Howl of Rage From a Secret Landlord

I dare not put my own name to this article because, if I admit to being a private rental landlord, I will attract as much disgust and horror as if I were a paedophile. I am Satan incarnate. And because people believe this, I will actually have to make 10 children homeless over the next few months. I may not be Satan, but I am also not a charity.

My time as a landlord began, as for quite a few of my generation, after I retired. I am someone who hates the idea of being dependent on the State and worries that even a private pension may not meet my needs in extreme old age. So I saved like crazy for decades. I could have stuck the money in ISAs and NS&I or bought government bonds or whatever tiny fragment of gold my savings would have afforded. But I chose instead to become a landlord. Naively, I thought it was socially more worthwhile.

I teamed up with a friend who has building and design experience. We bought a small portfolio of houses, all in fairly deadbeat parts of town, often in terrible condition, usually probate sales. We brought those wretched houses back to life and we let them out. Back then, private rental was an ecosystem that I believe mainly served the country well. It allowed some additional income to pensioners like me and lessened reliance on the State. Meanwhile it provided a decent pool of housing across cities for people who couldn’t afford or didn’t want to buy.

It should be obvious to anyone with an education – but sadly no one seems to understand supply and demand or how markets work – that the more people who do what I did, the better managed homes would be and the more slowly rents would rise. If anyone tried to jack them up, the tenants could simply leave and find another place. Ditto if we didn’t repair promptly. Council tenants often wait months for repairs and responses because no one is going to lose any income if nothing is done. If I don’t have a plumber or an electrician round within days, my tenants can withhold rent or leave altogether.

Of course there are horrifically bad landlords. I would never attempt to deny that. Do people not understand that, in any profession, there will be people who do a brilliant job, a large soggy middle who muddle along reasonably competently and some out and out crooks?

The worst of those crooks won’t be touched by the Renters Rights Act or the additional taxes Rachel Reeves has just imposed because they work under the radar. Officially they don’t exist. I’ve seen the houses in East London where a dozen or more single men were crammed into three bedrooms and a garden shed with a sink in the garden. Those landlords are paid in cash, so the taxman never knows. They are unlicensed. If the house needs to be cleared at short notice because the council comes snooping, there’ll be big men with even bigger dogs. Now they’re forcing the good landlords out, this is what renters will be left with.

My partner and I started in a borough which allowed HMO licences – that is, you could rent rooms individually to sharers. Our original tenants were young people starting out in fairly badly paid jobs, many of them in hospitality and many also new to the country, with no intention of ever buying in the area. They needed what we were offering.

Believe me there are nightmares among tenants too. Plenty who just disappeared, leaving rent and bills unpaid. One couple dug the grout out from around the shower, causing repeated leaks, which they used as an excuse not to pay rent at all. They were also horribly racist towards the other tenants, causing several of them to move out. (They were not white, by the way, so no one felt they could complain!)

This couple just ignored Section 8 (eviction) notices. Given the state of the court system, they could have squatted there till hell froze over, had I not done a bit of detective work and discovered the boyfriend, who had claimed to be a cop, had never worked for the Met or any other police force in the Home Counties. The Met were so alarmed at the idea of someone impersonating a police officer that they wanted to come round and talk to him. I told the couple. The next day, finally they vanished.

But I digress. As the years passed and property prices rose, our model no longer worked in the London borough where we had started. We moved east to Newham. But here the council won’t grant HMO licences. That means that honest, law-abiding landlords can rent only to families, not to single people. I understand why. Newham is a borough where many young, single, male immigrants from both Eastern Europe and South Asia gravitate. No local authority wants a preponderance of rootless, lonely young men. But as so often happens with regulation, it simply made things worse. The young men – and women – still arrived. But the only places to accommodate them were the unlicensed hellholes described above. Or council tenants renting out single rooms for cash. (In one case I know of, a council tenant was taking £900 a month for a tiny bedroom and use of a bathroom in a squalid flat. Not even cooking facilities.) Or, inadvertently, it’s utter mugs like me and my business partner who get scammed.

Here’s how that scam goes. The tenant rents for his ‘family’ which, under the terms of a ‘selective licence’, may consist of couples, married or not, grandparents, children – plus uncles, aunts and cousins. We tend to leave our tenants to get on with their lives without a lot of intrusion from us, but when I visited one house, I noticed a lock on the living room door, which had been turned into a bedroom. Upstairs there were locks on all the bedrooms. When I asked, I was told it was to protect the modesty of the female members of the house, as there were cousins coming and going. Like the gullible fool I am, I accepted this.

Then we finally made the decision to start selling everything. We served notice on our first house and, this week, I went in with the decorators. I had a chance to speak with some of those ‘cousins’ for the first time. They were no relations of my tenant. As far as they were concerned, he was their landlord and the owner of the house. They’d been renting rooms from him. FOR CASH. How much, I asked? £800 a month, said one. £750, said another. And they had the two smallest rooms. No wonder that, in four years, my tenant had never queried the modest rent rises, always paid me on time and never called on me for anything. He’d been making more than double what I’d been charging him from my property and breaking the conditions of my landlord licence in the process.

All this unfolded in front of the two decorators I’d hired to do the place up for sale. They laughed at my distress. How could you not know this, they said? Everyone’s doing it. How do you think people like us have anywhere to live? If I’d had a gun, in that moment I think I would have shot someone. I shot Rachel Reeves over and over in my head. Charging me extra tax on rental income cos I might be paying less than my poor tenants!!

But it isn’t simply that I’d been being ripped off. More importantly, so had those poor sub-tenants. It’s worth noting that, in poorer areas of London boroughs which allow HMO licences, you’d find few takers for single rooms priced at £500 or more a month, while in Newham people have been paying £800–£900 for single rooms and over £1,000 for doubles.

The attempts by governments of both hues to restrict or even eliminate small private landlords from the rental sector have been nothing short of a disaster and now things can only get worse. We cleared that house. It is ready to sell. It doesn’t disappear from the housing stock of course, but a single, better off family will now occupy it. Where will those who only want a single room go now? As he left, I asked the last of the fake ‘cousins’ if he had a room lined up. He shook his head. “I’m staying with friends till Christmas. After that, I don’t know.”

License it by all means, but private rental is, and always should be, an important part of the housing market. If you think the banks and big companies, with their build-to-rent programmes, will cater for anyone other than well paid professionals, you are mistaken. If you think cash strapped councils will look after their tenants and properties better than I and hundreds of other private landlords have done, you are dreaming.

This war on private rental began in 2017, when George Osborne decided to remove tax relief on mortgages. If you disallowed the cost of finance as a tax-deductible expense, most businesses would be bust. Looking back, that’s when we should have sold. Since then, we’ve had stamp duty hikes, the Renters Rights Act, increasingly onerous licensing conditions and outright hostility from many council employees, with the threat of costly ‘energy efficiency’ upgrades to come. And now the money we earn from all this effort is subject to an extra tax. That’s why anyone sane is getting out of private landlording as fast as they can. That’s why rents have soared and will go on soaring. When a rental market has been as badly screwed over by local and national government interference for almost a decade, this is the inevitable result. And I am Satan?