Shock research findings: Landlords who sell up don’t destroy houses on their way out

This image enrages me every time I see it. Image: Getty.

It is a truth universally acknowledged that the rent is Too Damn High. And for many of us it rises every year. So when the property industry reacts to any government policy that might disadvantage landlords with warnings that “it will only increase rents”, the threat rings hollow.

Economic theory also tells us to be wary of such predictions: the rent is set by supply and demand in the housing market. Landlords already charge as much as they can get away with.

If a landlord pays an extra 3 per cent in stamp duty when she buys a house – a surcharge that was introduced in April 2016 – she can’t simply charge 3 per cent more than the market rent because other landlords in the market will undercut her. Similarly, if a debt-laden landlord sees his mortgage interest tax relief cut, he can’t pass that on to the tenant – because most landlords have no mortgage, won’t be affected by tax changes, and will take his business.

So if a landlord is already charging what the market can bear and still can’t make the numbers work, they will have to leave the market. Cue the second threat. “With fewer rented homes, where will renters live?”, the estate agents cry.

But in quitting the market, landlords don’t, as a rule, destroy the house they have been letting out. They sell it, either to a landlord or an owner occupier.

If a landlord buys it, great: no problem for renters there, eespecially if they can stay put. If an owner occupier buys it, great – either they are first-time buyers themselves, or their chain is freeing up a home for a first-time buyer (or possibly a landlord; see first scenario). More first-time buyers mean fewer people demanding rental properties. Even as home owners they would still be financially stretched and trying to make as much use of space as possible. So there is no change to the balance of supply and demand. Because households can change tenure, supply and demand in the rental market is intimately connected with supply and demand in the housing market as a whole.

Since George Osborne introduced his tax changes, we’ve seen first-time buyer numbers rise, and the size of the private rented sector shrink by 111,000 – the result of fewer landlords buying property, and more landlords selling up. We decided to see if this had affected rents.

Tenure shift explained. Click to expand. Image: Generation Rent.

In cash terms they are still rising in most parts of the country, but at a slower rate than before the tax changes. In London they’ve been falling. But, like prices in the wider economy, rising rents is par for the course – so we looked at how they behaved in relation to prices in the wider economy, i.e. in real terms.

If the property industry is right, inflation-adjusted rents would have risen as the private rented sector shrunk. If economic theory is right, they would be unchanged. In fact they fell, by 3.2 per cent.

Something similar happened ten years ago. Instead of a drop in supply of rented properties, there was a surge in demand after mortgage lending for first-time buyers dried up. But rents didn’t rise: they fell, by 6.7 per cent in real terms. That was, of course, around the time of the recession. Short of a revolution in building rates, tenants’ spending power appears to be the biggest factor determining what landlords can charge.

Real rents over time. Click to expand. Image: Generation Rent.

The lesson in all this is that the government should press on with legislation to raise standards within the rental market, particularly ending Section 21 of the 1988 Housing Act to provide greater security of tenure. Landlords whose speculative or exploitative business models rely on that ability to evict tenants without a reason might well quit – but their competitors, who value and crave long term tenants, will do just fine.


To ease what exodus there is, the government has a duty to help the tenants who aren’t in a position to buy the house themselves. Any tenant who is evicted having done nothing wrong should get compensation – three months’ rent would be reasonable. That would both give them the means to find a new home, and incentivise landlords to sell tenanted properties to other landlords in the first place.

There’s no question that rents still need to come down significantly, but building enough will take years. In the meantime the government should ensure that renters get a better deal for what they pay for: a secure home.

Dan Wilson Craw is director of Generation Rent.

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“A story of incompetence, arrogance, privilege and power”: A brief history of the Garden Bridge

Ewwww. Image: Heatherwick.

Labour assembly member Tom Copley on a an ignominious history.

The publication last week of the final bill for Boris Johnson’s failed Garden Bridge has once again pushed this fiasco into the headlines.

As well as an eye-watering £43m bill for taxpayers for this Johnsonian indulgence, what has been revealed this week is astonishing profligacy by the arms-length vehicle established to deliver it: the Garden Bridge Trust. The line by line account of their spending reveals £161,000 spent on their website and £400,000 on a gala fundraising event, amongst many other eyebrow raising numbers. 

Bear in mind that back in 2012, Johnson promised that the bridge would be entirely privately funded. The bridge’s most ardent advocate, Joanna Lumley, called it a “tiara for the Thames” and “a gift for London”. Today, the project would seem the very opposite of a “gift”.

The London Assembly has been scrutinising this project since its inception, and I now chair a working group tasked with continuing our investigation. We are indebted to the work of local campaigners around Waterloo as well as Will Hurst of the Architects Journal, who has brought many of the scandals surrounding the project into the open, and who was the subject of an extraordinary public attack by Johnson for doing so.

Yet every revelation about this cursed project has thrown up more questions than it has answers, and it’s worth reminding ourselves just how shady and rotten the story of this project has been.

There was Johnson’s £10,000 taxpayer funded trip to San Francisco to drum up sponsorship for the Thomas Heatherwick garden bridge design, despite the fact that TfL had not at that point even tendered for a designer for the project.

The design contest itself was a sham, with one of the two other architects TfL begged to enter in an attempt to create the illusion of due process later saying they felt “used”. Heatherwick Studios was awarded the contract and made a total of £2.7m from taxpayers from the failed project.


Soon after the bridge’s engineering contract had been awarded to Arup, it was announced that TfL’s then managing director of planning, Richard de Cani, was departing TfL for a new job – at Arup. He continued to make key decisions relating to the project while working his notice period, a flagrant conflict of interest that wouldn’t have been allowed in the civil service. Arup received more than £13m of taxpayer cash from the failed project.

The tendering process attracted such concern that the then Transport Commissioner, Peter Hendy, ordered an internal audit of it. The resulting report was a whitewash, and a far more critical earlier draft was leaked to the London Assembly.

As concerns about the project grew, so did the interventions by the bridge’s powerful advocates to keep it on track. Boris Johnson signed a mayoral direction which watered down the conditions the Garden Bridge Trust had to meet in order to gain access to further public money, exposing taxpayers to further risk. When he was hauled in front of the London Assembly to explain this decision, after blustering for while he finally told me that he couldn’t remember.

David Cameron overruled the advice of senior civil servants in order to extend the project’s government credit line. And George Osborne was at one point even more keen on the Garden Bridge than Johnson himself. The then chancellor was criticised by the National Audit Office for bypassing usual channels in order to commit funding to it. Strangely, none of the project’s travails have made it onto the pages of the London Evening Standard, a paper he now edits. Nor did they under his predecessor Sarah Sands, now editor of the Today Programme, another firm advocate for the Garden Bridge.

By 2016 the project appeared to be in real trouble. Yet the Garden Bridge Trust ploughed ahead in the face of mounting risks. In February 2016, despite having not secured the land on the south bank to actually build the bridge on, nor satisfied all their planning consents, the Trust signed an engineering contract. That decision alone has cost the taxpayer £21m.

Minutes of the Trust’s board meetings that I secured from TfL (after much wailing and gnashing of teeth from the Trust itself) reveal that weeks beforehand Thomas Heatherwick had urged the trustees to sign the contract in order to demonstrate “momentum”.

Meanwhile TfL, which was represented at board meetings by Richard de Cani and so should’ve been well aware of the mounting risks to the project, astonishingly failed to act in interests of taxpayers by shutting the project down.

Indeed, TfL allowed further public money to be released for the project despite the Trust not having satisfied at least two of the six conditions that had been set by TfL in order to protect the public purse. The decision to approve funding was personally approved by Transport Commissioner Mike Brown, who has never provided an adequate explanation for his decision.

The story of the Garden Bridge project is one of incompetence, arrogance and recklessness, but also of privilege and power. This was “the great and the good” trying to rig the system to force upon London a plaything for themselves wrapped up as a gift.

The London Assembly is determined to hold those responsible to account, and we will particularly focus on TfL’s role in this mess. However, this is not just a London issue, but a national scandal. There is a growing case for a Parliamentary inquiry into the project, and I would urge the Public Accounts Committee to launch an investigation. 

The Garden Bridge may seem like small beer compared to Brexit. But there is a common thread: Boris Johnson. It should appal and outrage us that this man is still being talked about as a potential future Prime Minister. His most expensive vanity project, now dead in the water, perhaps serves as an unwelcome prophecy for what may be to come should he ever enter Number 10.

Tom Copley is a Labour member of the London Assembly.