally, in lieu of that, tenant resistance will emerge from the bottom-up. If people can’t pay, they will unite with others not to pay. The “Cancel the Rent” movement in the US is growing, and has won the major scalp of getting US Presidential candidate Joe Biden’s support. It was rent strikes in Glasgow in 1915 that got the first ever rent controls introduced by the UK Government, which remained in place until 1989, when they were dismantled as part of Margaret Thatcher’s counter-revolution. It may take a tenant-led housing revolution to tackle the enormous poverty crisis in Scotland that has been exacerbated by the pandemic. If the Scottish Parliament fails in its duty to tackle the scourge of poverty, which rent costs are a major part of, others will lead.

Comments (15)

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  1. Pete Roberts says:

    Excellent article. The first action of the French government in the pandemic was to cancel all rent, mortgage and debt payments including credit cards and bank loans. This was after months of mass protests against Macron’s attempt to increase the pension age by 4 years, which resulted in the governments abandoning the policy.

    This received no coverage in UK media. The French government knew they could not push the people too far. The English government assume that we are a bunch of pathetic brainwashed pussies who will just suck up whatever crap they dish out to us, and sadly they seem to be right.

    1. Pete Roberts says:

      Unfortunately the Scottish establishment including the SNP seems to suffer from the same contempt for its citizens unfortunate enough to find themselves on the lower end of the economic spectrum, while it abases itself before the rentiers and lairds. The whole economic system depends on those on the bottom existing in poverty, starvation and disease because the fear of falling into this demographic is what keeps the middle classes servile.

    2. Jim Stamper says:

      I can’t understand this blind spot which France has seen so clearly. Any discussion about costs and who should pay in the UK and, more disappointing to me, in Scotland always stops before they get to the banks. Compared to everyone else what have the banks to loose in reality. We should follow the French example.

      1. Doghouse Reilly says:

        It think it may be a good idea to check some of the details on France. There are still reports of tenants struggling to pay rent. From what I can see it was commercial, not residential rents that were suspended. Not that much of a surprise from Macron.

        1. Emma says:

          Sadly no rent has been cancelled in France. Just evictions suspended until end of July and in some cities until March 2021. A bit of discretionary increase of benefits 100 to 300£ to struggling households and sink or swim!

  2. Doghouse Reilly says:

    Amongst many important points in this article item (2) is probably more important than most.

    I don’t think there is much argument that the private rented sector in Scotland is too big, isn’t as well regulated as it should be, is too expensive, often offers poor value for money and offers tenants too little security of tenure. The 2016 act that introduced the current tenancy conditions is a landlord’s charter that allows for the eviction of tenants as a business management and profit maximisation tool.

    Given that out current housing minister and many of our current MSPs, including Mr Wightman, thought that was a good idea at the time I for one am unconvinced by their sudden discovery of this issue at this moment.

    As it happens I’m not convinced that the answer is rent controls either. I would rather see action to significantly reduce the size of the Private rented sector overall and replace it with genuinely affordable social housing.

    That’s not to say that social renting is without its problems. Before taking a bit of a shot at them though can we just be clear that on a day to day basis, social housing in Scotland is wholly unsubsidised. In councils and RSLs all the costs of repairs, management, maintenance and lost rent due to empties or unpaid rent and the several billions of historic debt are paid for by existing tenants. Under the current rules the waiving of rents during the this crisis will have to be paid for by tenants either through rent rises or service and investment cuts. When folk, mainly owners, pontificate on how best to “help” tenants they should be clear who pays for the service. It’s tenants through their rent.

    With that in mind one of the hall marks of the last 20 years has been the willingness of ministers to impose costs on social housing tenants. Social rents have risen ahead of inflation because very little support has been provided to help meet Scottish government objectives on energy efficiency and improved standards.

    The subsidy that is paid for new social housing was reduced dramatically in 2011 and despite a modest subsequent increase, existing tenants now pay around 55% of the cost of each new social rented home. Nearer 60% if you rent from a council, they get less subsidy than RSLs.

    To be fair, the condition of our social rented stock needed to improve and the centrally imposed standard have made a difference. But at a cost. Around 34% of social tenants now pay more than 30% of their net income on rent. The lowest social rents average around £60 a week whilst the highest are well over £100. I’m not sure it is possible to honestly argue that both are “affordable”.

    The issues of democracy and control is important too. We are good at making tenants pay for things but a lot less focused on what they have to say.

    The final, and most critical point is that we just do not have enough social rented homes and they are too unevenly spread. For all the headlines about the current target of 35,000 social rented homes over the five years to 2021 we will have fewer social rented homes than we did in 2016. It may be inconvenient but it is true that all devolved administrations have presided over a long term decline in social renting and and the growth in private renting.

    We will see the consequences of all this as we struggle to meet real housing needs during the Covid “recovery”. We already have many more people in temporary accommodation. Homelessness and rough sleeping haven’t been ended and we simply do not have the social rented homes we need to achieve this.

    In housing terms it will take a lot more than we have seen so far for a post lockdown Scotland to be “fairer and more equal”. I suspect our politicians will baulk at the bill. Other people’s bad housing is, in the end, always affordable.

    1. Toepoke Petrie says:

      Excellent reply. Only contribution I would add is that the building of new social housing is also hindered by a lack of imagination and understanding of what is required, the same boxes are being churned out without thinking of future demand, i.e. an ageing population and if Covid has demonstrated anything it’s that people need to be able to remain at home rather than Care Home setting. It’s also hindered by the way Councils cost out their building programmes, so they have to use internal services such as architects which then “bill” their housing colleagues in the weird way that hard stretched local authority services have to constantly justify their very existence.

    2. Tommy Lusk says:

      Good points well made.

  3. Daniel Raphael says:

    The SNP looking a bit less progressive in the light of this day? Teaming up with the Scottish Tories is not the best advertisement for someone who might fancy leading a newly independent nation, hm?

    1. Alistair Taylor says:

      Aye, SNP looking like the Tartan Tories now, Daniel.
      All rather disappointing.
      Not quite sure where the working class revolution is going to come from.

      Maybe we should just all go pick fruit for Prince Charles and be grateful for some crumbs.

  4. Morag Williams says:

    It is disappointing to read that the Scottish government is not making the most of the opportunities created by the Covid-19 crisis to implement changes to the Scottish economy. This is not to suggest that the Covid-19 crisis is anything other than a tragedy. If not now, when?

  5. Sean Clerkin says:

    A well written and thoughtful article on housing. Wish we had more like Ben Wray.

  6. Tommy Lusk says:

    A first step to democracy would be to implement laws already in force. We’ve had two tenant ballots in the past five years (the latest during lockdown). “Independent Tenant Advisors” (ITA) are duly appointed and tenants are given reems and reems of information……all of which comes from the HA and all of it misleading.

    The first ballot, we were told, was a proposal to form a “constitutional partnership” with another HA. It was actually for Bellsmyre HA in Dumbarton to became a wholly owned subsidiary of Caledonia HA of Perth.

    This year tenants were told they needed to vote yes in a ballot in order to get new housing. You don’t have ballots to build new housing. They actually needed to ballot tenants because Caledonia HA decided it suited them best to wind up Bellsmyre HA altogether. Why was this necessary, I asked, when Caledonia had complete financial control over Bellsmyre anyway? Is it because the heavily mortgaged Caledonia HA needs the deeds to our houses, so they can be used as security for loans? No answer from the ITA, and no pressure from Scottish Housing Regulator for them to provide an answer.

  7. Neil Gray says:

    HAs are supposed be a saviour for tenants. David Bookbinder heads a forum of HAs in West Scotland. David Bookbinder is constantly getting his kickers in a twist defending HAs against tenants and showing remarkably little sympathy for tenants’ predicaments. This article reveals that contradiction in the mythos of HAa and more very well.

    The key point for me is:

    “If Wightman’s modest proposals really would be “catastrophic” [for HAs], as Bookbinder has argued, that is not an excuse to not support tenants – it’s a reason to look seriously at the system of social housing we have in place and ask whether it needs be brought back into public sector ownership and control.”

    Or, another option that is less favourable to me, at least that HAs are adequately funded to provided social rented homes rather than the usual supposedly neutral tenure mix of affordable rent, mid-market rent and shared ownership which only contributes to gentrification by stealth and does not meet the needs of those in housing poverty. As for democracy? When was the last time anyone heard someone from an HA tenant committee criticising HAs. Join an independent tenant union such as Living Rent.

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