But Council Landlords Are Worse Than Corporate Landlords

No, rilly

It’s a standard part of British political theory that private sector landlords are vile beasts who need to be eliminated from the country. Some sort of race memory from Georgian slums perhaps. Georgian slums were not lovely places to be sure but they were better than the rural poverty that was the alternative - which is why people lived in them.

But, you know, it’s deeply embedded in that body politics that state landlords, council landlords, good, private bad.

Oh, right:

London Borough of Newham (00BB) - Regulatory Judgement: 16 October 2024

Note that. This is not some capitalist corporation. It is also not some social organisation - a housing association. This is the local council. You know, the people democratically accountable and all that:

C4

Our judgement is that there are very serious failings in the landlord delivering the outcomes of the consumer standards. The landlord must make fundamental changes so that improved outcomes are delivered.

“C4” can also be described as “shit”.

Summary of the decision

From the evidence and assurance gained during the inspection, we have concluded that there are very serious failings in LB Newham delivering the outcomes of the consumer standards and it must make fundamental changes so that improved outcomes are delivered, specifically in relation to outcomes in our Safety and Quality Standard and our Transparency, Influence and Accountability Standard. Although LB Newham has indicated a willingness to address these serious failings, we have not yet seen evidence to sufficiently assure us of its ability to put matters right. Based on our assessment of the seriousness of the failures and the changes needed to improve outcomes for tenants, we have concluded a C4 grade for LB Newham.

If you want the details read on there. But things like fire inspections being years out of date. Necessary repairs - the usual damps, leaks, moulds - taking months to fix.

And now to the actual point here. A democratically accountable organisation does not - necessarily that is - provide the goods. A local council doesn’t. Council housing doesn’t.

It’s also true that monopoly corporate housing can be pretty shit.

This then tells us something about what is necessary for non-shit supply. Choice. Alternatives. In essence, at bottom, what is required is the ability to exit. To go get that what ever - the banana for only $10*, the house that’s livable - from someone else. Only if that can happen is it necessary for a supplier to up their game to provide that desired good - the $10 banana, the livable house.

Exit. That’s the thing. That it is feasible for someone to bugger off. Then the supplier has to up that game in order to retain the custom. Which is why an exit tax upon leaving the country is such a bad idea. Because it means government itself faces less pressure to up its game. Why having monopoly suppliers of anything works so badly - monopolies produce shit because they’ve not got to give a shit.

And so a local council housing department is going to provide shit properties in a shit state. Because they’ve not got to give a shit. What are the tenants going to do? Go pay market rates? In London?

Aha, aha.

A selection of corporate landlords competing with each other would be better than this. Is better than this in fact. So is some army of buy to let landlords better than this.

Which brings us to the real point here. It is not the ownership structure that matters. It is the incentives the owners face. If you don’t like the word owners then substitute suppliers for it. Makes no difference to the point. Only if the consumer has a choice of suppliers does the supplier have to give a shit about whatever the hell it is that the consumer wants. That is, we need market systems with free entry - free markets - and who owns, well, who gives a shit? Capitalists, petty bourgeois, cooperatives, the local council? Meh. That the consumer can get out and get that thing from others is what prevents the supply of shit and lump it.

So there.

One more thing. Some will say that of course this is all the fault of austerity. Not enough taxation is spent upon these houses. But that rather conflicts with the usual insistence that council housing makes money. They have got all those rents coming in after all. They’re not paying off the capital costs - much of this was paid off decades back, there are capital grants and so on. To a useful level of detail they’re only trying to cover the maintenance costs out of their rents. Sure, the rents are below market but they’re still only trying to cover maintenance. Which means the local council is really pretty shit at managing stuff. Or, of course, maintenance costs are really very high so private rents are at just dandy levels.

And of course we’d find out which of these explanations are correct if only we had markets in operation here. Or me as the dictator of the Newham council housing system. I’d even do it for that traditional perk of those who work in council housing systems. A really nice, nice, council house for me. Something along the Thames opposite Greenwich would do. They actually do have places that the private market would rate at £2 and £3 million but which are let out on the usual council rents. To, err, people in favour with the council housing department. Which, given that I’d be the dictator, I would be.

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