This is part of our week long series on the housing crisis: “Home Truths”.
Britons are often accused of fetishising home ownership. Yet the number of people living in the rented sector in Britain has risen precipitously in recent years. According to Knight Frank, by 2021 it is estimated that a quarter of us will be living in privately rented accommodation.
With so much demand for flats and rented rooms, the buy-to-let market has boomed for those with money to invest. Between 2007 and 2016 total mortgage lending for such properties doubled from 8.5% to 17%. Much of the housing stock is former social housing: more than 40% of council homes sold to tenants through the Right-to-Buy scheme are now owned by private landlords. At a time of stagnant wages and stratospheric property inflation, the attraction of investing in a property for those who can afford to take the plunge is obvious enough. In 2015 for example, 38% of workers earned less than the amount the average homeowner made from the increase in the value of their house.
It has thus become both more expensive to buy a house and easier, at least in theory, to seek out a landlord. The problem is that increasing demand for rented properties has heaped inflationary pressure on rents; and has also encouraged unscrupulous landlords to enter the market in search of a quick buck. According to the Economist one in 30 UK adults – and around one in four MPs – is now a private landlord. And while many maintain their properties appropriately and treat their tenants well, almost 30 per cent of private-rented dwellings are officially classed as ‘non-decent’. That means they fail to meet even basic standards for things like heating and repair.
Of course, should a tenant find themselves in a property that has been neglected, they can move elsewhere. This is, after all, how the free market is supposed to function: eventually rogue landlords will be unable to compete with those who behave with greater care towards their tenants.
Yet, as is so often the case, the reality doesn’t match the theory. The letting agencies used by many landlords often charge tenants a fee of several hundred pounds each time they move into a new property, making it prohibitively expensive to exercise choice by moving from one place to the next. In a welcome move, the Government has pledged to ban letting agent fees. The legislation, however, is not expected to come into force until 2019.
Another cost in the rental process is the deposit. Renting a room typically requires a lump sum to offset against any potential damages caused by a tenant during the stay. This can be as much as one month or even six weeks rent. The prospective renter could need as much as £1,000 to hand before he or she is able to consider moving elsewhere. This poses an obvious challenge to those on low incomes since the tenant will potentially have two large sums of cash tied up with different landlords during the moving process.
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