A leading group of cross-party peers has criticised the private rented sector (PRS) for its increasing unaffordability in a report published today by the House of Lords.
Called Meeting House Demand, it looks at all the factors creating the UK’s housing crisis and follows months of interviews with the key movers and shakers within the housing market including several housing ministers and the National Residential Landlords Association.
It also set out to discover the market’s structure, demographics, demand for different types of housing tenure including rented, and whether the government’s target of building 300,000 additional new homes a year is realistic.
But the NRLA told the Lords’ Built Environment Committee that unaffordability within the PRS is down largely to government policy, highlighting how the curtailing of mortgage interest tax relief and the introduction of a 3% stamp duty surcharge is restricting supply while high house prices, particularly in the south of England, is increasing demand for rented accommodation.
The NRLA says these decisions by then Chancellor of the Exchequer George Osborne were based on the ‘highly questionable’ assumptions that landlords ‘crowd out’ homeowners from the sales market and that landlords were taxed more favourably than homeowners.
The committee’s report says the biggest problem facing first-time buyers is not competition from landlords, but the inability to save up a deposit, ‘a goal that becomes increasingly out-of-reach if house prices rise faster than savings’ it says.
But it also points out that the proportion of private tenants income spent on rent has risen from 12% in 1980 to 32% today across the UK but 42% in London.
In comments published by the report, Toby Lloyd, Chair of the No Place Left Behind Commission and an Independent Housing Policy Consultant, said: “The private rented sector is by far the most expensive, by far the lowest quality and by far the least popular.
It is absolutely the worst possible tenure for almost everybody in it.” He added.
“Most people who are private renting would much rather be in something cheaper and higher quality. Who would not be? That means either social renting or owner-occupation. It is absolutely the tenure of last resort.”
Key recommendations of the report, which was chaired by Baroness Neville-Rolfe (pictured), include giving tenants greater redress – something the government is likely to introduce within its soon-to-be-published Rent Reform proposals, and that more rented social housing should be built to take more financially vulnerable tenants out of the private rented sector, where they tend to live in more crowded, poorer quality conditions than homeowners.
Talking to LandlordZONE, Baroness Rolfe said: “We were struck by the huge growth in the private rented sector in recent years from 10% to 20% of the housing market, and the change in landlord demographics in recent decades,” she said.
“45% of landlords have only one property and another 38% have between two and four properties – but most worryingly landlords are getting older and the evidence we heard suggested a younger generation is not joining the sector.”