Tuesday, 03 March 2015

Private rents 'unaffordable' in most of country

Average rents in the private sector are unaffordable for ordinary working families in more than half of local authorities in England, research shows.

The housing and homelessness charity Shelter released findings from its rent watch which showed that in the majority of councils, typical rents from private landlords were over a third of average take-home pay.

Rural areas are among the worst hit with findings showing that it is now more affordable to rent in Manchester, Liverpool or Birmingham that it is to rent in north Devon, north Dorset or Herefordshire.

London boroughs were the most expensive, with the average rent for a two bedroom home at £1,360 – almost two and a half times the average in the rest of the country (£568).

The least affordable local authority area outside London is Oxford, where typical rents account for 55 per cent of average earnings.

Shelter is calling on the government to take urgent action to stabilise the private rental market and develop policies to bring rents in line with average earnings.

Campbell Robb, chief executive of Shelter, said: ‘With huge differences in affordability across the country, there are now worrying signs that families are likely to be displaced by our out-of-control rental market.

‘Over recent years we have seen more and more people forced into renting, as high house prices and a lack of social housing have made it the only option for thousands of ordinary families.  

‘What we’re seeing now is that renting is no longer the easy, cheap alternative to home ownership.

‘We have become depressingly familiar with first time buyers being priced out of the housing market, but the impact of unaffordable rents is more dramatic.

‘With no cheaper alternative, ordinary people are forced to cut their spending on essentials like food and heating, or uproot and move away from jobs, schools and families.

‘With rural areas suffering just as much as cities - or in many cases, even less affordable - it’s no longer enough to encourage people to move out of crowded urban areas.

‘Government must urgently consider how private renting can become a stable, affordable option for families, and not a heavy financial burden that makes parents choose between buying food for their children and paying the rent.

‘This should be the wake-up call needed to finally take action to address our renting crisis.’

Readers' comments (81)

  • F451

    Neil - I did not intend any implication, but if it was felt, apologies. I'm not sure this is about sides though, it's about making housing affordable.

    Jono - welcome to Damascus. I hope your journey was uneventful, but do shake the sand from your shoes and sit down.

    Yes - the financial sector produced some really poor products and the more ignorant (including me) bought them. I do not expect the economy to be further screwed because I failed to properly research what I was getting into (or actually wrongly gauged risks). I see no reason why the rest of the nation should be further screwed to make life easy on those who should not have got into a business that they could not afford if investments went down rather than up.

    I really do not give much priority to those saddled with unviable BTL mortgages - either they use their business accumen to get through this or they realise that they should not have been playing games that were beyond them. Their choice Jono - as I'm sure you'd agree, or do you object and wish to argue for a collective solution for these few poor souls.

    So great - we are all agreed - landlords can afford to reduce their rents (and if cutting LHA produces all the effects you project Jono - i.e. if you are right, then won't those same poor people with the BTL mortgages find it a tad awkward when their £100k becomes £80k, to use your model?). So now there is no argument about the fact rents can be reduced - why not do the simple thing and, reduce them.

    The advantages of a rent cap have been clearly put previously so I will not repeat them - and fortunately we are wiser than in the those dark days before the shortcoming of poor financial products was realised. its nice to find some agreement on something at last.

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  • Jon Southall

    F451 - there is a difference between a business being unviable because of market forces, and a business being unviable because other people are screwing with it.

    Let me put it to you in another way. We are all going to be ill from time to time. If I catch a bug at work, and fall ill, then that's life - I wait til I'm better and get on with my life (or if it is really bad, die). Alternatively, a person deliberately infects me with the same virus in sufficient dose to make me as ill.

    Now the outcomes are the same, but the causes differ. Do you understand F451? If the interplay of voluntary action of life results in a Landlord falling into hardship, then as you say this is the nature of the beast. If a Landlord is literally forced into hardship by another party (Tenants and their representatives) to make life better for that party, it is certainly unjust.

    Do you see F451 - this is not about protecting landlords but about a violation of a principle. No one should expect the unearned - a rent cap is, essentially a reduction of the tenant's costs, or put differently, an increase in their disposable income compared to what would be the case otherwise. This is paid for by the landlord, who is forced to forsake that income. What claim has the tenant over the landlord to make this a legitimate transaction? None. It is a violation of the landlord's rights.

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  • F451

    So, in principle Jono, you agree Landlords can afford to reduce the rents - who gives a monkeys about the cause then if that is the outcome that can be achieved, indeed is the outcome that you want to achieve through benefit capping and I want to achieve through rent capping. The difference is purely your way causes suffering, my way does not. Why should the poor and vulnerable pay the price for your principle when it is a price that does not need to be paid.

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  • Jon Southall

    You are putting words into my mouth. The post is clear on what my views are.

    The poor and the vulnerable are not a different kind of species F451. They are human beings like you and I, and they have to make decisions about how to live, the same as you and I. The same principles which are right for you and I, are right for them too.

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  • Jon Southall

    You are putting words into my mouth. The post is clear on what my views are.

    The poor and the vulnerable are not a different kind of species F451. They are human beings like you and I, and they have to make decisions about how to live, the same as you and I. The same principles which are right for you and I, are right for them too.

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  • F451

    So in your own words

    Can landlords afford to reduce their rents?

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  • Joe Halewood

    London accounts for 16% of the housing market, the rest - yes those plebs in the provinces, account for more than 5 in every 6 houses. Still this doesnt stop any theory of housign being discussed at it would or has applied to the perverse and atypical London housing market does it?

    Of course not as each sucessive housing policy coming out of each sucessive Hosing Minister for the last 30 years (if not more) is developed to address the atypical (but very nearby!) London housing market.

    The perversity of Londons private rented market is a clear case in point, though almost as perverse is the complexity of 'solutions theories' to it on here, which are becomign more and more complex.

    Oh national average figures for HB in-payment are £79.45 for regulated private tenancies and £113.78 for unregulated ones. Simple facts proving a simple point on a national basis (Yes soory that includes the more than 5 out of 6 plebs that dont rent in the capital!)

    What I hear you say theres only 48,000 of then left and none here since 1989? True, but has anyone looked at Northern Ireland and the reintroduction of regulating private tenancies? Highly regarded by the private landlords themselves and by tenants?

    Seems if in that part of the world they can get over hundreds of years of religious dogma, shouldnt really be that hard for this or any other goverment to set aside their political dogma and regulate ALL landlords and then bring the burgeoning HB bill back under control.

    Sorry another pesky fact and repeated again - if unregulated private claimants paid at same rate as regulated ones then thats a £2.59bn saving to the HB bill at a stroke - which is more than the entire HB reforms are projected to save!

    Can landlords afford to reduce rents? Average nat social housing rent level £76.17, average private rent level nationally is £164.55 - more than double the social rent level.

    And ti supplement my vierw that is a gravy train, regulated private landlords at £79.45 receive LESS in HB than housing association tenants do at £80.11 and they still must at least break even.

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  • Rick Campbell

    HouseMark’s information hub to help you keep up with the fast pace of change in housing

    Friday, 14 October 2011

    Shapps won't cap private sector rents

    Shelter has published research examining the rapid growth of the private rented sector and focussing on its affordability.

    The report says, 'Growth of this magnitude has not been seen in a housing tenure since the post-war rise in social housing'.

    Despite this, the report suggests that 55 per cent of English local authority areas have private rents costing over 35 per cent of median take home pay - a level which, according to previous studies, is likely to be unaffordable.

    A selection of findings:

    The highest average private rent for a two-bedroom home in England is found in Kensington and Chelsea (£2,714 per month), with the lowest (£394 per month) in Burnley.

    Extremely high rents are almost exclusively found in London and areas close to London with good commuter links – the average private rent for a two bedroom home in London (£1,360 per month) is nearly two and a half times the average in other regions (£568).

    The geographic distribution of rent levels is an almost perfect ripple effect out from central London – the further away from the capital, the lower the average rent is likely to be. The few exceptions to this are Manchester, York and Harrogate where average rents are on a par with those seen in the South East and East of England.

    Shelter's report quickly grabbed the BBC's attention, prompting a response from Housing Minister Grant Shapps who refuses to cap private sector rents, claiming that the only way to solve the current housing crisis is to build more homes. Talking on BBC Radio 4's Today Programme Shapps said:

    "On this private rented sector issue a lot of people say why don't you cap rents? I'm convinced that's a bad thing to do. When rents were capped the private rented sector shrunk from over half of all housing to just 8 per cent by the time the caps were released. So I don't think that's the answer. But building more homes is."

    Shapps claims that the Government's plans to revitalise Right to Buy, hand over Government land to developers and reform the planning system will create 200,000 new homes.

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  • Rick Campbell

    Sorry, should have stated that the above posting is a direct lift from the latest e-mail I've had from CoalitionWatch.

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  • Jon Southall

    F451 - still missing the point. The question is - is it right to force someone offering a service at an agreed price to drop it, so another party can benefit at their expense? I say no.

    Joe - do you spend all your time watching rents? Besides - if you suddenly removed £2.59bn, which I would agree with actually, you would force those who rely on subsidised tenants to find unsubsidised tenants. Given that the spending power of the market would fall, so to would rents have to as explained above.

    No need for caps or regulated rents - just stop paying the subsidy.

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