The lack of private rental homes available – particularly within London and across the south east of England – has contributed to a sharp rise in rental prices in recent years.
According to the latest English Housing Survey, 4.4 million of the country’s homes are within the private rental sector (PRS) – that’s a 1.1 million rise in just five years. But it’s still not enough to keep up with demand. In contrast, owner-occupied dwellings have fallen by almost one million during the same period, and the number of rentals within the social housing sector has remained constant. This clamour for private rental homes means securing somewhere to live, that is fit for purpose and at the right price, is a significant challenge – particularly for those who must move across the country or from abroad for short periods of time, perhaps to suit work or family circumstances.
The latest survey also reports that, in 2013, 21 percent of dwellings (in both private and social sector) failed to meet the Government’s decent homes standard. That, combined with rising rents, is not an encouraging sign for those seeking out somewhere to live, either for themselves or for an employee. Those aged between 25 and 34 are now more likely to be renting than buying their own home. That’s almost double the number reported by the English Housing Survey in 2003. The introduction of buy-to-let mortgages by lenders is contributing to the huge growth in the rental sector – but the sheer number of tenants could be a sign that the UK is moving towards becoming a nation of renters. And this could prove costly for many.
The British Property Federation (BPF) is warning that high house prices and the growing number of private tenants in the UK means that more must be done to encourage the purpose-built rental sector.“Politicians talk about ‘Generation Rent’ as if it is something to be ashamed of – when this should not be the case,” said Melanie Leech, chief executive of the BPF. “Countries such as Germany and the USA have thriving rental markets, where people live happily in institutionally-backed, purpose-built, high quality rented accommodation for many years.
“While we are not against owner-occupation – and see starter homes as a welcome initiative – we are aware that such a policy is stroking the demand for home ownership, rather than focusing on meeting supply.
“The build-to-rent sector has the potential to deliver a huge number of additional homes and to drive up standards in the rental sector – and must not be disregarded in favour of homes for sale. There is room for both.”
David Cox, Association of Letting Agents managing director said: “A third of agents are still seeing landlords pushing rents up, which reflects the sorry state of affairs in the market. “With increasing pressure on the dwindling supply of housing, and the number of house hunters growing, rent increases are unfortunately very common – as one in three tenants (is) experiencing.”
The cost of rental properties across the UK also differs considerably, depending on location. Region by region, sometimes even city by city, tenants are faced with wildly different costs for the same standard of property. For many, this is irrelevant because they have chosen to live in a particular area for a reason, so they have taken rental costs into account. But for those who have been asked to move by their employer in order to fulfil a particular business role, finding the right property at the right price is essential.
London poses a particular challenge for companies based outside of the capital but needing to send workers there to develop business opportunities. Added to that, the majority (56 percent) of private rental homes were built before 1965, which explains the difficulties faced by both landlords, who are required to maintain their assets, and tenants living in sometimes less than ideal conditions.
So what are the main issues? There is little choice over properties to rent, often because of available budgets. And finding a reliable landlord is a difficult business. Even if the property they are offering seems perfect at first glance and falls within budget, the landlord must comply with all rules. Deposits, immigration laws, energy performance and the safety of gas and electricity appliances are all subject to stringent regulation. Some more unscrupulous landlords are clearly flouting these rules, according to Citizens Advice. Failure to follow the rules can land even the most experienced of landlords on the wrong side of the law. Investing in property and becoming a landlord can be a sound business move for many – with a huge proportion of the UK rental market occupied by tenants who have relocated for employment reasons. With so many tenants residing in privately rented homes, 740,000 households are suffering poor health as a direct result of their living conditions. It is understood that 16 percent of privately rented homes are unsafe – far higher than the 6 percent in the social rented market.
Landlords must take care – protecting deposits, checking that tenants are allowed to be in the UK, making sure that electrical appliances are checked regularly and only using fire retardant furnishings and so on. Privately rented properties are regularly inspected by local authority health and safety officers – and woe betide the owners of those that don’t come up to scratch. The value of expertise from property specialists – to help source a suitable rental home and to make sure the landlord is complying with increasingly stringent regulations – is becoming not just ‘nice to have’ but absolutely crucial.