Landlords: The Front Line of Coronavirus Greed
by Andy Worthington
May 15, 2020
As the coronavirus continues to cripple the economy, it is clear to anyone paying attention — a situation not encouraged by either our political leaders or the mainstream media — that its disastrous effects are extremely unevenly distributed.
While some people are working from home on 100% pay, others — the essential workers of the NHS, pharmacists, those in the food industry, postal workers and other delivery people, public transport workers, and many others — have continued to work, often at severe risk to their health, because of the government’s inability to provide proper PPE or a coherent testing system. Other workers, meanwhile, have been furloughed on 80% of pay (up to £2,500 a month), while another huge group of former workers have been summarily laid off, and have been required to apply for Universal Credit, a humiliating process that also involves the requirement to try to survive on less than £100 a week.
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While those on Universal Credit receive support in paying their rent, and one of the government’s first moves, when the lockdown began, was to secure mortgage holidays for homeowners, no such support exists elsewhere in the economy for those who are renting. This is a disaster both for businesses and for those living in properties owned by landlords and not receiving housing benefit, as there has been no suggestion from the government, at any time over the last seven weeks, that landlords should share everyone else’s pain.
Sadly, this is typical of the way that governments behave, because, for the last 20-odd years, the ownership of property, whether of homes or commercial properties, has conferred on owners the right to participate in a feeding frenzy of greed, and, moreover, to see themselves as both superior and uniquely entitled to make as much money as they can get away with, with little or no thought given to those who are exploited as a result.
The result of this mentality, as the economy has crashed, and millions of people have lost their incomes or seen their incomes cut, and numerous businesses have been forced to shut their doors to the public, is that those struggling to pay for their landlords’ sense of self-entitlement are, in a domestic context, either paying most of their income in rent, or are likely to be made homeless, and, in a business context, are likely to go bust.
It’s possible that there will have to be reckoning when, after the worst of this crisis is over, the streets are full of homeless families, and shops, pubs, restaurants, theatres and offices are all shut and boarded up because no one can actually afford to run businesses any more, but it would be reassuring if there were efforts to prevent this total collapse by reining in the self-entitled greed of landowners, homeowners and landlords sooner rather than later.
Private renters’ woes
On the domestic front, to give you some idea of the extent to which those living in privately rented property are being affected by the combination of the coronavirus and their landlords’ undiminished greed, startling news has emerged via Ome, a company that is trying to rethink rental deposits, about the extent to which suffering workers are still being fleeced by their landlords. The company undertook research into how furloughed workers are coping, and discovered that, prior to the lockdown, the average tenant in the UK “was paying 47% of their monthly net income to cover the cost of renting”, an amount that has increased to 57%, an increase of 10%.
In London, meanwhile, the research revealed that, prior to the lockdown, “rent already accounted for 64% of the average monthly net income”, and that this has increased to 85%, an increase of 21%.
The research also indicated that the highest change in the percentage of income paid in rent was in Kensington and Chelsea, “where a furlough reduction in monthly income means renting now accounts for 152% of the average wage, a huge jump of 94%”.
Other shocking increases were noted in “Westminster (+76%), Camden (+52%), Richmond (+43%), Hammersmith and Fulham (+40%) and Wandsworth (+39%)”, with rent “now accounting for upward of 93% of income for those on furlough.”
In order to try to protect renters to some extent, the government sought to prevent evictions for three months when the lockdown started, but that much-trumpeted ban seems, in reality, to have been toothless, as Amelia Gentleman of the Guardian recently exposed shocking stories of hospitality workers in London who were almost immediately made homeless after the lockdown began, because they lost their jobs overnight and then couldn’t pay their rent, and were evicted and are now living on the streets.
Beyond these stories, many evictions have indeed been put on hold, but only for a limited time. As Joe Beswick of the New Economics Foundation pointed out in a Guardian article on May 12, “The suspension is scheduled to end in mid-June, and has not been extended.” Beswick pointed out that “Citizens Advice found last week that 2.6 million private renters have already missed, or expect to miss, a rent payment due to the crisis”, and added:
“For thousands of renters who’ve lost their income but are still required to pay rent, eviction could come quickly once the suspension is lifted. In the words of Ghazal, a member of the London Renters Union:
“I’ve lost all my work because of the pandemic. My landlord won’t give me a rent reduction and I’m worried that this means I will be forced out.”
“London Councils, the representative body of the city’s local authorities, has warned of an “avalanche” of evictions coming down the line.”
Beswick noted how, last weekend, the Labour party announced a “five-point plan” to protect renters, which “extends the eviction suspension by six months, gives renters two years to pay off any rent arrears built up during the crisis, and asks the government to consider a temporary increase to housing benefit”, but as he explains, “even this is unlikely to be enough, and involves plunging tenants into debt to protect landlords’ income streams.”
As he proceeded to explain,
“With the Bank of England contemplating the worst recession in 300 years, renters’ incomes are unlikely to bounce back once lockdown lifts, and the impact of the crisis on people’s ability to pay rent will be here to stay. If we are to protect renters, we need to solve the problem of rent.”
He added, “Under Labour’s plan, a renter who missed three payments of the average monthly rent in England (£867 a month) would find themselves paying £108 extra every month for the next two years”, an extra cost that many renters will be unable to afford. Instead, as NEF has recently proposed, the best answer — indeed, the only way to avoid a potential tsunami of homelessness — “is to temporarily suspend rents.”
For more on the housing rental crisis, see this Independent article about how students are taking on rapacious landlords, who are refusing to write off rents, even for students whose courses have been cancelled, by embarking on rent strikes, a course of action that other renters need to keep a close eye on.
Meltdown in the hospitality sector
In the business sector, meanwhile, the same problem — of landlords seeking to extract money from tenants that they simply don’t have — threatens to wipe out an extraordinary number of businesses unless some sort of enactment of shared pain takes place.
Restaurants have been making this clear since the lockdown began, with award-winning chef Yotam Ottolenghi warning in the Guardian on April 11 that the coronavirus will destroy the UK restaurant industry without assistance — particularly with regard to rents. As he noted:
“Thanks to the government-funded furlough scheme, we are fortunate enough to be able to pay our staff while they are at home. There are, however, other serious issues, the most burning of which is rent. Though some landlords have made private arrangements with tenants to forgo rent payments for a certain period, most are demanding their quarterly transfers.
“For businesses with zero income, this is a kiss of death. Accumulating debt now, when we are not operating, will severely hamper our ability to re-establish businesses that pay salaries, taxes, bills and rents. For many, it will simply mean that they cannot renew trading — this would be a devastating and totally unnecessary outcome. For the lucky ones, it will mean that they hang on by the skin of their teeth, but will not have enough capital to expand and create more jobs, which will be so sorely needed when this crisis is over.”
For more on the restaurant crisis, see Jay Rayner’s Observer article, ‘Will Britain’s restaurants survive coronavirus?’ and this article on the ‘Eater London’ website, detailing how a number of restaurant owners have “asked the government to consider a nine-month rent-free period” to save their businesses. Rayner, following up on Ottolenghi’s position, explained how Criterion Capital, “which owns large slabs of property around London’s Leicester Square”, had been threatening Caffe Concerto with a winding up order, because it had not paid rent on one of its sites, and noted that Andrew Sell of Criterion told the FT,
“We are driven to take such action because we are a business that has an obligation to our lenders, to collect rent and meet their demands for interest payment to be made on time.”
He added that, as he saw it, “The property industry is being treated as the nation’s bank”, which is a very un-generous position.
Kate Nicholls, the chief executive of the industry body UK Hospitality, said that she had “heard repeated stories of restaurant owners facing issues of this sort”, explaining, with some accuracy, “Too many landlords, banks and insurance companies are simply not sharing the pain of this.”
Elsewhere in the hospitality industry, pubs are also facing a bleak future. As the Guardian explained on May 10, “[w]ith only one of the big six landlords cancelling rents”, publicans are fearful about their future.
Already suffering from “ties”, an “ancient but controversial deal under which pubs buy their beer at inflated prices from the business that owns their property”, supposedly in exchange for lower rents, publicans are now finding that “nearly all of the major pub companies have refused to cancel rents, opting to defer their demands or offer a discounted rate instead.”
Edward Anderson, who runs three pubs in Cheltenham, told the Guardian, “It’s just debt that we can’t repay when we reopen.” His landlords had “offered to postpone the rent bill”, but that wasn’t enough. As the Guardian added,
“rents are set based on a pub’s ‘fair, maintainable trade’, in other words the turnover it expects to make in a year. But while takings have fallen off a cliff overnight, rent reassessments take place only every five years, meaning that when those rent demands resume, there will be less in the till to honour them with.”
Dave Law, who runs the Eagle Ale House near London’s Clapham Common, told the Guardian, “We need rent to be cancelled during the period. We’re being forced to pay based on turnover that we can’t make because of government decree. Rents are already inflated and when we come out of this, we’re going to be in a recession.” As the Guardian added, “Like Anderson, he fears he won’t be able to recoup his lockdown losses unless pubcos step up and share more of the pain.”
So what does the future hold? Will landlords recognise the scale of the crisis facing their tenants, or will we have to wait until as I suggested above, “the streets are full of homeless families, and shops, pubs, restaurants, theatres and offices are all shut and boarded up because no one can actually afford to run businesses any more”?
I fervently hope not.
*Note: For what’s happening in the US, see ‘Cancel the Rent’, a brand-new article in the New Yorker.
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Andy Worthington is a freelance investigative journalist, activist, author, photographer, film-maker and singer-songwriter (the lead singer and main songwriter for the London-based band The Four Fathers, whose music is available via Bandcamp). He is the co-founder of the Close Guantánamo campaign (and see the latest photo campaign here) and the successful We Stand With Shaker campaign of 2014-15, and the author of The Guantánamo Files: The Stories of the 774 Detainees in America’s Illegal Prison (click on the following for Amazon in the US and the UK) and of two other books: Stonehenge: Celebration and Subversion and The Battle of the Beanfield. He is also the co-director (with Polly Nash) of the documentary film, “Outside the Law: Stories from Guantánamo” (available on DVD here, or here for the US, or you can watch it online here, via the production company Spectacle, for £2.55), and for his photo project ‘The State of London’ he publishes a photo a day from seven years of bike rides around the 120 postcodes of the capital. In 2017, Andy became very involved in housing issues. He is the narrator of the documentary film, ‘Concrete Soldiers UK’, about the destruction of council estates, and the inspiring resistance of residents, he wrote a song ‘Grenfell’, in the aftermath of the entirely preventable fire in June 2017 that killed over 70 people, and he also set up ‘No Social Cleansing in Lewisham’ as a focal point for resistance to estate destruction and the loss of community space in his home borough in south east London. For two months, from August to October 2018, he was part of the occupation of the Old Tidemill Wildlife Garden in Deptford, to prevent its destruction — and that of 16 structurally sound council flats next door — by Lewisham Council and Peabody. Although the garden was violently evicted by bailiffs on October 29, 2018, and the trees were cut down on February 27, 2019, the resistance continues.
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