On Landlordism and Governance

George Kerevan’s weekly economics column for Bella Caledonia.
Let me introduce you to Mr Gerry More, the Scottish Government’s sometime official Private Rental Sector Champion.  Mr More, a house building industry insider for decades, was appointed to his “champion” role in 2014 by the then Deputy First Minister, Nicola Sturgeon.  In 2017, he was catapulted from his salaried job as the landlord’s spokesperson at the heart of the Scottish government machine to become managing director of Aberdeen-based Stewart Milne Homes.
I have nothing against Mr More personally.  Like many folk appointed by the SNP Government to posts inside the bureaucracy, he is of a liberal bent.  Just like Benny Higgins, the ex-banker and current chair of the feudal Buccleuch Estates, who the FM has appointed to lead the committee advising on Scotland’s post-Covid economic recovery.  But such high-minded liberalism often masks a devout commitment to a market economic system that is far from fair to ordinary Scots.
Why did the SNP Government feel obliged to appoint a “champion” for the landlord class?  When appointing Mr More back in 2014 – the rest of us were diverted by a certain referendum – the Deputy FM’s press release stated: “I welcome the appointment of Gerry More as Scotland’s PRS Champion, a post that underlines the importance of the private rented sector to Scotland’s housing mix… The Scottish Government recognises the potential that exists to unlock new and alternative sources of housing investment in this sector, and that is why we provided funding towards the post…”
To paraphrase, Mr More’s paid government job was to help big landlords and development companies (often the same thing) find cash to build and rent new properties.  His job as “champion” was not to help the many Scots who rent to keep a roof over their heads. Rather it was to help investors.  Which Mr More proceeded to do.
As he made clear in a submission to the Scottish Parliament in 2015, Mr More’s task was to transform the rented sector from the domain of small, private landlords to a corporate-run behemoth thirsting for profit: “Large scale PRS developments funded by institutional investment from pension schemes and life insurance funds are already commonplace in other countries, including amongst others the USA… My appointment recognises the opportunities that that this approach could bring for Scotland… this new rental sector is very different from the existing buy-to-let PRS dominated by small amateur landlords…”
Some will argue it was perfectly legitimate for the Scottish Government to promote such private investment, given the catastrophic collapse in home building falling the 2008 banking crash.  But Mr More was bent not on expanding social housing but in creating a new vehicle for finance capital to invest in.  That required preventing the Scottish Parliament (and the SNP as a party) introducing legislation to curb rent rises.  And this Mr More proceeded to do as part of his paid job as the corporate landlords’ “champion” at the heart of the Scottish Government.
In 2016, the Scottish Parliament debated the Private Housing (Tenancies) (Scotland) Bill.  Mr More, in his official capacity, presented written evidence to MSPs. He was desperate to ensure that the legislation did not obstruct the ability of corporate investors to raise rents: “My preference would be to see the removal of rent control proposals from the Bill”.  He was particularly opposed to giving student renters additional protection as this threated the lucrative (though these days vastly over-extended) investment market in university accommodation.
As for rent controls in “pressured areas” (i.e. areas where there was a serious accommodation shortage), Mr More simply denied that such shortages existed.  Instead, he went on to intimidate MSPs by warning them that even the merest hint of rent controls would, by increasing “the perception of risk” reduce investment returns for investors and landlords, thus ending further investment in new housing.  The Bill was duly diluted in its ability to impose rent controls, despite this being SNP party policy.
Why did the Scottish Government get so excited about Build to Rent, and appoint Mr More to push its agenda?  The answer is that in 2012, the new Tory Government at Westminster took a similar road. With the UK economy tanking as a result of extreme austerity, Chancellor Osborne did an about-turn and offered billions in new (i.e. printed not borrowed) cash subsidies to investors in the Build to Rent sector.  This led to a rush of finance capital outfits setting up building investment arms to get their hands on the lovely lolly – including Greystar, Realstar, L&G, LaSalle, Aberdeen, Ares and Hermes.  Of course, the Barnett Formula extended this bankers’ largess to Scotland.
Note: Osborne was deliberately constructing a new class of financial asset (with profits supplied by the poor bloody tenants) designed to sabotage social housing.  He wanted to create a new “control mechanism” over working class renters, making them subordinate to private corporate landlords.  At the same time, he ensured the taxpayer would guarantee investments in Build to Let and guarantee part of the rental stream.  And the result?
The latest private rent stats from the Scottish Government (published last November) make interesting reading.  As ever, rents in Greater Glasgow rose fastest at 5.3% for your average 2-bedroom private rental, in the 12 months to September 2019.  That’s a stunning mark-up given that prices over the year rose only circa 1.7% on the CPI measure, and landlord borrowing costs were virtually zero.  Overall, monthly private rents in Scotland increased by 2.4% for the average 2-bedroom, from £652 in 2018 to £668 in 2019.  That’s still above inflation, indicating significant landlord exploitation of tenants.
In the nine years between September 2010 and September 2019, the average rent for a 2-bedroom house (the most common type of rented property) in Greater Glasgow grew cumulatively by over 38% while inflation was 21% – a truly massive increase in tenant exploitation. In Edinburgh and Lothian, rents went up a massive 46% in those nine years – more than doubling in real terms.  That is how Scotland’s landlord class behaves.  It is true that in some of the depressed industrial towns, and in Aberdeen post the oil price collapse, rents declined in real terms in those nine years – but that is a reflection of the depressed rental market in those areas, not an indication of benign landlords.
The private rented sector in Scotland has doubled in size since the advent of an SNP administration.  In a recent Scottish Government publication, Housing Minister Kevin Stewart waxed lyrical about this expansion: “Build to Rent is an important part of the Scottish Government’s approach to growing and improving the private rented sector… I want to see an increase in supply… Scotland is open for business…”
Which might explain Mr Stewart’s obvious irritation this week with attempts by Green MSP Andy Wightman to move amendments in the latest Covid-19 Bill to give tenants greater protection, especially given the massive rise in unemployment and equally large threat to incomes, resulting from the medical emergency and lockdown.  Mr Stewart evidently thinks that the Tories’ hated Universal Credit system is sufficient to enable tenants to avoid eviction. On the other hand, our Kevin simply rushed to provide an emergency public subsidy to the landlord class that had inflated rents by 46% in the Lothians since 2010 – yes another bloody landlord subsidy.
I know there are Nationalists who think it inopportune to publicly criticise the SNP Government at this juncture, given we need an SNP victory at the next Holyrood elections to unlock the path to a second independence referendum.  But the fastest way to lose votes is to see working class tenants evicted.
The SNP Government was wrong to follow the Tory plan to subsidise the creation of a corporate Build to Let empire back in 2012.  It should have stuck with mass social housing.  It should have defied the Treasury over borrowing rules.  Instead, it has created a landlord interest group that will still be with us under independence.  An independent Scotland run for and by the landlord class is no kind of freedom.

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  1. meg macleod says:

    I raise my head above the parapet.I am a mature lady on a small pension.We worked hard and put our self-employed earnings into property for `our future security `.I rent out the properties for an income to supplement my inadequate pension.My properties are well maintained and up to a standard exceeding many council properties i have seen.I attend to the needs of my tenants as requested immediately.I have not raised the rent in years keeping them affordable for residential use for local people.At the moment one of my tenants is without work and cannot pay any rent .I have reassured the tenant of his tenancy. Please acknowledge that not all landlords are without a conscience.

    1. Certainly not all landlords are without conscience but we have huge amounts of people in sudden income crisis in a market with no rent control or regulation, that’s a very dangerous situation

    2. Wul says:

      Meg, you say”; “We worked hard and put our self-employed earnings into property for `our future security `. ”

      Wouldn’t it be better to live in a country where your own future security was assured by good, cheap, safe housing and excellent, guaranteed life-long care, rather than to have to take a cut of someone else’s wage to meet their essential need for a home?

      I say this not to criticise you, but the current state of affairs.

      It seems that becoming a landlord and speculating on property is now the only game in town for people with savings who are concerned for their future security. This is very bad. It means that the well-off (however hard they worked) are taking money from the less well off. That cannot be good for our country’s long term well-being.

      As I get to know my neighbours better, I have discovered that a significant majority of them are “amateur” landlords renting out flats. Often the flat they owned themselves, before they got married. Sometimes they rent out multiple homes. One neighbour has four; “for my pension”. At the same time my daughter worked two jobs, on top of a full-time study course, and built up tens of thousands of pounds of student debt, just to pay her rent. ( Her home and both jobs now vaporised by Covid19).
      Another wheeze is that when your own child needs to find a flat for university, you simply buy one with 3 bedrooms and the other two (poorer) students effectively pay your own child’s rent, your buy-to-let mortgage fees and then hand you an unearned capital gain when you sell the flat upon graduation (or keep it on as a renter “for my pension”).

      1. MBC says:

        Of course it would Wul, but we’re not living in such a country. At least Meg (if she lives in Scotland) is probably recirculating the rent she receives to supplement her meagre pension back into the local economy, by buying stuff, employing people like tradesmen to repair her properties, keeping folk in jobs, and paying UK taxes. And she sounds like a decent lady operating ethically and efficiently.

        1. Wul says:

          I agree, Meg sounds all right. I didn’t mean to categorise her as an evil landlord. (Sorry Meg, it was brave of you to put your head above the parapet)

          People in my own family have been landlords and tried to be decent ones. One has been shafted by a string of tenants who variously: used the place as a cannabis farm, convenience address for loan and DWP fraud, an illegal puppy farm, never paid any rent ever and destroyed two front doors in police raids due to noise nuisance…

          It seems wrong that so many “ordinary” people are now landlords; how did that happen? Renting from a private landlord is usually a fraught situation, it’s just not healthy (at least the way we do it in the UK).

          I know of a whole area in the South Side of Glasgow that has been ruined by private landlordism. Thousands of former council houses and privately owned family homes are now private rented. A transient population of “locals” comes and goes and has no interest or investment ( literally) in the neighbourhood. Why should they care about the area? It’s just a temporary stop-off on their upward or downward social journey. The heart has gone.

  2. David Mackenzie says:

    Thank you for this excellent article – let’s hope the SNP leadership responds positively to the anger among its own constituency about this fiasco.

  3. Josef Ó Luain says:

    Anyone not concerned about the behaviour of the S.N.P. hasn’t been keeping their eye on the ball.

  4. Wul says:

    I know I’m ranting but this topic make my blood boil.

    The one thing every single human being needs is a home. To turn that essential human need into a commodity that speculators; amateur, corporate or otherwise, can make huge unearned profits from is obscene. And then, to take tax payers’ money and give it away to a f**king hedge fund, so that it can further impoverish our own children, by renting them student chicken coops…that is true madness.

    Building houses is not complicated. We know how to do it and local authorities used to do it all the time. The ingredients are; land, sand, cement, timber, glass, insulation, cables and pipes. Everything you need can be found in a builder’s merchant. Scotland has lots of land. Lots and lots of it. And not very many people. To make a owning or renting house something that you have to work for 2, 3 or 4 days a week, for decades, is insane. We are being taken for fools.

    The SNP lost my vote over their treatment of tenants this week.

    1. Lorna Campbell says:

      Wul, I have always believed that Scotland’s independence, or otherwise, is linked by an umbilical cord to property and land ownership, and that this umbilical cord needs to be severed. If not, even an independent Scotland will find itself in thrall to private, vested interests in property and land that, in no way, reflect its reality for so many of its citizens. I have little doubt that there are a minority of landlords and landowners who are benign and decent, but they are a minority. Like you, I have seen the rise and rise of private landlords as inimical to the well-being of our people. Turn the TV on any day, and all you see all morning are programmes about buying property in economically depressed areas, both in the UK and abroad. Quite often, the older or very young people with lots of money in their pockets are from London and the South-east, reflecting the higher salaries and job opportunities in those areas. They look at properties that most people can only dream of, and turn their noses up at the most trivial things, in mainly rural area which are depressed economically. They reflect the huge disparity between the wealthy and the poorer sections of our society, as do the adverts both on TV and in newspapers and magazines. I have never before in my puff seen such a massive divergence.

      I watched a programme recently, and Keith Brown, to his credit acknowledged that this was a massive problem now,. He seemed genuinely embarrassed. The audience comprised people from a small Scottish village who were to have it expanded with over two hundred new homes, none of which was remotely affordable for local people. Mainly, it was expected that the occupiers of these new homes would come from furth of Scotland, and this, while thousands of Scots lie each night in shop doorways in our cities. To boot, there are ‘shelters’ now in every town for those who have no roof over their heads. It seems to me that things have become worse in the past five years or so, and, while I realize that the drugs culture has much to answer for, something else is at play, too. It is as if the middle classes are ousting all working class people, pushing them to the margins and beyond, taking over their traditional areas, even in rural communities, and we are becoming a society divided on wealth lines, with much of Unionism itself a vested interest in keeping the status quo. I sometimes cannot believe that this is the SNP I knew. No, I’ll alter that: this is not, in so many ways now, the SNP I knew. It is as if the party hierarchy is deliberately advancing a social experiment on Scots, one that is destroying their traditions, their cohesion and adhesion to our democratic enlightenment. They are following Labour’s lead by abandoning the very people who supported them, in favour of middle class elites, both our own Scottish ones and others from outside Scotland who owe Scotland’s democratic enlightenment no loyalty at all. I hope I am wrong, but it seems to be morphing into a very British party.

      1. MBC says:

        What was the programme Lorna? I agree it is a disgrace. Here, in Bruntsfield Edinburgh, the former Boroughmuir High School building was sold a few years ago to Cala, who offered the top price for it. You can’t blame the Council, who owned the building, from accepting the top offer. They run a deficit of millions of pounds. Cala promised to convert it into 120 or so flats, a proportion of which would be ‘affordable’. There was some opposition to this, mainly because the area was already congested, but it was argued that Edinburgh and the South East of Scotland needed more housing in line with current data and projections. We learn that the population of Edinburgh is growing at about 800 a month and they have to live somewhere. If not a brownfield site like this, then it’s the greenbelt. So it went ahead, folk accepting that housing was a local need.

        Then recently we learned that some, at least, of the new properties were being sold, off plan, in advance of completion, by Retties, who were marketing them, to buyers in Hong Kong. This was before they were ever even released on the local market. I assume Cala needed a cash injection at that point and so tried to get some advance sales. Retties obliged, ‘we know where we can get you some buyers’, sort of thing. As far as I can see, nobody was breaking the law. But selling to an investor in Hong Kong is not exactly answering a local need for ‘affordable housing’. And so it goes. Funnily enough, in some parts of Asia, Singapore, I believe, a capitalist hot spot, the government there manages to clamp down on this sort of thing. Property is just not allowed to be sold to non-Singaporeans. Such is the housing need. So it is possible, even in a capitalist system.

  5. Fay Kennedy says:

    It’s a chronic problem for many people accessing decent affordable accommodation. Australia is so similar and there is almost no protection for renters. These people who say ‘they worked hard to acquire property’ have a very narrow view of how society functions. Most of the wealth could not happen without all the labour that goes unacknowledged. Without the public infrastructure ( rapidly being sold off) roads, services and so on they could not do it. And the labour that is freely given by good folk who look after their loved ones and neighbours every day without any monetary payment but out of a common decency to assist each other through this life. The sacrifices of time and social relaxation to the god property and money is not much of a deal for a decent life. Speaking from experience of being around too many of the type who ‘worked hard for their assets’ and who never admit to their tendency to exploit those who are not as willing to exploit their fellow traveller. I have only ever encountered one decent landlord in my own rental history and could write a book about quite a number.

    1. Lorna Campbell says:

      Fay: when the local councils ran housing, local people were guaranteed a home at some point, even if they had to wait a year or two for it, with private renting taking up the slack, or young people simply remained at home till they married. It was, by far and away, the best renting system ever. I’m afraid that Thatcher delivered the death blow to that, and, although many ordinary people who could never have afforded their home were able to buy (which, in itself, was not a bad thing) the councils lost billions on the deal, were prevented from placing an embargo on further sell-offs, were prevented from borrowing to build new homes, etc. The entire social experiment that was Thatcherism did what it said on the tin – it destroyed the social cohesion – and it was carried on by Labour and by the Lib Dems after that, and even by the SNP. It is going to take a complete social revolution to change matters, and I cannot see it coming. It is far more likely that there will be entrenchment and even greater punitive economic measures brought to bear on society in the aftermath of the pandemic and Brexit. For Scotland, this has been nothing short of tragic, in the full sense of that word, because we have aligned ourselves with this very English, right-wing, neoliberal, neocon disastrous experiment. It will take a total rethink on taxes and who pays them, on land reform and on many other aspects of society that we have, if not grown accustomed to, certainly appear to accept as our fate – which, of course, is nonsense. I cannot see the SNP doing any of that; they have shifted their emphasis on social egalitarianism (or as near an approximate to it as possible) to accommodating those who are always reluctant to pay taxes or to vote for anything that would lead to any hike in taxes at all or in any kind of restructuring that would lead to greater equality and economic distribution of resources. In other words, as with the Tories always, and now Labour, too, the SNP seems hellbent on reaching out to the middle classes for fear of alienating them.

  6. MBC says:

    Just a couple of questions here: was it so wrong for the SNP to have grasped Osborne’s Build to Rent scheme when it was offered and if there were Barnett consequentials did they have any option to use the money differently? Does anybody know?

    1. Lorna Campbell says:

      MBC: possibly not. This is the trap of the Union, and the pandemic has shone a spotlight on it. The way that devolution is organized in the UK, not to disseminate powers to the ‘regions or nations of the UK, but to ensure the grip of the centre never slackens, means that, even with devolution, we are in a bind. This was glaringly obvious in 2014, even more glaringly obvious in 2016, but Unionist Scots are terrified to let go, or just too selfish to let go and try and do things differently for the greater benefit of all. The SNP has not challenged that mindset since 2014, not an inch, really. If anything, it has pandered to it at the expense of the poorest Scots.

      1. MBC says:

        Yes, the ‘lock-step’ trap. Responsibility without power. The curse of the middle manager throughout the ages. That’s devolution. No genuine scope for innovation and change.

  7. MBC says:

    OK I googled up Stewart’s landlord bailout scheme and here it is:

    The scheme is aimed at landlords who are not businesses and who have fewer than five properties, and it is an interest free loan scheme which will require to start being repaid from October. Given that interest rates are 0.01% at present (so my bank tells me) it doesn’t strike me as much of a bung.

    1. Wul says:

      “Not much of a bung…”

      Hmm, that depends on how easy it is to get the cash, whether any “security is required ( I suspect none) how long landlords get to re-pay it and how much effort the government puts into re-claiming the loan. Where can you get an unsecured loan for 0.01% interest?

      Why not just give the cash to tenants who pay rent? They will all have a rent-book and records of payments, and if they give the name of their landlord it will be easy to check that they continued to pay rent. The underlying assumption is that landlords can be trusted and tenants not.
      How do you actually prove that an anonymous tenant didn’t give you rent money? Landlords probably won’t be required to prove it, because it’s unprovable and too time-consuming to do.

      “Amateur” landlords are private individual speculators. They take a gamble in a free market. If they lose rental income, I’d say “Tough Titty”. That’s the nature of speculation; you win some, you lose some.

  8. Jell says:

    I have just heard that Buccleugh Estates are to sell off thousands of acres of land. This land reputedly is to be for a national park/nature reserve and community buy-outs. Funny Benny Higgins, chairman of the Buccleuch Estates, has just been appointed to lead the committee advising on Scotland’s post-Covid economic recovery by the First Minister.
    What’s the deal? What’s in it for the tenants? It looks like she runs with the fox and hunts with Buccleugh hounds
    I don’t trust SNP for our future.

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