The housing crisis is lining private landlords’ pockets

Housing benefit is acting as the ‘landlords’ bonus’, while provision of emergency temporary accommodation by private landlords is the ‘icing on the cake’.

A family made homeless and rehoused in small unsuitable temporary accommodation.

The continued rise in house prices is pushing more and more people into homelessness. It is estimated that by 2025 nearly a quarter of households will rent privately, and that many working families will be unable to afford market rents without help from benefits.

With the ratcheting up of rents not only are more people in need of assistance to pay their rent but an increasing number of those already on housing benefit are unable to make up the growing shortfall between the rent demanded and the benefit received.

Housing benefit: the landlords’ bonus

Housing benefit is given by local authorities to private landlords and housing associations to make up the rent of those in need of, but not able to access, social housing. In short, housing benefit represents the privatisation of social housing.

Rather than tax payers’ money going into social (formerly council) housing stock that provides accommodation for people in need, it goes into the pockets of private landlords who have little concern for the wellbeing of their tenants. Even ‘nice’ landlords, controlled as they are by the forces of the market, are extremely limited in their ability to keep down rents.

The situation for tenants is getting ever worse as the gap between rent rates and benefit caps continues to grow. The allowance has not kept pace with rental prices since 2010, and was frozen completely in 2016. This means that the local housing allowance (LHA) that determines benefit is calculated on the basis of local rents that are closer to those of 2011 – when rents were on average 16 percent lower than they are now.

The latest figures show that housing benefit is inadequate to cover rent in 95 percent of the country. In more than half of the country the gap is £50 a month, while in 23 percent it is more than £100 a month. Unsurprisingly, in the capital the gap can reach more than £900.

With rents rising by an average of 2.5 percent a year, this shortfall is getting continually worse, inevitably meaning that the number of people unable to make up the difference is also rising.

Homelessness on the rise

The result of this increasing gap is a perfectly predictable increase in the number of people becoming homeless. The charity Shelter has recently released analysis estimating that one in every 200 people across the country are homeless and either sleeping on the streets or in temporary accommodation.

In London the situation is worse with one in every 52 people homeless. In Brighton it is one in 67; in Birmingham it is one in 73; and in Manchester it is one in 135.

The failure of the present system to provide housing for all is further highlighted by the fact that about 33,000 homeless families have at least one member who is working – a rise of 73 percent since 2013.

Under capitalism not only is a decent home not a right, even having a job does not secure for workers the ability to keep a roof over their heads.

Temporary accommodation: another landlord reward

When an individual or family is made homeless as a result of inability to pay the rent, emergency temporary accommodation should be provided by the local authority. Once again, where this temporary accommodation would previously have been owned and managed by the council it is now primarily being provided by the private sector.

The latest government statistics show that there are nearly 80,000 households in temporary accommodation, including over 120,000 children, at a cost of £1.1bn a year. This is a huge subsidy to the private sector from the public purse.

Connect House in Mitcham, London stands as a stark example of the conditions of temporary housing. A run-down converted office block in the middle of an industrial estate, it has been converted into ‘flats’ to provide so-called ‘accommodation’ for 86 families.

Conditions in the block are dire, with many families crammed into one-room ‘units’ that have a bed in one corner, a kitchenette in the other, and a tiny bathroom. The council is paying an average of £35 a night for the use of these ‘units’, giving the landlord an estimated income of £1 million a year from the building.

Significant numbers of homeless people do not even get into this emergency temporary accommodation and end up in (usually extremely grotty) bed and breakfast accommodation instead. A conservative estimate puts almost 6,000 households, including more than 2,000 children, in B&Bs.

Once again, councils are paying through the nose to private owners for this ‘service’. In 2016-17 it was estimated that more than £286m was paid by councils for this type of emergency accommodation.

Figures from Shelter also suggest that rents are being artificially inflated as “demand grows” – ie, as more and more people are pushed into homelessness. This can be seen from the fact that there has been a 147 percent increase in spending by local authorities on B&Bs over the past five years, despite the fact that there has only been a 32 percent increase in the number of units being rented.

The discrepancy between the two can only be the increased rents being demanded; a tithe being transferred from public taxes directly into private landlords’ pockets.

The need for decent homes

The housing crisis in Britain is clear for all to see and is getting worse by the day. While we can blame unscrupulous landlords for hiking up rents and overcharging for B&Bs, and should certainly support the call for a rent cap at 20 percent of minimum wage to limit their ability to behave in this way, parasitic landlords are only a symptom of the bigger problem.

The real problem is the lack of decent, affordable social housing, which forces people into the arms of the profit-driven private market. Workers must demand that more council houses are built and that councils requisition all new-build and existing surplus housing stock to provide much needed homes.

Housing should be a right not a privilege. If capitalism cannot meet this simple demand then workers need to change the way society is ordered so that people’s needs can be met without the need to make a profit.