Generation Rent says ‘homes, not landlords’ is the key to rent affordability

Generation Rent says ‘homes, not landlords’ is the key to rent affordability

0:06 AM, 1st August 2024, About 3 months ago 25

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Metropolitan areas in England that significantly increased their housing stock since 2015 are more likely to have experienced improved rent affordability, according to an analysis by Generation Rent.

The study, based on recent Office for National Statistics rent data, found a correlation between building more homes and reducing rent as a proportion of average income.

Across 90 English urban areas, a 20-home increase per 1,000 people was linked to a 2.8 percentage point decline in rent-to-income ratio.

This evidence comes as the Labour government considers new methods for calculating local housing targets.

Housebuilding and affordability

The organisation’s deputy chief executive, Dan Wilson Craw, said: “The evidence of the last eight years shows a clear relationship between housebuilding and affordability.

“Areas where building failed to outpace the local population saw rents rising faster than incomes.

“Importantly, the evidence shows that it’s the building that matters, not tenure.

“Simply encouraging landlords to buy up existing homes will do nothing to make homes more affordable.”

Size of the private rented sector

In contrast, the analysis found no connection between rent affordability and the size of the private rented sector.

Generation Rent says this challenges claims that encouraging landlord investment would alleviate the housing crisis.

It also emphasises that while building more homes is crucial, addressing the needs of the most vulnerable renters requires a focus on social housing.

The group warns that simply increasing overall supply without prioritising affordable options will not solve the housing crisis for those facing the most severe conditions.

‘A lot of building to make a difference’

Mr Wilson Craw said: “Policymakers must recognise that it still takes a lot of building to make a difference to affordability.

“Those of us who are worst hit by the housing crisis are not earning enough to pay in rent what average earners can afford, so the government must do much more to build social homes, and make sure Local Housing Allowance keeps up with market rents.”


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Cider Drinker

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9:33 AM, 1st August 2024, About 3 months ago

Simple supply vs demand.

Increasing supply and/or reduce net migration will ensure rents are as affordable as possible. Having more homes than are needed will ensure the poorest quality homes are not occupied.

Old Mrs Landlord

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11:08 AM, 1st August 2024, About 3 months ago

Well, at least Wilson Craw recognises the need for LHA rates to track market rates. That's the first bit of sense and realism I've ever heard from him I think.

Reluctant Landlord

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12:11 PM, 1st August 2024, About 3 months ago

at the end of the day market rent is where it is because of supply and demand.

If the government lifted the LHA to market rate then the only thing that will do is mean that benefit tenants could meet the affordability level.

A benefit tenant may still not secure a tenancy though as many lack referencing data, no guarantor etc, so in essence no significant change. All it means is more applications for a LL to deal with, and with that comes more filtering, so may will still be declined just as they would have been before. There will be still plenty in temp accommodation for a long time yet and the numbers will only increase.

The other basic thing that GR and the like completely fail to remember is - social housing means somewhere, someone has to subsidise it. Blindingly obvious gap between high build costs etc and low rental charge - so who meets this?

Private Housing Provider

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12:34 PM, 1st August 2024, About 3 months ago

Either get a job or run a business to rent or buy a home.

And without landlords, you can't rent.

Its like saying we want groceries but not the supermarket. Just free groceries.

Mark Smith

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12:49 PM, 1st August 2024, About 3 months ago

Renting from a private landlords always costs more than owning property and self managing it.

Landlords have to pay tax on mortgage interest - a higher rate of capital gains tax and additional stamp duty compared to private home owners. They often have to pay a license fee (and I have calculated that in my case the overall cost of licencing averages out about 2x what the council charge me - as the council expect me to do admin and paperwork on the scheme which costs me in admin costs equivalent to what they charge for their own costs in the licence fee)

And of course the Landlord looks after repairs maintenance and admin costs for the property - as well as he addititional costs of advertising, agency fees , conducting veiwings etc - and absorbing legal costs and rent defaults and in most cases paying council (often at a higher rate during the voids between tenants.

Landlords must recoup these costs before they start to make profit or pay themselves for the work they do and earn a basic living.

This provides a base level for rents and if market rents fall so landlords cant recoup this landlords have to sell up or go bust.

However if you build more property and property prices fall this is good for renters and landlord costs fall so they can keep rents lower.

However it can be very bad for owner occupiers who may find themselves in negative equity and those of us who have lived through this know this is not fun. Falling prices often mean housebuilders stop building and hold onto plots as they don't want to build and cant sell houses that are falling in value because buyers just wait and the market stalls .

This is a complicated area - and it needs people who understand the economics of what happens when you make simplistic moves - you often get undesired results - sadly Wilson Craw does not seem to have a real grasp of this.

Personally - I would love to see more social housing built and - especially council housing to councils can take an integrated approach to housing and social care.

But as a person who is both a small private Landlord - grew up in a council house, and has served in a voluntary capacity chairing the tenancy subcommittee of a housing association I am also aware that tenant satisfaction is usually higher with private landlords (especially those that rent direct rather than through an agent) that with either local councils or housing associations.

It is rather ironic that a number of notorious councils who are failing to deal l with poor property conditions , mould and damp in their own properties become the policemen and licensing agent for the private landlords. I have seen the same councils who are campaigning politically agains no fault evictions issuing no fault notices to their own tenants.

If we are to have licensing it should be independent and councils and housing associations private landlords should have their properties licenced by the smae independent agency and pay the same licensing fees per property - to really upgrade conditions for tenants.

Darren Sullivan

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14:36 PM, 1st August 2024, About 3 months ago

You talk of homes like they can be produced like magic. Who is going to pay to build them? The government will only put their hand in their pocket so far.

It’s not all about the tenant it’s also about a multi million pound industry that provides employment to hundreds of thousands.

Accountants, agents, utilities engineers, surveyors, builders the list goes on!

Unless you expect us to pay for your lifestyle? Are you expecting the government to flood the market with homes? I can’t see that happening. Labour are all talk. They have spent the first month crying about the past and will continue to do this for at least two years.

Ian Narbeth

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14:45 PM, 1st August 2024, About 3 months ago

"In contrast, the analysis found no connection between rent affordability and the size of the private rented sector."

This needs further explanation. Wilson Craw is right that more (subsidised) social housing is needed.

If even a small number of PRS landlords withdraw their properties because they are fed up with over-regulation or, perhaps, they had a non-paying tenant who took a year or more to get out, or a man of straw who ruined a decent home, that will likely feed through to higher rents than if they had not withdrawn those properties.

Reluctant Landlord

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16:02 PM, 1st August 2024, About 3 months ago

All talk from Labour is about 'affordable' housing not providing accommodation at social rent levels.

They can see this is simply not viable and makes no financial sense (especially with RTB still in place).

By pushing for more 'affordable' (?) properties to be build it seems they believe that the majority of tenants can genuinely still afford 80% of market rent.

Mark Smith

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16:11 PM, 1st August 2024, About 3 months ago

Hi there - I think Labour is an improvement on the previous Tory government who were the most Landlord unfriendly government in living memory - however we do need to continue to robustly defend ou contribution to providing homes - as the new government has taken over many of the previous Tory governments policies - and of course with a bigger majority has more power to enforce those Tory policies than the weak and divided previous Tory government had.
WE need to be on the ball representing the very real and positive contribution we make to housing the people of the UK and to do so in a way the new government can understand. Sadly I think our national epresentaive bodies are unable to do this and are failing badly .

G Master

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21:34 PM, 1st August 2024, About 3 months ago

So now the freeload seekers fancy their chances for a free property from the socialist government. Do not forget, it is the quango who controls the interest rates. New borrowers will forever complain about paying high mortgage instead of rent.

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