The national cost of renting from a private landlord passed £50bn for the first time last year to hit a record high, according new figures from the estate agent Countrywide, and the total bill has risen to £51.6bn from just £20.3bn in 2006. This increase can partly be explained by the growth in the population of private renters – in England this grew from 2.6m households in 2006 to 4.7m by 2017. Once we account for the rise in numbers, the rise in total rent paid means that rents increased by around 40 per cent over those 11 years. This might not be so bad if we could afford that increase, but in the same period average weekly earnings only rose 26 per cent.
Higher rents are therefore eating away at renters’ quality of life, and they don’t have much say in the matter. The root of the problem Two things have fuelled housing costs in the past decade. One is the well-documented shortage of homes in areas of high demand and weak government attempts to get building at anywhere near the rates we need. There is a shortage of council housing – 1.2m households are on the waiting list – and house prices have put home ownership out of reach for the majority. A large chunk of that increased bill is money that people would much rather be using to pay off their own mortgage.
The other is the lack of regulation of the private rental market which has encouraged amateur investors to get into buy-to-let. Landlords don’t need a reason to evict their tenants, so it is very easy to sell up if they want to cash in their investment. That allows property to be treated like just another commodity to be bought and sold when the price is right. Combined with the housing shortage, this has invited speculation on house prices and the stampede by landlords has duly pushed them up, leaving would-be first-time buyers in the dust. The relatively higher disposable incomes of thwarted first-time buyers add to the demand for rented property which has allowed landlords to raise rents. Building solutions The long term solution to this problem is much greater investment in new homes, including by the government and councils. But even if we were able to build 300,000 new homes a year – the cross-party consensus on what’s needed – this would only reduce rents by about 22 per cent after a decade.
Renters can’t wait that long for a better standard of living – we also need to overhaul regulation and improve protections so that renters have more certainty over how long their home is theirs and what rent they pay. This would help to dampen demand for property as a financial plaything – and thereby allow more renters to buy their home. Given the sheer cost of the monthly rent, we also need to look at rent controls. There is already a Living Wage – let’s have a Living Rent. You might not even need to force landlords to adopt rent control. Two thirds of private rented properties have no mortgage on them so landlords could easily charge less – we’d just need to find incentives to encourage them to do so. Political reckoning If politicians don’t act now, the renter population will continue to grow and rents will keep rising. Without a dramatic turnaround in wages, life will become even more of a struggle and more kids will grow up without a stable home. Millions of people will be stuck renting for their whole working lives, and hit retirement age with meagre savings and a landlord still to pay. But the rise of renting will also mean that a large section of the population will actively need house prices to fall. To form a government, politicians will need their votes. Something will have to give.