What is the tenant fund really for?

by | 28 Sep 2021

The Scottish Government has announced a fund to protect tenants from eviction - but is that really what it is for?

The Scottish Government has announced a fund of £10 million to support people who are at risk of eviction because of rent arrears. But what is the fund really for and who actually benefits?

To understand the picture it’s worth thinking in terms of political philosophies – Richard Murphy has done a useful explainer here. A right wing, pro-market philosophy sees the problem of tenant evictions as a ‘market signal’ saying either the tenant is in the wrong house or the landlord is charging the wrong rent. An eviction forces one or other to alter their behaviour.

A left wing approach sees the problem as a the outcome of an unfair market in which the power of the two parties – the tenant and the landlord – are unequal and so the public must intervene to prevent the exploitation of the tenant for the public good.

A centrist approach is closer to the right-wing approach. This sees the market as ‘fundamentally correct’ but occasionally causing painful outcomes which must be mitigated in order to protect the market system in the long run – the tenant’s financial issues as temporary, the landlord as essential.

The £10 million tenant eviction fund is very firmly centrist in its approach. The market must be protected until the ‘system’ can get ‘back on track’. There are alternative potential ways to protect the tenant but they would be at the expense of the ‘market’ (like a stronger eviction moratorium).

That’s why, while this is labelled as a ‘tenant protection measure’, in reality all of the money ends up being transferred almost directly from the taxpayer to the landlord. This makes it a support package for what is known as ‘rentier’ behaviour where the ownership of an asset levers additional income (in this case from the public purse).

So in effect this is really a fund which protects the landlord from financial loss resulting from people being unable to afford high rents. It would be the responsibility of the state to provide emergency housing for the evicted former tenant anyway so this doesn’t really reduce the investment the public sector would make, but it redirects it from investment into social housing to a private landlord.

So long as the only real public policy around housing is to inflate property prices and prevent devaluation in the housing market at all costs, housing will continue to extract every-increasing proportions of the income of citizens

From a left-wing perspective this is a failure to regulate rents and a failure to use policy and investment to ensure a balanced housing market (including high-quality social rentable housing) so that people have a fair chance of affording somewhere to live that offers stability.

From a right-wing perspective this is a failure to allow the market to ‘correct’ and to reduce rents if the economic conditions of the population are such that previous rent levels become unaffordable.

A very large proportion of the current crisis in housing (a crisis impacting particularly on the young) is a result of this centrist perspective. In favourable, stable economic conditions prices and profits in the market are allowed to rise without limit. In less favourable and more changeable economic conditions the market is protected and ‘artificially inflated’ until conditions settle again.

It produces a ‘never too big to fail, always increasing in profitability’ problem where there is next to no risk in purchasing assets to extract an ever-increasingly level of value from it because public policy will continuously and artificially inflate the value of the asset, no matter what.

And this impacts on you no matter what your housing situation – it increases the price of all housing and as it does so it increases the incentive to take more and more housing stock out of the owner-occupier market, reducing choice, affordability and availability.

It is part of an extensive package of measures which collectively have this effect – permitting land banking, maintaining lower house building standards than desirable, bailing out banks when mortgage markets fail, ‘help to buy’ schemes which directly inflate house prices that would otherwise have been unaffordable, failing to capture ‘planning gain’, the invention of the term ‘affordable housing’ to replace the concept of public rental housing and much more.

A proper solution would include public investment in diverse housing stock (more quality public rental housing), rent controls to prevent landlord profiteering, stronger enforcement of landlord property maintenance, steps to control the loss of housing stock to short term lets (AirBnB) and a redirection of housing benefit (which perversely also largely goes to landlords and so also helps inflate prices beyond that which the market could sustain alone).

None of this happens accidentally. The centrist ideology is explicitly about protecting powerful market players and is the result of the all-pervasive lobbying culture. In Scotland the private housing lobby is one of the most powerful of all the lobby groups.

Homes for Scotland is not a charity campaigning for better housing but a lobbying group representing the UK’s most powerful bulk housing developers (one of the biggest industry sectors in the country). The Scottish Association of Landlords successfully lobbied the Scottish Government for measures during Covid that were more pro-landlord and less pro-tenant than those of Boris Johnstone’s government.

And AirBnB (one of the world’s most politically influential corporations) has been successfully lobbying against the moves from Holyrood to regulate short-term lets, though it often uses more sympathetic surrogates in the media.

So long as the only real public policy around housing is to inflate property prices and prevent devaluation in the housing market at all costs, housing will continue to extract every-increasing proportions of the income of citizens and move further and further out of the reach of young people.

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