Micro-life for students

A house of multiple occupation, or HMO, is a house where several people live together as either tenants or lodgers.  Where the landlord also resides in the house, then the paying residents are termed lodgers; otherwise they are tenants.  The paying residents each have a room to themselves, and share communal rooms such as the kitchen, bathroom, and maybe a lounge.

Tenants have more legal rights than lodgers, who have almost no legal rights worth speaking of.

Two recent news items concern such dwellings.  The first is about a young student who was lodging in London, and caught her landlord entering her room without permission.  The comments are divided as to whether or not the landlord was acting legally.

The other is about the impact which HMOs tend to have upon the surrounding area and its other residents.  This quote from a man in Leeds is worth noting:

HMOs started to crop up in the Nineties when universities expanded as the Labour government pumped money in. No one gave any thought to where these students would live.

So too is this quote from a lawyer:

We just don’t have enough houses. HMOs are a response to the fact that lots and lots of people have nowhere to live.

I have lived as a lodger myself, and it would be easy for me to argue for strict laws protecting the welfare of lodgers, but then I reflect that it is not always easy to have a stranger living in your home.  Surely the best solution would be for the government to make it easier for people to have somewhere to live without having to lodge in someone else’s home.

The last Labour government made clear its ambition to have fifty percent of all school leavers go to university, but failed to provide an adequate explanation as to why this ambition was desirable.  One of its many consequences was to inflate the demand for housing near to universities- and yet this Labour government won three consecutive general elections.

Maybe it would make sense for people to stop voting for politicians who have illogical obsessions, and instead vote for politicians who have a sensible housing policy.

Related previous posts include:
Micro-life
Do we need universities? 

Stamp duty reform is nothing to celebrate

The news at the moment is dominated by the government's reform of stamp duty on house purchases.  At least one national newspaper is reporting this as a good thing for people who want to buy a house, which just shows how idiotic its editorial staff are.

Quite simply, the reform does not make life better for people looking to buy a house, although it probably makes life better for people looking to sell a house.

Economics is the study of supply and demand, and we live in a country where the demand for housing greatly outstrips supply.  One consequence of this is that there are thousands of people living rough on the streets, with maybe as many as a million people living in garden sheds and outhouses.  Another consequence is that many people who want to buy a house struggle to find enough money for the asking price.

Broadly speaking, there are only two ways in which to address this housing crisis.  Either we reduce demand or increase supply.  Reducing demand could for example take the form of removing foreign nationals from the country, but this is unlikely to happen until the British people stop voting for Labour and Conservative politicians and start voting instead for political parties which support large scale repatriation - in other words, never.

Another method for reducing demand would be to discourage people from owning (or renting) more than one home, but we need to be realistic.  How many members of parliament are content with just one home?  Our political masters cannot be trusted to encourage restraint if they themselves cannot first bring themselves to practise it.

Our zero option for resolving the housing crisis is therefore to increase supply, and yet even that is something of a forlorn hope.  Quite simply we cannot build new houses in this country fast enough to keep pace with demand, and that is why many people struggle to find the money to buy their first home.

And so to stamp duty.  Suppose you buy a house costing £200,000, and you pay stamp duty of £4000.  The bill for the £200,000 property is therefore £204,000 - and that is before we add in the cost of legal fees.

Suppose the government abolishes stamp duty altogether, which has not actually happened.  You are now able to spend £204,000 instead of just £200,000 on buying a property.  You might think that this gives you more spending power, but in reality it gives everyone in the housing market more spending power.

Reducing stamp duty provides you with an advantage in the housing market only if you alone have your stamp duty reduced.  When everyone else in the housing market enjoys the same reduction, then it merely allows everyone to spend more money on the same property.  People who sell houses are the winners; buyers are not.

Stamp duty is a very efficient form of taxation.  Non-collection is pretty well non-existent.  Therefore it should perhaps be the last form of taxation that any sensible government looks to reduce.

The bedroom tax and the nasty LibDems

The Affordable Homes Bill, sponsored by a Liberal Democrat MP, has passed a critical hurdle in The House of Commons.  If it becomes law in its unamended form, then it will implement changes to the under-occupation rules, also known as the bedroom tax.

The bedroom tax is a reduction in housing benefit entitlement for social housing tenants who are deemed to have at least one spare bedroom.

According to the BBC, the bill would mean people who could not be found a smaller home would be exempt, as well as disabled people who need a spare bedroom or who have adapted homes.

Victims of the bedroom tax, who are all of working age, can respond in various ways.

They can make up the shortfall in housing benefits from other income - or at least some of them can.

They can find a job (if they are unemployed) or secure extra hours (if they work short hours).  That is to say that they can find a job or secure extra hours if they are lucky, which not everyone is.  Job opportunities remain scarce in this once-proud country.

They can move to a home with fewer bedrooms, but only if a home with fewer bedrooms is available locally, and also there is no help available with the cost of moving.  Also, many people might not want to move to a smaller home.

Imagine your teenage son leaves home to start university.  Your house is no longer his primary place of residence, and so his bedroom is now deemed to be a spare room, and your housing benefit is reduced accordingly.  If you move to a property with one less bedroom, however, then your son might not be able to stay with you outside of term time as you will no longer have a bedroom for him.

Sadly a lot of bedroom tax victims have to go hungry, or rely on food banks, and yet the government still does not take the matter seriously.

The government is happy to save money by further impoverishing people on benefits, but sees no reason to save money by not going to war.  It seems that the United Kingdom can afford military action against the Islamic State, but cannot afford to reverse the bedroom tax, and this is a state of affairs which the Liberal Democrats do not oppose.

Related previous posts include:
Another victim of the bedroom tax
Bedroom tax fiasco

The myth of the wealth creators

Followers of my blog will probably know that I have a low opinion of company directors who earn obscene salaries.  I have recently come across the video of a TED lecture by American businessman Nick Hanauer.  The lecture dates from more than two years ago, and I wish I had come upon it sooner.

I am not sure to what extent Hanauer has changed my mind - if at all - but I do know that he has helped me to be a lot clearer about my point of view, which remains largely unchanged.

Anyway, please take a moment to watch this video of an interview with Hanauer.  I will add my comments below.

At the most basic level, Hanauer is right.  Suppose you open a shop, and lots of people buy from you without ever quibbling over the price.  The outcome is that you become very rich, and you might find people referring to you as a wealth creator.

Now suppose instead that no one buys from your shop, and you end up bankrupt.  If success makes you a wealth creator, then does failure make you a wealth destroyer?

If there are such things as wealth creators, then surely they are inventors.  The mere act of buying and selling does not create wealth, but it allows some people to become wealthy.  True wealth exists in the invention and distribution of new products.  Some readers might be thinking that rich people help with the process of distribution, but it might be closer to the truth to say that they hinder it.

A digression is called for.  Suppose you are a rich person, and you pay some workmen to dig great big holes in the ground and then fill them in again.  On the one hand you have benefited a group of workmen by giving them employment, but on the other hand there is no lasting benefit to what you have done.  At some point you will run out of money, and there will be nothing to show for it.

This may seem absurd, but take a moment to look around your home.  You may possess such things as books you never read, DVDs you never watch, and board games you never play.  The money you spent on those things might as well have been spent on digging a hole in the ground and filling it in again.

Now suppose you are rich.  You might well be tempted to spend your money on cars you rarely or never drive, and houses you rarely or never live in.  In other words, you might be tempted to spend your money in a way which has little or no lasting value.

It is not inevitable that rich people will spend their money frivolously.  For example, Michael Owen bought an entire street of houses in the Welsh town of Ewloe for his relatives to live in.  Nevertheless there does appear to be a lot of reason to be critical of the way in rich people spend their money.

Suppose a rich person gives ten million pounds to charity.  The same benefit could be achieved by one million working class people giving ten pounds each.  Suppose a rich person hires Gary Barlow to perform a private concert.  Gary Barlow could earn the same money or maybe more by playing an arena concert to thousands of ordinary people.  Suppose a rich person buys two large houses for five million pounds each.  The same money could buy houses for maybe as many as one hundred middle Englanders.

Even if our rich person buys two houses that cost less than five million pounds each, then the fact remains that he owns one more house than he needs.  Next time your local council allows a housing developer to concrete over another piece of green land in your home town, reflect that there would be less need for new housing if everyone owned just one house.

In short, the idea of rich people being wealth creators is massively flawed.  Not only are they not really wealth creators at all, but depending on how they spend their money they could actually be stifling the prosperity of society as a whole.

Related previous posts include:
The banksters are not Jonathan and Charlotte
Fat cats and commies

Housing crisis: why houses alone are not the answer

You might expect the same old story, but this time there is a twist in the plot.  A big company is seeking to build a new housing estate on the edge of an English village, and are opposed by many local people.  So far so normal.  What is remarkable is that on this occasion the objections being raised do actually go beyond the usual parrot cries of the NIMBY brigade.

The unexpected objection is that the village already has empty houses which are on the market but which are not selling.  Surely that makes it game, set, and match to the objectors.

On the one hand, it is curious that the big company expects to build houses and presumably make a return on its invesment in a village where houses are not selling.  On the other hand the fact remains that Britain needs houses.

There are huge numbers of people in this country who are either living rough, living in garden sheds, or living in overcrowded accommodation.  The solution is to build more houses, and not just a few more.  We need a lot more.

Actually there are other solutions, but only in theory.  We could make the best use of our existing housing stock by banning people from owning more than one house, and by putting an immediate and permanent stop to immigration - but these things will not happen, because the British people will not vote for them.

And so we are left with the zero option of building more houses, and we must also accept that green belt land is not exempt from the bulldozer - but this alone would not solve the problem.

Consider a young person - I will call him Sam.  Sam is nineteen years old, and lives with his parents and four younger siblings in a three-bedroom house.  It would be helpful to him and his family if he could find a place of his own, but Sam works thirty hours each week for ten pence more than the minimum wage.  We cannot expect him to be able to take out a mortgage and buy a place of his own.

Some readers might be thinking that simple economic reasoning comes into play here.  If a house is unsold, then the vendor will at some point lower the price - but how low would the price have to go to interest Sam in seeking a mortgage?

Let us be fantastical and assume that the new houses on the edge of the village will be put on the market for just one pound each.  Sam can afford to pay a pound, but on top of that he will have his conveyancing fees.  Once he is in the property he will need carpets, curtains, curtain rails, furniture, and white goods.  He may need to call out a plumber or other tradesman from time to time.  Does he really want to burden himself with all of that expenditure?

Let us instead assume that some of the new houses on the edge of the village will be put on the private rental market.  Sam might be tempted to move into such a house.  On the one hand he would not need to worry about conveyancing fees or the cost of maintaining the property, but on the other hand he would still need to buy furniture and white goods - unless the property is let as furnished of course - and he might also have to buy carpets and curtains and curtain rails.  Add to this the fact that he almost certainly has little or no security of tenure, and he might well choose to remain living in his overcrowded parental home.

By contrast, let us assume that some of the new houses on the edge of the village will be made available in the social housing sector.  Sam might be more likely to move into one of the houses if he is offered a secure tenancy, but how many of these tenancies would realistically be on offer?

In short, more housing is not on its own the solution to the housing crisis.  It helps if at least some of that new housing is made available in the social housing sector, and it helps also if as many people as possible are in work and have a disposable income.

Related previous posts include:
Nasty NIMBYs
What exactly is affordable housing?
A large family versus private landlords
Stop being nasty to those less fortunate

The hate speech of a private landlord

Just as one national newspaper reports that a woman left a rented house in a mess, so another newspaper reports that she did not.

If you do not have time to read these two press reports, the basic story is that a single mother on benefits called Christine Lucas used to live with her two (or three - it isn't clear) children in a house owned by private landlord Sean Feeney.

She vacated the property when she was offered a council house, where she now lives with her children and her mother.  Mr Feeney alleges that she left the house she rented from him in a terrible state, while Miss Lucas alleges that she left the house spotless.  Any damage was caused by vandals after she left.

I do not know whether or not Miss Lucas is telling the truth, but I wonder if Mr Feeney does either.  Can he prove that people other than Miss Lucas did not trash the property?

Mr Feeney has been quoted as saying that they haven’t worked hard for anything in the house so they have no respect for it.  How is this not hate speech?

If Mr Feeney were to talk about black people the way he talks about benefit claimants, then he would probably be arrested.

Does he honestly think it is polite to imply that people who have to depend upon welfare payments are by nature morally deficient?

Also, Miss Lucas argues that Mr Feeney did not maintain the property.  Is that true?

It appears that Miss Lucas fell behind with the rent, and that she borrowed money to pay the arrears, but it was stolen.  Maybe the lender could have given her the money in the form of a cheque made payable to her landlord.  Surely that would have been safer.

Mr Feeney may well have a point when he complains about the government paying housing benefit to tenants rather than landlords, but that state of affairs is the fault of the government, not the tenants.  In fact it is the fault of the millions of people in this country who insist on voting in elections for worthless politicians.

Related previous posts include:
What exactly is hate speech?
This hate speech shames Britain
Stop being nasty to those less fortunate
A large family versus private landlords

Ed Miliband and the rental market

It has recently been reported that Ed Miliband has been talking about the need for rent controls, and in particular has been arguing that private tenancies should last at least three years.

Rent controls have a poor reputation.  They have been tried out in this country and elsewhere, and often with unfortunate results.  They can for example diminish the supply of new housing, as private landlords are unwilling to invest in building projects when the returns they can enjoy on their investments are limited.

Nevertheless the situation as it stands is far from perfect.  It is normally very difficult to rent a house or apartment from a private landlord.  They usually demand an up-front fee while they decide whether or not to let you the property.  This is normally non-refundable, and can easily exceed a week's salary.  If you are turned down for one property, you might not have enough money left to pay another up-front fee.

It is common for private landlords to let properties only to people who are employed (which rules out the self-employed), who are in permanent employment (which rules out those on fixed-term contracts), and who earn at least thirty time the monthly rent.  In addition, these rules normally apply to ALL adults in a given household (which rules out housewives and grown-up children still in the education system).

In addition to this, many private landlords refuse to let properties to people who smoke, and many private landlords refuse to let properties to people who own pets.

Even if you are lucky enough to secure a private tenancy, you might have to move after as short a time as six months.  In fact you might have to move house every six months.  It is therefore advisable to have only minimal possessions, which is awkward for a family with children.

It is unsurprising that large numbers of people in this country live in social housing.  Of course there might be less demand for social housing if it were easier to own your own home, but that is impossible for many people.  How can you afford to buy a house if you are either unemployed or working for the minimum wage?

There would also presumably be less demand for social housing if it were easier to secure a private tenancy, and if people with private tenancies tended to enjoy greater security.

In other words, maybe there is a case to be made for at least some state intervention in the private lettings market.

Related previous posts include:
Two hundred evictions
A large family versus private landlords
The story of King Ed
Is it legal to hate private landlords?

A large family versus private landlords

A couple on benefits are being pursued by three private landlords for unpaid rent.

Amanda and Derek Finnigan, both 35, have seven children.  In recent years they have lived in a four-bedroom house (seven children share three bedrooms), a seven-bedroom house (seven children share six bedrooms), and a five-bedroom bungalow (seven children share four bedrooms).

I will not pretend to know the truth of the matter, but the Finnigans claim that at least one of their former landlords failed to carry out maintenance.  This I fear is a common failing of private landlords.

The fourth episode of Benefits Street shows the interior of the house formerly occupied by the man known as Fungi.  (He has since left the street.)  The house was in a dreadful state of disrepair.

Fungi was in receipt of housing benefit, but his landlord was the true beneficiary of that money.  In other words, the landlord is a huge benefit scrounger, who laps up taxpayer’s money while forcing his tenant to live in misery.

It is possible that Fungi’s landlord was Paul Nischal, who according to The Daily Mail owns houses on James Turner Street.  They quote one of his tenants (who works in a factory) as saying that his house is so damp that a cupboard fell off the kitchen wall, and so cold that his children have to go to bed fully dressed.

The Finnigans have predictably attracted a lot of bile from people who object to families raising children on benefits.  A common argument is that people should not have children unless they can afford to support them, but it is fair to say that according to that logic almost no one outside of the royal family should ever have children.  After all, a family who earn a large salary today might be living on benefits tomorrow.   Prosperity is seldom carved in stone.

Britain needs children.  Any society does.  Children today provide the work force of tomorrow.  Do we really want people not to have children?  Generally speaking, making nasty remarks about families on benefits is akin to stupidity.

An interesting feature of the Finnigans’ case is that it appears that their housing benefit was sometimes paid to them rather than directly to their landlord.  The government is currently in the process of bringing in a new benefits system known as Universal Credit.  So far as I can make out, one aspect of Universal Credit is that housing benefits will normally, perhaps invariably, be paid to the benefit claimant rather than to the landlord.

Maybe the government should amend the rules to ensure that housing benefit can still be paid directly to the landlord - but only if the landlord actually maintains the property.

Related previous posts include: 

Two hundred evictions

Is it legal to hate private landlords?

A rent arrears crisis in London

Fat cats in Cambridgeshire

The case of Paul Kingsman has prompted me to write once more about fat cats.  Before I look into the details of his recent criminal prosecution, let me explain where I am coming from.  This country has a minimum wage law.  If someone is paid significantly more than the minimum wage, then I feel entitled to ask why.

If I interpret the facts of the Kingsman case correctly, then the story began with a young woman called Sophie Kingsman living in social housing with a young child.  One day she reported her neighbour, Charlene Vernall, to the RSPCA for mistreating her pet dog.  Miss Vernall retaliated by subjecting Miss Kingsman to a campaign of intimidation which lasted for five months.  Miss Kingsman contacted both the police and the housing association, but neither of them took action against Miss Vernall.  Eventually the stress became to severe that Miss Kingsman's father drove a Cherokee Jeep into the wall of Miss Vernall's home.  He has recently been handed down a suspended prison sentence.  He has also been ordered to reimburse the housing associaton for the cost of rebuilding the damaged house.

The persecution of Miss Kingsman could have been resolved by the intervention of either the police or the housing association, and yet neither was prepared to take appropriate action.  Some might argue that the police and the housing association both have limited resources, but I suspect that the chief constable of Cambridgeshire Police earns rather more than the minimum wage, and I suspect also that the chief executive of the housing association might also earn rather more than the minimum wage.

If I am correct in assuming that the chief constable and the chief executive earn significantly more than the minimum wage, then what exactly do their salaries achieve?  It should be obvious to anyone that money spent on salaries above the minimum wage is money that cannot be spent on anything else.  If the chief constable of Cambridgeshire earned less money, then maybe the police would have had sufficient resources to allow them to confront Miss Vernall about her behaviour.

I strongly suspect that Mr Kingsman is a victim of fat cat Britain.  Maybe one day he will have the option of voting in a general election for a political party which has realistic policies for tackling the fat cat mentality.  But would he vote for such a party?  Would you?

Related previous posts include:
Bedroom tax fiasco
We get monkeys anyway
Fat cats and commies
The cats stay fat

Bedroom tax fiasco

Much as I despise the so-called bedroom tax, I will spare you the reasons why on this occasion, and instead comment on this news item about a loophole.  If I read the situation correctly, the government, or someone, has identified a loophole in the underoccupation rules.  Apparently this loophole was accidental, not deliberate.  The government is now alerting local authorities to the existence of that loophole.

And so once again I find myself writing about fat cats.  Were the rules written by someone who earned only the minimum wage?  (I believe that legislation is normally written by civil servants, and I would be surprised if government legislation is ever written by anyone else.)  Were the rules enforced by local authority personnel who earned only the minimum wage?

If you earn more than the minimum wage, then presumably your salary reflects the fact that you are worth more than the minimum wage.  If you are employed to write legislation, and you unintentionally create a loophole, then presumably you are either paid a very low salary, or else you are overpaid.  Likewise, if you are employed to act in accordance with legislation but you fail to implement that legislation correctly in every case, then presumably you are either paid a very low salary, or else you are overpaid.

This is all subjective of course.  What is a low salary?  Does anyone think they are paid well?  Consider the testimony of privileged journalist Petronella Wyatt.  If you don't have time to read all of it, she quotes a surgeon as saying he is poor.

I don't doubt that it can be rather hard to scrape by on a huge salary if you have trouble making good financial decisions.  It appears that some of the people she mentions have children in private schools, some of them borrowed money when they could and should have been saving, and some of them are obsessed with expensive designer clothes.  She mentions a work ethic, but I wonder how many of her posh friends would get out of bed for the minimum wage.

I strongly suspect that the bedroom tax loophole is yet another symptom of a society which rewards some people with salaries which are way out of proportion to their abilities.

Related posts include:
The cats stay fat
Energy sector fat cats
The betrayal of the low paid
To build on debt is to build on sand

Two hundred evictions

I had been planning today to write about either Iraq or Nigel Farage (again), but I have chosen instead to comment on a news report concerning a private landlord called Fergus Wilson who is evicting (or has evicted) two hundred tenants.

If I read the situation correctly, the tenants in question are all in receipt of housing benefit.  What is not made clear is whether or not they are all in arrears.  Is the landlord evicting only those tenants who are in arrears?  Or is he evicting all of his tenants who are receiving housing benefit?  I'm not sure.

It is also not clear whether or not this landlord has made any enquiries as to why exactly many of his tenants in receipt of housing benefit are in arrears.  Might there be a case for clemency here?

Mr Wilson is quoted as saying that private landlords run their properties as a business and have to make decisions based on economic factors.  It is also stated that Mr Wilson and his wife had been "on the brink of financial ruin in 2008 after banks stopped lending".  Presumably they believe that banks should operate as a business, and make decisions based on economic factors.  In other words, presumably they believe that banks should show no mercy towards private landlords who have run up too much debt.

Previous related posts include:
Is it legal to hate private landlords?
A rent arrears crisis in London
Rough sleeping: when will it be you?
To build on debt is to build on sand
Another victim of the bedroom tax
Stop being nasty to those less fortunate