Realist, not conformist analysis of the latest financial, business and political news

The Liverpool Tower Block Where We Rip Off The Foreign Plutocrats

We’re told of a tower block owned by certain foreigners. Where the tenants are cold and those dastards have been making massive profits. Given that this is commented upon by the Resolution Foundation, New Economics Foundation, as written up in The Guardian, we know that everything here is wrong. Our task being to understand why it is wrong, not whether. It’s even got Frank Field in it so it must, must, be wrong it’s only how.

The truth being, far from this as a story of plutocratic foreign johnnies ripping off the poor and us taxpayers, it’s us gouging cash out of Johnny Foreigner.

A Liverpool tower block that had more housing prosecutions in 2017 than any other building was 80% owned by international investors, some of whom were banking publicly funded rents while subjecting tenants to potential danger from hazardously low temperatures.

Mill View tower, a 16-storey former council-owned high rise in Toxteth, attracted 13 prosecutions last year for Elite Property Management and Lettings Ltd, a local firm that was managing 13 of the flats. The flats had cost around £60,000 each in 2013 and were all rented to residents claiming housing benefit. The company was prosecuted for licensing offences.

OK, bog standard low end – scummy end – of the housing market then. But who is ripping off whom? The claim:

Frank Field, the independent MP for nearby Birkenhead and chairman of the work and pensions committee, said: “It is deeply shocking and depressing isn’t it? I think it is another example of the weak underbelly of globalisation, where the government is defenceless in trying to defend tenants.”

Field said some landlords should have their property confiscated: “This is not just an isolated case. We have therefore got to build up an armoury to protect tenants in the weakest position. That includes withholding housing benefit from landlords and withdrawing their right to own and manage the property. Is it so shocking that these people should lose control over their property?”

It’s them screwing us. And yes, it is shocking that such people, even such people, should lose control over their own property. For we’ve tried systems where the government can just come and take private property before. There’s no system which does this which has ever worked. True, some of them have managed to stagger on without starving 8 million Ukrainians to death but none of those systems has ever worked at the job of a socio-economic system, substantially increasing the living standard of the common man in a sustained manner.

But let’s examine a little more the who’s ripping off part.

Having paid around £60,000 for a two-bedroom flat, each investor would have made a yield of roughly 8% a year from the housing benefit-funded rent.

In around 13 years, therefore, the rent received would cover the purchase price of each apartment. Such calculations make it easier to understand how international property players could view housing benefit tenants as an investment asset class.

These rough figures do not take into account management fees and also assume no maintenance spending on the properties

So, they weren’t making 8% were they. The letting agent would have been taking 10% off the top as a minimum. That takes us down to a 7% yield on its own. Now start to add in gas certificates and all the rest. No, that profit is nothing like it.

But more:

Conditions in the block were poor in 2016 according to Liverpool city council, with temperatures inside judged to potentially be a risk to tenants’ health.


Years before the city’s environmental health officers discovered the heating was so bad the flats could be a threat to health, Mill View was owned by Liverpool city council.

In 2012, as austerity measures bit, the local authority sold the block to developers, who refurbished it and sold the flats on to a string of international investors the following year.

Ahh. So, before, when the council owned and ran it, conditions wee even s**ttier. Then, when it was released from council ownership out into the private market it was spiffed up. At which point, and only at which point, did the council employed inspectors note that it was still a bit s**te. You know, despite being better than under council ownership. And then they used the force of the law to force those private landlords to improve conditions. In a manner they never did while they, the inspectors, were employed by the same people, the local council, who owned the building and collected the rents of the s**tty flats.

This is a story about the iniquities of being ripped off by Foreign Johnnies, is it? Or one about how ghastly council owned habitations are? And how any reasonable system of housing management has to ensure that the people who own are not also the people who regulate?

Quite, this is actually a story of the triumph of privatisation, isn’t it. Ghastly slums liberated from political control to be spruced up by the private market. Regulators now freed from conflicts of interest to be able to insist upon further spiffing. At the cost of foreign johnnies, not the local ratepayers. Looks like a blindingly gorgeous thing to do therefore, this privatisation.

So, which bit of the government estate do we sell next then? Any bids for the Arts Council? Or are we going to be nice and only try to sell things which have any value?

0 0 votes
Article Rating
Notify of
Newest Most Voted
Inline Feedbacks
View all comments
Mark T
Mark T
2 years ago

As usual the logic is completely missing. Far from being a disgrace requiring yet more legislation, this actually reads as a triumph of privatisation and regulation. The private sector provides the capital and the public sector provides oversight. Both do what they are (theoretically) best at. The usual suspects complain about rent money flowing abroad, but surely that is a return on the foreign capital that flowed in? And what happened to that capital? It went to the council. As the article also points out, none of the 13 prosecutions on a total of 64 flats were actually for the… Read more »

Esteban DeGolf
Esteban DeGolf
2 years ago

“These rough figures do no take into account management fees and also assume no maintenance spending on the properties” – at this point we should take away this writer’s crayons.

Other than that, Mrs. Lincoln, how was the play?

Would love your thoughts, please comment.x