As the impact of welfare reform rolls out across the country and the social housing landscape finds itself more unstable than ever, private housing is looking more and more appealing to those living in the UK – but this sector is not without its own financial struggles.
In light of Conservative schemes such as Right to Buy, the dream of homeownership is an agenda Cameron’s government is keen to push – with council tenants being incentivised to buy their homes at a substantial discount.
This year, The Guardian put rising rent prices in the private sector under the microscope, revealing figures that highlighted “the dramatic extent to which the cost of a place to live has uncoupled from the cost of living”. So, with social and private housing becoming increasingly unaffordable for the majority of Brits, landlords and their tenants are looking for ways to mitigate the growing financial risks.
The question is: what can private landlords learn from this acute housing crisis, and how can they safeguard both themselves and their tenants in the long term?
Is private renting the future?
Last year, The Independent reported that more and more Brits were moving towards private renting – and following the latest shake-up to the social housing sector, the UK could see an ongoing rise in Brits who choose to rent privately.
Campbell Robb, of homelessness charity Shelter, described this increase in private renting as a confirmation of “the historic shift that people across the country are already feeling”, with Britain’s low income families “faced with the unsettling reality of bringing up children in a cycle of short-term private lets”.
As talk of private rent control in London sparks nationwide controversy, the plan to safeguard tenants from dramatic and unprecedented increases in rent may not be easy to implement. With private rentals accounting for 30% of all residential accommodation in the capital, versus just 13% in 2005, that makes two and a half million Londoners renting privately – and demand is only continuing to increase as the housing crisis bubbles ever closer to boiling point.
The 2015 Summer Budget saw George Osborne reveal that, from 2020, mortgage interest relief for private landlords will be limited to the basic income tax rate. Landlords currently paying the basic rate may be unaffected by this change, as tax will be applied to turnover rather than profit, but others will find themselves pushed into higher income tax rates without experiencing an increase to their income.
David Smith, the policies director for the Residential Landlords Association (RLA), stated that “the evidence shows we need more, not less rented housing” and “it is only by supporting this group that we will boost the supply of homes to rent”. With calls for our government to assess the true impact this will have on an already struggling market, many private landlords face an uncertain future when it comes to their financial stability.
As the latest changes to welfare have a tangible impact on housing benefit recipients, tenants are likely to be concerned when it comes to the future of renting. By establishing and nurturing a culture of openness between yourself and your tenants, you can support each other with any queries and concerns that might arise.
With housing in desperately short supply, particularly throughout the capital, rent prices are continuing to rise – and as tenants struggle to stay on top of their payments, the support of Britain’s private landlords is more crucial than ever before.
So, whether your tenants are in full-time employment or rely on housing benefits to make rent, maintaining an open and honest rapport will ensure you have a long and profitable relationship.
Article Courtesy of: Graham Byers, Manager of Removal Services Scotland, specialising in home and office removals in Edinburgh, throughout the UK and internationally.