Housing in Knightsbridge, London, an area where much property sits empty. Photo: Getty
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Live in guardians: one radical solution to the UK’s housing problem

Property guardianship emerged in the Netherlands in the 1990s, seen as a way of dealing with the large numbers of squatters occupying empty Dutch buildings. 

Not many people can afford to live in a 10,000-square-foot property in the heart of London like Robin – but actually, she can’t afford to, either, which is why she became a property guardian.” So began a recent Sky News report, the latest in a series of upbeat features on property guardianship, the novel practice of recruiting people to live in empty commercial or residential buildings for a fee. But is it as good as it sounds?

It first emerged in the Netherlands in the 1990s. At the time, squatters were occupying empty Dutch buildings in large numbers and had gained legal status through a ruling stating that owners could evict them through the courts only. Property guardianship was seen as a way of preventing this problem.

In the past five years the practice has been adopted in the UK, too. And, in a country that has the apparently paradoxical combination of a homelessness problem and an empty-building problem, it doesn’t sound like a bad idea. According to local council data, there were 635,137 empty residential properties in England in 2013. Almost a third of these had been lying empty for more than six months.

For the building’s owners, it’s a good deal: leaving a building empty can reduce its value by up to 5 per cent, and installing security can cost £6,000 a month. For the property guardians, it’s not too bad an arrangement, either, as they pay between 30 and 60 per cent of standard market rate. But what they pay isn’t rent, and they are not technically tenants – their fees go to an agency, not to the landowner, in exchange for keeping the guardians in check.

Arthur Duke, managing director of the agency Live-in Guardians, says most of his customers are aged between 25 and 35. “About 80 per cent are saving for a deposit, and the other 20 per cent are fed up with expensive rents.” Most stay with the company for about six to nine months; some stay in one property but others move through several. When a building is needed by its owners, the guardians are offered other properties.

Guardians have to contend with a fair few rules. These include a ban on pets, parties, and smoking – and on leaving the property for more than 24 hours without permission. Until recently, agencies also had clauses in their contracts forbidding guardians from speaking to the press; as far as I can tell, this no longer applies.

The rules highlight the big catch with property guardianship: even its strongest advocate would admit that the exchange is, essentially, reduced rent (sorry, “fees”) in return for reduced rights. Property guardians aren’t tenants; they are “licensees”. In human-speak, this means they are given the right to use the building but the building’s owner doesn’t take on landlord responsibilities. This legal compromise was constructed precisely to allow such schemes to operate: agencies need to be able to boot out the tenants when a building is due to be reoccupied, sold or demolished.

The facts are more complicated. Giles Peaker, a property lawyer, was approached in 2012 by a UK guardian who had been locked out of a property after being given only two weeks’ notice by telephone. Her belongings, which were still inside the property, then went missing. She sued the company for unlawful eviction and received a substantial payout. (One of the conditions of the settlement was that no one could name the agency.)

In court, Peaker argued that the Eviction Act 1977 applies to guardians. That gives them the right to at least four weeks’ notice before being asked to leave. Despite this, several property guardian agencies maintain a two-week eviction policy.

In the Netherlands, guardian agencies have faced mounting criticism. In 2009 the Dutch film-maker Abel Heijkamp set up the campaign group the “Union of Precarious Renters” to improve legal protection and push for an end to property guardianship. His website is almost entirely in Dutch, but this has not deterred guardians in the UK from contacting him. “Policymakers only see the stories where people live in Westminster palaces – they ignore the fact that it’s creating guardians without rights or security,” Heijkamp says. “In London, where the rents are ridiculously high, people see it as a solution. But they should protect the rights of citizens, not of private enterprises.”

Yet Giles Peaker believes guardianship could still be a viable, and effective, housing option. “Like so many things, it’s an arrangement that can work – if it’s done properly between consenting adults.” 

A longer version of this article can be found on the NS’s new sister site citymetric.com

Barbara Speed is comment editor at the i, and was technology and digital culture writer at the New Statesman, and a staff writer at CityMetric.

This article first appeared in the 06 August 2014 issue of the New Statesman, Inside Gaza

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation