Why must the rent go up?
House-property is, proverbially, the best investment. The proverb in fact dates back to before the first world war, when over 90 per cent of the households in Britain were rented from private landlords. The legislation for rents at present being framed by the government has already given it some fresh vigour. A house bought as investment—that is, for income from unfurnished letting—may now cost half as much again as a year ago, in a rising market created by anticipation of the new Act.
Today about 20 per cent of houses and 30 per cent of households are privately rented (the figures given by Robert Millar in The New Classes, 1966, and D. V. Donnison in The Government of Housing, 1967, are 21 per cent and 28 per cent respectively). The difference is accounted for almost entirely by furnished letting. Nearly 50 per cent of houses are owner-occupied, and the remainder—approximately a third of the total—are council-owned dwellings. The only other mode of tenure, by housing associations, is statistically insignificant : less than 1 per cent.
The proportions vary, of course, from place to place. The 1965 Report of the Committee on Housing in Greater London informs us that while Kensington has only 5 per cent council tenants in its population, Dagenham has 67 per cent. Nearly half of Newcastle lives in council houses. Under Labour governments since 1945 local-authority building has been favoured over building for sale, while the Tory emphasis has been the opposite. In rural areas council building is small-scale, concerned chiefly with housing the elderly whose working lives and therefore their tenure of tied farm cottages are over. Over Britain as a whole, however, more than half the population are tenants, and have to pay the rent.
All private tenancies except those of furnished accommodation are governed by the Rent Acts of 1957 and 1965, which lay down control of rents and security of tenure. “Furnished” lettings have only minimal sketchy controls. The tenant—usually of a flat or rooms—may be evicted at two months’ notice. He may appeal to a local Tribunal over his rent, and be given six months’ security while he does so; but legal intervention ends there. This is the only form of letting in which a market exists. There are special agencies for directing tenants to furnished flats, the normal fee being one week’s rent.
The 1957 Act solidified the processes begun by the Rent and Mortgage Interest Act of 1915 (which marked, in fact, the beginning of the end of private building for letting). It fixed rents at the figures being paid by tenants in 1956, but with a “repairs increase”. The aim was to arrest the deterioration of older houses with rents kept low by the previous legislation. Landlords had protested since the first world war that rent restriction made it impossible to maintain houses decently from income. From the governmental point of view, slums were being created by the failure of proper maintenance; to allow two-fifths extra on rents was at least a palliative.
The next few years opened disparities, however. Under the 1957 Act, rent control ceased when a house became vacant: the owner could charge what he liked to the next tenant. This itself was an inducement to “Rachmanism”, the harrassing of statutory tenants to leave so as to make way for exorbitant rents. More generally, as wages and prices rose in the nineteen-sixties a wide gap appeared between the “controlled” and the “decontrolled” rent. To give examples, a London suburban house built before 1914, in reasonably good condition but lacking modern amenities, might have been let before 1956 at 19s.6d a week; and the increase permitted by the 1957 Act took this to 27s.6d. Should the tenant have died or moved away in, say, 1963 the house immediately became available for letting at £5 or more.
The 1965 Act was to some extent a consequence of the newspaper publicity over Peter Rachman’s activities. It extended controlled tenants’ security of tenure to the decontrolled, who were now to be known as “regulated”. Local Rent Officers were set up, to consider applications from tenants or landlords of these properties to have “fair rents” settled-upon and registered. These are for three-year terms, and supply-and-demand is excluded as a factor in determining rent. To return to the example of the last paragraph, the “fair rent” of the same house under the 1965 Act would be perhaps £3.15s. a week.
Theoretically, the 1965 Rent Act was a tenants’ charter. In practice, more landlords than tenants invoked it. “Decontrolling” after 1957 had been so new a phenomenon that many landlords has not fully grasped the opportunity offered, and had been cautious about asking rents hugely disparate from “controlled” figures. Controlled rents became a mounting grievance amongst landlords, however: houses paying not much more than £1 a week, when one might rent a garage for not much less !
The governmental problem has been to try to maintain the stock of habitable houses. The improvement grants system has had hardly any effect on landlord-and-tenant housing. A landlord may increase rent by, annually, one-eighth of his own expenditure on recognised improvements. If he received a grant of £400 (the maximum standard grant under the pre-1969 system) and spent £400 himself, the extra return would be less than £1 a week. The revision of the system under the 1969 Act offered the special inducement that a “controlled” house brought thoroughly up to standard would thereby pass into the “regulated” class. So far, it has remained unattractive to most landlords.
The economics are simple. A house standing empty represents a realisable value of, say, £4,500. The installation of a tenant at £4 a week at once reduces the capital value to about £1,500. The return on the capital is, therefore, roughly 7½ per cent. If repairs and insurance are deducted, the figure comes down to about 6 per cent. A fairly substantial outlay on improvements raises the capital value and the income; but within the present rent structure the increases are not enough to make the expenditure worth the property-investor’s while.
Moreover, tenants themselves are frequently opposed to improvements which would raise their rent: a sad demonstration of the chronic poverty-problem of the working class. Before 1969, a landlord could not modernise a house without the tenants agreement. Now, if he is determined about it, he can go to the County Court and apply for an order that the tenant let work be done and pay the consequent increase. In every city there are large areas of near-slum dwellings which, much as the reformers inveigh against them, are sought after and tolerated by the occupants because they are the only cheap housing available.
From the landlords’ point of view, cheap housing is either a safe but poor investment, or one made adequate from neglect permitted by the tenants’ poverty. Since the Rent Acts, the most profitable form of letting has been “furnished”. Most often it means the division of houses into rooms and flatlets, producing multiple rents from single properties; it means tenants can be got rid of, and in any case tend to be short-term; and, besides higher rents, there are means of additional profit from gas and electric meters that arc permitted by law. The obvious effect of this situation has been to reduce further the stock of unfurnished housing available for letting.
The new legislation is therefore a Bill to increase rents—in this case, the controlled-property rents which have been static since 1957. They are to be put on the same basis as regulated rents, which means something over a million households will have proportionately far greater additions to pay each week than were permitted in 1957. As an estimate from the kinds of figures now laid down as “fair rents” for regulated tenancies, the increase is likely to be 150 per cent above the present “controlled” amounts—as against the 1957 increment of 40 per cent.
Conscious of the economic consequences of so heavy an increase in the cost of living, the government proposes that it be staggered over a two-year period. It is proposed, too, that the rent-subsidy scheme become general so that poorer-paid workers can have some or all of the increase made up. This, posing as a paternalistic scheme to help the needy, is a strategy to try to keep wages in check. The principle, which was first applied socially in Family Allowances, is to see that extra money to meet extra expenses is paid only in the cases where the expenses exist. Why, the reasoning runs, should an army of workers claim more pay when the ones to whose need it refers can be selected?
One interesting aspect of the proposed Bill is that it intends taking local-authority houses into the rent structure. Until now, councils have been outside the Rent Acts. They have been able to levy increases according to the needs of their housing accounts, to impose their own conditions of tenancy, to serve notice on tenants without showing reason. Their incorporation in a general system with private landlords, to whom these privileges have been an irritation, may well mean their becoming the pace- and precedent-setters in applications for rent increases in the future.
Why do half the people in this country have to pay rent for their homes? It is an ignominy that is taken for granted: a weekly fee for living in someone else’s house, with the assurance of being able to stay a matter of the temper of parliamentary Acts. The answer to the question is that under capitalism you get only what you can buy, and half the population can buy only the use of a house week by week. Not that the alternative, owner-occupation, gives exemption from the problem. For most people it means crippling mortgage repayments for the greater part of their working lives, and the same shadow always there: if you can’t pay, you’re out.
The proposed legislation is another in the endless series of attempts to solve particular problems in the complex of the housing problem. It seeks to extend the lives of older houses by making investment in them more profitable, and so forestall the need for expensive clearance schemes and the addition to housing lists of still more people in sub-standard accommodation. The fact is that the majority of the working class have never been satisfactorily housed since capitalism began. Even today, many are not housed at all — living in hostels, on muddy caravan sites, with relatives — and, in appalling cases which come to light, in places like the back seats of cars.
In 1872 Engels wrote, in The Housing Question: “But one thing is certain: there are already in existence sufficient buildings for dwellings in the big towns to remedy immediately any real ‘housing shortage’, given rational utilization of them.” This is at least equally true today. Two or three years ago a Housing Minister was slated on all sides for remarking that the number of empty houses in Britain was about the same as the number of housing applicants. Of course it was fatuous—the implication that the two could tidily be brought together, in society as it is. The more important implication, however, is that capitalism’s sovereign remedy of continually building more houses is no remedy at all.
Given houses built to the cheapest standard, whose maintenance is a matter of their profitability as investments, there is no end to the housing problem. As in Engels’ day, the clearance and replacement of run-down houses is their being “. . . not abolished; they are merely shifted elsewhere! The same economic necessity which produced them in the first place, produces them in the next place also.” (Today, for instance, many councils use their “old”—i.e. pre-1939—housing estates for families deemed unsuitable for better new accommodation.) Thus, legislation like that of 1957 and its present continuation is inescapable under capitalism, but it cannot answer the problem inherent in the way society is organised.
Bricks and mortar are of vital importance to human beings. Housing is involved in innumerable social and personal questions: health, sex, the facilities for both privacy and sociability, education, recreation. Nor is bad or good housing a matter simply of the building by itself. A dwelling which is suitable at one phase of a person’s or a family’s life will be inconvenient at another; a well-to-do person can buy mobility as necessary or desired, but most people are stuck for life. Underlying it all are the coercions of the society which produces only for profit. One may compare the technical possibilities of our civilisation with the way people have to live, and see that in this regard as in all others Socialism offers what capitalism cannot.