Wednesday, March 20, 2024

We know how to make rent affordable: crush landlords

In question time today, Housing Minister Chris Bishop, in response to questions about the Kāinga Ora waitlist, said that the government's policy goal was to “get rent affordability better under control”. He seemed to think this was a matter of everyone but Kāinga ora building houses, plus of course the (bullshit) trickle-down effect from giving huge tax cuts to landlords. But an article in the Guardian last night on the UK's housing crisis shows that the policy solutions to high rents are known and tested:

In the 1970s, when [Tory MP Edward] Leigh’s contemporaries were buying their first homes, they were the direct beneficiaries of an imploding private rental market. Rent controls, secure tenancies and high interest rates had conspired to decimate the sector: it shrank from nearly 60% of dwellings in England and Wales in 1939 to just 9% in 1988, towards the end of Margaret Thatcher’s premiership. This was welcomed by Conservative governments and Labour councils alike: the former rejoiced that rack-renting landlords were having to sell up to new owner-occupiers, while the latter enthusiastically repurposed existing private lets into new social housing stock.
Of course, it was Margaret Thatcher who fucked this up, with policies designed to ensure that "the letting of private property will again become an economic proposition". That went against the past 50 years of political consensus, that it should not be an economic proposition, founded on solid evidence that it led to nasty, squalid, and over-priced housing as landlords sought to maximise their profits.

We need such a consensus here. Or at least, a left-wing coalition committed to the eradication of landlords. And we know how to do it: tax and regulate the shit out of them. Tax land and vacant property. Control rents, make tenancies secure, and require them to be decent. When landlords sell up, tax their capital gains, and use the money to fund an expansion of Kāinga Ora and council housing to outcompete the private sector. We shouldn't pursue the traditional solution of hanging landlords from lampposts, but we should absolutely do the economic equivalent to drive them out of business.

The Guardian article notes that one of the few things that Adam Smith and Karl Marx agreed on was that landlords are bad, a complete economic dead-weight. It goes on:

Even if we leave aside the appalling conditions and precarity that private renters face, anyone with an interest in lower taxes, lower wage bills and increasing the number of first-time buyers must equally be interested in smashing the private rented sector to bits. Homebuyers are now forced to compete with landlords, who chase sensational yields in our unregulated rental market, and £85.6bn a year (which comes, of course, from wages and taxes) is wasted on rent. A renewed collapse of landlordism would represent not just the tenants’ revenge for the housing crisis, but a much broader and more valuable moment of social progress.
Obviously, I disagree with the "reduce rent so we can pay people less" line; instead I'd argue that reducing rent would be a huge way to improve living standards, moderate the cost-of-living crisis, and lift people out of poverty. That is something the National Party claims to be interested in; it is certainly something the Labour Party should be (the Greens and Te Pāti Māori, representing groups who overwhelmingly pay rent, already are). The question is, why do the major parties continue to ignore the known solutions, in favour of handouts to landlords and tinkering around the edges? Is it because their MPs own too many houses themselves...?