What actually is the point of the Private Rental Sector (PRS)?

Posted on December 3, 2022 by itsaboutpeople292867057

The Housing Act of 1988 deregulated new lettings to encourage the PRS to return, 44 years later the potential for 1910 rent strikes of pre The Rent Control Act of 1914 look like they may return.

Sitting in the library, grinding my way through various papers and journals on Rent Control (RC), I started to read a report from the much admired Joseph Rowntree Foundation (JRF) published in 1992 with various academic, housing pressure groups, practitioners and financiers together with advisors to politicians from different parties all contributing to the discussion. So far so good, but…..

The book in question amongst my usual chaos

Two issues of cognitive bias became increasingly apparent, both of which we all suffer from as emotional beings, so I’m not specifically criticising the authors of the report, but taking the more cautious route of an anthropologists like, the sadly departed David Graeber and also the political economist Thomas Piketty. Graeber in his book (and the secret is in the title) Debt; The First 5000 years and Piketty to a lesser extent focussed on the past 200 years in his highly acclaimed and fascinating book Capital of the 21st Century.

“Recency bias is a cognitive bias that favors recent events over historic ones“

The first bias was the effect of just looking to the lived and experienced recent past (recency bias) and making a judgment that a correlation of rent controls of the recent past have meant that the PRS has reduced due to not enough yield being available from old RC properties, that is a fair judgment, but does that mean that to get more rented properties available for the small sector (at the time of the report) of transient renters, namely young people on their way to purchase and temporary work force ( in fact a red herring) moving around the country, you just simply reverse the model?

So with that logic, if rent control causes PRS shortages then abandon rent control and supplement the PRS and a ‘fair’ rental market will return with the benefit of landlords now also getting a ‘fair return’.

“What could possibly go wrong’?

The issue with this decision is that now in 2022 we are seeing the true consequences of this reversal, rather than market rates settling to a ‘fair rent’ level they are driving people into cohabitation and single room conversions with shared bathrooms as incomes have stagnated (not so much trickle down, but rather, trickle up), but rents increase as scarcity within the ‘free market’ predicts.

Whereas if they had taken the time and effort to look back to pre 1914 Rent Act they would’ve seen the issues of free market rents gradually consuming and therefore monopolising a sector that even Winston Churchill in 1909 fumed and rallied against to the greed and slothfulness of the rentier class.

Churchill in his mid thirties around 1909

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Rent Control Paradox No 1

Posted on November 16, 2022 by itsaboutpeople292867057

Undoubtedly the first of many seemingly paradoxical issues concerning the difficulty (ie the monied establishment of whom Rent Control would affect the most in a negative sense) to even implementing Rent Control (RC) and thus a refusal at the first hurdle.

This post is a reply to question that I had no time to answer at the end of a presentation on the basic background of the present housing model and why unregulated private purchase and rents are now completely market led under the finasialation of the mortgage debt market and the now commodified living space, we call home.

The question is an obvious first hurdle to even thinking about an introduction of private RC,

Slightly paraphrased question from my classmate Mark;

“How are you going to get an acceptance from small private landlords let alone institutions” ?

My answer which has come from several ideas that I have been working on for a few years that I recorded as an end goal based on a fantasy Beveridge 2.0 report, including the ‘five giants’ ( think the 5 elephants in the room) as of a consequence of a 21st century established neoliberal society, namely the UK.
Very broad, but the main point being how do you convince that the stick of RC will benefit the nervous middle (50-90 percentile) and suspicious asset wealthy (top 10%).

According to the behavioral economist Kahneman we all suffer a greater bias towards loss (known as ‘loss aversion’) than gain, namely, ie it plays on our minds. At first this seems a good thing, as being over cautious must be good, as common sense would say that being attuned on a financial decision is wise, but alas this can in some circumstance lead to poor judgment, as shown in the gambler chasing the initial debt, whilst being blind to the option of just accepting a loss and walking away (Kahneman 2011). An AI algorithm would of course weigh up the odds and take the initial loss, if the odds stated were the best course of action to its overall long term gain.
Humans struggle with this due the emotion of the initial loss, we all do it as a fast thinking reaction.

So with this in mind to counter the loss we need a greater gain, thus in this report I figured four carrots to the one stick, this is so important to creating societal jewels (ie NHS) that can be justified to the majority over the small minority of our natural self seeking to a short term initial loss ( and we will see in the paper all benefit long term, again the NHS).

Though it should be stated that any welfare fiscal spending cannot show a direct profit by its very nature it’s once, twice, thrice removed and the measurement of GDP growth is only seen as a generation is cared and educated from birth to grave, kept healthy, has food, shelter, warmth and no fear of retirement so as to concentrate on producing the measurable wealth.

“Not all can be commodified for direct profit, but what can should be able to produce unhindered by welfare concerns. Thus, “No Apron Strings”

Yes, it’s a bit uptiopian, but so was male and female emancipation, free university, health and safety in the workplace, the 5 day week, paid holidays within PAYE etc.

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Próblēma, “anything thrown forward,

Posted on October 29, 2022 by itsaboutpeople292867057

Albert solving some problems, or so it looks.

Why we need problems.

Recently watched a Vpro ( documentary maker from the Netherlands) documentary. Highlighting the issue of University inventions and thus patents being given away free to private industry to use and then profit from, with the bizarre reality of the state buying them back including a rent for the patent! Think pharmaceuticals and the NHS.

The well known and often quoted is the iphone, most of the internal components were government funded projects for defence, navigation and general public funded university research, all used by Steve Jobs and co, and cleverly put together to create the ubiquitous smartphone which was then marketed for huge profits, with none going back to the publicly funded organisations as if it was all the ideas of just the private sector (remember these corporations also avoid taxation).

So Mariana Mazzucato goes through this in her book The Entrepreneurial State (debunking public v private sector myths, video further down the page) and the Vpro video.

One section near the end caught my imagination.
Problems are there to be solved, the Kennedy moonshot speech;

“We choose to go to the Moon. We choose to go to the Moon… We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win, and the others, too”.