A prominent economic analyst warns that many of the rental policies advocated by the major political parties in the General Election could end up pushing rents higher.
Sarah Coles, head of personal finance at business consultancy Hargreaves Lansdown, made her comments following the release of the latest government figures on the private sector, which shows rents up 8.7% in the year to April. This is actually down from the 8.9% annual figure a month earlier, but still considerably higher than the 1.1% rise seen in house prices.
Coles says: “Would be first time buyers are facing horrible pressure from the rental market, with rents up 8.7% in a year. And while there were plenty of measures for renters in the election manifestos, these have been focused on improving rights and conditions rather than on rental affordability.
“Ironically, those measures could well end up pushing up rents, as more landlords may be persuaded to sell up, and those who stay could face higher costs, and pass them onto tenants. With no light at the end of the tunnel for renters when it comes to costs, their only hope may be to get onto the property ladder and out of the rental market altogether.
“Anyone in this position, who is aged 18 to 39, should seriously consider taking advantage of the Lifetime ISA, where you can save or invest up to £4,000 a year and the government will top it up by another £1,000. The LISA offers a vital leg-up onto the property ladder.
“An estimated 11% of first-time buyers with a mortgage used a Lifetime ISA to get onto the property ladder in the most recent year we have data for (2022-23), and during 2023, among HL LISA clients, the average annual bonus was £747, which is a very welcome step in the right direction.”
Richard Rowntree, managing director for mortgages at buy to let lender Paragon Bank, says: “It is encouraging to see a reduction in rental inflation, which we believe will be driven by lower inflation on new lets. In order for this trend to continue, something that helps to alleviate the affordability challenges faced by tenants, it is crucial that we address the imbalance between the demand and supply of rented homes. To do this we need to recognise the contribution of private rented sector landlords and be proactive in creating the conditions that facilitate investment in good quality housing.”
And Nathan Emerson, chief executive of lettings agents’ trade group Propertymark, comments: "The impact of what has been a challenging economic period continues to play chaos for many renters. Not only are personal finances stretched to the max for many people, but we have the added uncertainty of a general election and what that might ultimately mean for renters and landlords.
“All major political parties have referenced the need for building much-needed new homes, but we need to see a precise plan and timeline as to how and when that is going to happen. Currently, demand is continuing to seriously outstrip supply, and this remains a major contributary factor to elevated rental prices across the board."
Activist group Generation Rent responded to the rent rise figure with its chief executive, Ben Twomey, issuing a statement: "Prices in the shops may have stopped rising so quickly, but renters are still seeing our single biggest cost go up faster than our incomes. Landlords can raise the rent as high as they think they can get away with and use the threat of a no-fault eviction to bully their tenants to accept it.
"We won't fix the cost of renting crisis unless the next government acts to slam the brakes on these runaway rents. We need more homes in the places people want to live, but to give us more certainty in our homes, we also need protection from unaffordable rent rises. That means stopping landlords raising rent above wage growth or inflation - whichever is lower."
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Twoomy has 1 thing right.... The UK needs more homes. The government needs to build more social housing and stop landlords selling up and stop forcing them to sell via higher taxes and more legislation.
This nonsense will just mean more landlords sell up rents sky rocket (supply down , demand up) as those in power & the parrot MSM continue to make it worse for everyone.
More crazy and desperate rhetoric from the loonies 🥱. The sad thing is…. They know there is nothing they can do, the more they attack us, the more we sell 🏡💰, the higher the rents 😱.
Generation Rent need to get their facts straight. France has three year leases and this is the model we should be following. Sweden which has lifetime tenancies has a black market operating whereby tenants sublet at a much higher rent!
I'm not convinced many UK tenants would like the French system. I've rented there and my sister has owned a BTL there for around 15 years.
The standard of rental properties I viewed ranged from dated and basic to something you wouldn't kennel a dog in. Kitchens consisted of a kitchen sink. No units or worktops. The tenant had to provide their own. Flooring tended to be stained and a few years past life expired. Decor was mainly stuck in the 1960s. Deposit deductions were heavy handed and something we would never get away with here. When I moved in the flat was full of dead insects, tiles were cracked, fixtures had been glued together. When I moved out it was spotless but because one of the things that was broken when I moved in was even more broken when I moved out I lost a big chunk of the deposit. Our tenants are positively pampered by comparison.
I am afraid rents will have to keep rising until something gives. If we can't cover our costs we will have to sell. If we aren't allowed to sell then I guess the lender will do it for us. Lenders won't stand for this nonsense. It might actually be better to have a mortgage as presumably they will only be able to stop sales of non mortgaged properties? Even then, Human rights legislation might come to our aid.
Jo, they will have mixture of policies, like 3 year rental lease with all the work to be done by landlord on an ongoing basis, even if the tenants create the problems, like dampness on an ongoing basis. The policy will also allow the tennats to refer to the landlords for any insects or rodents, which again may be created by them, by taking food upstairs and half eaten food left by the bed. We have deposit scheme, who would scrutinise any heavy deductions made on properties even with receipts and proper check in's and check outs. In UK, the landlords will be totally trapped, all because the council and government being so lazy to work on tenants properties. They should not just depend on building new homes. There are landlords willing to sell at market prices, if they were genuinely concerned about the tenants. However, the government, councils and so-called charities helping tenants have an agenda against the landlords, most of them do look after their roeprties and the tenants to make a good home for them.
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