05 Jun 23
The proposals to shake the Private Rental Sector (PRS) to its foundations will, depending upon your political persuasion and housing status, be the greatest victory for tenants in decades, or it will be an act of sabotage that undermines our already broken housing system.
Much is made of vested interests.
MP’s who vote against or want amendments are scrutinised – do they own buy to let? If they do, their opinion is described as being biased. Tenant groups have long been trying to redress what they see as the imbalance between landlords and their hard-done-by tenants. Well-publicised scandals where illness and even deaths have occurred in sub-standard homes have cemented the feeling that this is a noble quest, a fight between good and bad.
It means housing is now political and you pick a side. And perhaps because of this, politicians of all parties have been nervous to do anything more than eye-catching interventions such as Stamp Duty breaks and Help2Buy. As a result, the fundamental issue of supply and demand that is now so unbalanced hasn’t been tackled in any meaningful way.
In the meantime, the population grows, family units become smaller and more diverse, and that needs yet more housing.
The target to build 300,000 new homes a year to add to the supply showed good intent but when the target was missed year after year, rather than increasing new build, instead the target itself was dropped. For the foreseeable future we can expect around half of the minimum amount of new homes we need to actually be built.
So instead of increasing the supply of homes, ministers decided to focus on the rental, the lower-hanging fruit.
It is politically expedient too.
Why risk the wrath of Nimbys objecting to new developments? Better to please millions of tenants that might vote for you, even at the expense of losing the far smaller number of landlord voters.
And that’s how we find ourselves facing enormous changes to the rental sector.
The Private Renters Bill, delayed yes, but on the way.
So which side should you be on? As is so often the case, the answer is nuanced.
Policies that will help many will also hinder others, thanks to the law of unintended consequences.
If this policy sees the light of day, and it is looking in the balance what will happen to the letting market, who will be the winners and who will lose?
On the face of it hard-pressed tenants will be the biggest winners. All of the new rules favour them over the landlords, many would say not before time.
But with a chronic shortage of rental property, will this do anything to affect supply? It seems it would, and the news isn’t good. A recent survey by NRLA shows 33% of private landlords planning to reduce the number of homes they let out. A year before that figure was 20%. 10% of landlords intend to increase their portfolio.
These homes will be emptied of their tenants and sold, most likely to a private owner, so they will house someone. But the property is likely to disappear from the rental market forever, making the rental shortage even more acute and inevitably driving up rents.
The grotesque game of Property Musical Chairs will continue but with an increasing number of players and with fewer and fewer seats available.
But don’t expect a cliff edge, the detrimental effects will be felt gradually, over a number of years. A policy to sell council houses in 1980 is still having repercussions today.
Solving the housing crisis will take political will and the courage to take unpopular decisions that could lose votes.
But until that happens, the property crisis will get much, much worse.
Thank you for reading
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