As we reach the end of a truly awful week for the government* the National Audit Office has decided to get in on the act. The Regulation of Private Renting report is the equivalent of a (fully deserved) kicking for the government and its approach to the private rented sector over the past decade. I can’t believe that much in here will come as a surprise to readers of this blog, but it’s truly depressing to have it all pulled together in one place.
First, the scale of the problem. Private renters spend an average of 32% of their income on their housing costs. That is *much* higher than owner-occupiers (18%) and a bit higher than social tenants (27% – that’s itself concerningly high and, I assume, can be attributed at least in part to the rise of the “affordable rent” sic scheme). This isn’t just a source of individual hardship for tenants but is a huge outlay of public funds – the private sector housing benefit bill is over £9bn a year (imagine how many low-cost houses you could build with that money!). And, for all this money, they get what? Certainly not security of tenure – 29,000 households a year are made homeless or threatened with homelessness for reasons which are not related to their default. Nor do they get good quality housing. Some 13% of the PRS has a Category 1 hazard (Housing Act 2004), as against 10% of owner-occupied properties and 5% of social housing.
Secondly, government interaction is piecemeal and lacks any strategic vision for the sector. Importantly, the government has no way of measuring the impact of its interventions. It lacks data on key issues (e.g. scale of harassment and unlawful eviction) and, just as importantly, does not know what the impact of its reforms has been on landlords (either financially or in terms of changes in behaviour). Where it does have data, it hasn’t shared that with local authorities (which, given that they are the primary enforcement vehicle, is breathtakingly stupid**). There is limited “joined up” thinking. The DLUHC does not, for example, have any formal process for discussing tax reform (as it affects LLs and Ts) with the Treasury.
Thirdly, the government has effectively outsourced enforcement to the 308 District/Unitary councils in England. That has, unsurprisingly, led to an enormous disparity in performance, standards, etc and the government does not even take steps to ensure that authorities can learn from each other by promoting good practice. It also doesn’t help to promote its own reforms – there have been just 10 banning orders since they were introduced by the Housing and Planning Act 2016. The ONS has been able to do some limited data analysis and, in a conclusion that will shock precisely no-one, concludes that authorities which have a more active enforcement policy tend to have higher quality housing in their area.
Fourthly, if we turn to tenant-led enforcement mechanisms, these are confusing and expensive. Tenants simply don’t have the knowledge to let them negotiate with their landlords. That’s not surprising – partly because of the inherent power imbalance in the L&T relationship but also, as the report explains, because many tenants are either not native English speakers or face other structural disadvantages.
I don’t know whether to rage or weep when I read things like this. I commend this report to anyone with an interest in the sector. We are all – landlords, tenants, home owners – failed by this level of incompetence.
* all self inflicted and, frankly, disgusting.
** Although entirely in keeping with the standards of this government.
Sorry to spoil the indignant indignation but the 18% owner-occupiers spending is just for their average mortgage costs.
It doesn’t include their costs for renewing boilers, carpets, cookers, roof repairs, cp12’s, EPC’s, EICR’s, etc etc.
And private rents are largely taxpayer unsubsidised.
So….
I’m not sure whether or not you’re right about private rents being largely taxpayer unsubsidised, nor does the NAO make any such comment. The NAO explains that £9.1bn is the “… estimated amount of housing support paid to private renters or directly to private landlords in England in 2020-21”. My point is simply that £9.1bn is a lot of money and I confess some doubt that it’s the most effective use of public money.
Secondly, I think you are right that the 18% figure refers to mortgage costs, but I’m not sure that’s quite the good point you appear to think it is. Tracing footnotes 1 and 2 of the NAO report takes you to English Housing Survey: Private rented sector 2019–2020. That suggests (para.2.15) that owner occupiers with mortgages spend 18% of their income on their mortgage. Similarly, the EHS is the source for the 32% of income *on rent* figure in the NAO report (pg.4 of 59). It’s an imperfect analogy, but rent is a reasonable thing to compare with mortgage costs as both relate to the direct cost to the person of being able to have rights over the land in question and both exclude other “add on” costs (whether repairs as home owner or other housing costs as tenant).
If your primary complaint is with the tone of my writing then may I gently suggest that there are rather more pressing problems with the PRS…
“First, the scale of the problem. Private renters spend an average of 32% of their income on their housing costs. That is *much* higher than owner-occupiers (18%)”
May I gently suggest you didn’t understand the scale of the problem.
Owner occupiers don’t need EPCs or EICRs? Not sure why you added those in.
Comparing rent for tenants and mortgage costs for owner occupiers is a reasonable, if not perfect, means of comparing the costs of being able to live in a property. Costs of replacing boilers, carpets, roof repairs etc are relatively small when spread over the extended period in which they would be incurred, so unlikely to add significantly to the average % of income spent. (Certainly won’t be 14% of income per year!)
Not sure what you mean about ‘unsubsidised’ rents. Social tenancy rent levels aren’t subsidised, they return healthy amounts to council housing revenue accounts and to the Treasury every year.
“Comparing rent for tenants and mortgage costs for owner occupiers is a reasonable…” In what sense can this possibly be reasonable? For a start mortgage costs include a repayment of capital element. That is not a cost. OK, for early mortgages that may be small, but aggregated over all mortgages as an average it won’t be. Secondly, the mortgage interest is not a housing cost at all – it is a cost of borrowing to buy an asset which over time is most likely to appreciate. Suppose a property with value £250,000, owner occupied on 80% at 4% interest mortgage at 4% interest that appreciates at 7% (a reasonable long term average) compared with the same property tenanted with 4% yield costing the tenant £12,500. The “cost to the owner occupier is £8,000 (plus the opportunity cost of his capital element, say £3,000), less the increase in house value £17,500 – net negative £6,500. The tenant has a real cost of £12,500. You can argue with these figures, but you can’t argue the fact that over 25years the typical tenant has nothing while the owner occupier has a substantial asset. Our housing system is broken and needs a fundamental rethink.
Inasmuch as it is a cost of occupying a property, it is a housing cost. The end state after 25 or 30 years, and the capital value are, of course completely different, but the point for the NAO and the comparison, is the proportion of income spent on housing costs. The difference in the proportion of income goes to support your suggestion that the housing system is broken, not undermine it.
Your article states, “29,000 households a year are made homeless or threatened with homelessness for reasons which are not related to their default”. As we know, many landlords resort to Section 21 when they really should use Section 8 (where the tenant has in fact breached the agreement). In fact most of the landlords I encounter through work use Section 21 when the tenant is in fact at fault. How does your data demonstrate that the 29,000 households are *not* in fact at fault (presumably these are where Section 21 was used)?
You also mention the English National Housing Survey. Paragraph 1.40, page 15 states, “Satisfaction with current accommodation
*The majority of private renters were satisfied with their current
accommodation (83%).* They were more likely to be satisfied than social
renters (78%),” https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1000052/EHS_19-20_PRS_report.pdf
Previous ENHSs have given similar values for private renter satisfaction. Given the respondents’ identity is likely to be concealed and not shared with their landlords, the respondents have no reason to lie and (given human nature) respondents would be much more likely to want to report negative conditions.
I would also like to point out that private renters are a very diverse range of people, who rent for different reasons. The vast majority of my tenants over the years had the option to buy (based on their incomes and credit scores) but *chose* to rent instead, yet you are taking a specific group of private renters (low income and housing benefit dependent) and suggesting this group is representative of *all* private renters.
Thank you.
Sure, there are private landlords who provide an excellent service and who have an effective and professional relationship with their tenants. But there are far, far too many landlords who don’t meet that description. And that is the reason why there needs to be proper regulation and enforcement of standards. But what should concern *everyone* about this report, whatever their role in the housing market (whether tenant, landlord or owner-occupier) is the criticisms of the government. Regardless of what one thinks of the legislative interventions of the last decade, surely everyone would agree that not having any means of measuring their impact is absurd. Similarly, the failure of the DLUHC (or DCLG/MHCLG as it was for most of that period) to have a formal relationship with the Treasury to discuss the implications for LLs and Ts of tax policy changes is just madness.
Mandy, it is not ‘our data’. It is not about s.21 either.
The tenant satisfaction figure is completely by the by. The point of the NAO report is the Govt has failed to have any joined up thinking or practices when it comes to tackling the substantial proportion of poor quality, relatively high cost private accommodation.
This knee jerk tendency to denounce anything that contains any criticism of parts of the private sector as an attack on the private sector as a whole really isn’t helping. It just makes it look like private landlords won’t be part of coming up with a solution because they keep denying that there is any problem at all.
Whenever the 83% ENHS satisfaction figure is trotted out, I confess my eyes do roll.
My crew, Safer Renting deal with around 250 referrals a year of illegal evictions and people suffering serious harassment, which are all accompanied by very bad often death trap property conditions. The referrals tend to be by address, so in HMOs which most of our cases involve, those 250 referrals easily amount to two or three times that in individual renters PLUS I’ve been doing this for 31 years and couldnt even begin to count the amount of cases I’ve dealt with and yet one thing I know for sure, I have never spoken to a single renter who the ENHS pollsters have ever spoken to, nor are the pollsters who conduct the ENHS regular visitors to 15 bed HMOs with no fire precautions, 3 bed homes converted with stud walling into 15 units, where no tenancy agreements or rent receipts and given.
Our work represents 11 of the 308 UK Boroughs, the ENHS interviews around 13.000 people, not just renters. We keep very detailed data on all aspects of rogue and criminal activity, the scams perpetrated, the ethnic groups adversely affected by this kind of landlordism. If the ENHS people are interested in adding our data to theirs I will personally deliver it to their offices in an armoured car and see then if this rigged 83% still passes muster.
Ben, your 250 referrals per year spread across 11 boroughs represents 22.7 per borough and if every borough in the country had the same number – unlikely as I imagine that you operate in some of the worst areas – it would still only equate to an annual total of 7,000 cases. Far too many I agree but it is a tiny proportion of the 4.4 million rented properties i.e. approximately 0.16%. I also distrust the 83% satisfaction figure – it is probably far too low.
David you are making the common mistake of coming at the equation from the opposite direction. 1 landlord illegally evicts 1 tenant, thats 1 illegal eviction and 1 criminal landlord.
Landlord of 10 bed HMO illegally evicts 10 tenants to evade prosecution for failure to licence, = 1 criminal landlord 10 illegal evictions. 10 people street homeless or sofa surfing.
For the past couple of years I have been working on complaints against one landlord, prosecuted earlier this year by one of our partner councils, who by – his own admission owns 600 properties. Most of the ones I’ve been involved in are HMOs, 7 being the smallest number of occupants. Now, taking the number of rogues and criminals representing just 5% of all landlords – an entirely made up figure thrown out by govt with no evidence but widely adopted among the landlord community, if this guy runs just 5% of his properties this way, that’s 30 properties with say 7 luckless people per property, then you have one criminal landlord harassing 210 human beings at any one time, not taking into account turnover of occupants.
In another case I have been involved in for just the last month for Westminster council, where neighbouring Camden council got an anti social behaviour injunction with an exclusion zone around his properties, he runs 2 flats in Kilburn High Rd, each housing 7 people but where there has been an inflow and outflow of new tenants just in the past month bringing the total number of residents up to 20, he has stabbed one in the neck with a car key (we have video footage), knocked another unconscious and had another badly mauled by a dog. this doesnt take into account the numerous visits by thugs, threats made and disconnection of electricity……1 criminal landlord, 20 victims in the past month alone, in just 2 of the numerous properties he rents out across London.
Oh and hey, lets take the Mayfair landlord who removed the roof to drive out the tenants, making 12 families homeless. 1 untraceable BVI offshore company owner, 1 dodgy managing agent = 12 families made homeless.
Its not about the number of landlords, its about the number of their victims and the devastating effects of their crimes
In the NAO report is DLUHC’s analysis that 46% of private landlords fail to comply with their regulatory and legal requirements. (It is on page 37).
Ben, these examples are horrifying – they may seem commonplace to you but do not reflect the experience of the vast majority of renters and the landlords you describe are far from typical.
You are not happy with the 83% ENHS satisfaction figure but if you dig into the detail you will find that it is only 2.9% of renters who are “very dissatisfied” with their current accommodation. The remaining 97.1% are either satisfied, neutral or slightly dissatisfied. Even those figures are distorted by much higher levels of dissatisfaction in two particular regions.
I’m still not sure where ‘tenant satisfaction’ gets anyone, not least when the same report sets out 23% of PRS (29% for tenancies with UC support) don’t meet decent homes standard and 13% have at least one category 1 hazard. Are people really saying ‘hey, the tenants are happy with the place so it doesn’t matter if it isn’t decent’?
Which brings us back to the NAO report and the point being a failure to address PRS issues by the Govt in a joined up way.
[Edited by J – the name of the person who posted this was indeed an accurate description of what was said]
“Private renters spend an average of 32% of their income on their housing costs. That is *much* higher than owner-occupiers (18%) and a bit higher than social tenants (27% – that’s itself concerningly high and, I assume, can be attributed at least in part to the rise of the “affordable rent” sic scheme)”
According to the table on page 23, more than half of owner occupied homes are owned outright. The average cost for those who have mortgages is therefore at least double the 18% of income quoted, which suggests that the true cost for those who are buying is at least 36% of the average income for that group.
On average, renters are likely to have lower incomes than owner occupiers and it is to be expected that they would spend a higher proportion on housing, heat and food than a higher earner. The percentages quoted suggest that they are in fact getting a rather good deal.
Having to spend a large proportion of income on housing costs means either (or both) incomes are too low, and housing costs are too high.
Your approach to the table is wrong, I’m afraid. The EHS afordability approach only considers owned properties with a mortgage, so the outright owners aren’t included. See 1.50 of the EHS report. Nice try.
Yes, I was just double checking the EHS report myself so I surrender on that point! However, I still believe the statistics to be misleading as mortgage payments reflect the price paid, regardless of when that was.
In our area a typical 2 bedroom house currently has a market value of around £200,000 and rent of £750 per month, give or take. Buying the same house on a 25 year 95% repayment mortgage would cost around £840 per month after payment of the £10,000 deposit, SDLT, legal costs and all the other expenses that renters do not have to worry about.
Therefore, comparing like with like the cost of owning, even with interest rates at their current low level is significantly greater than the cost of renting. Expressing costs as a percentage of average income leaves a trail of false impressions.
The cost of housing is driven largely by supply and demand. Whatever Government might say about affordability, there are more than enough prospective purchasers and renters to sustain current levels. We had more than 30 applicants for the tenancy of our last vacant property and houses are snapped up almost as soon as they appear on the market.
I’m sorry David, but statistics are against you. It is generally the case that mortgage payments are lower than rent payments. There may be various individual exceptions, but it doesn’t alter the general picture. https://www.which.co.uk/news/2021/04/is-it-cheaper-to-own-or-rent-a-home/
@David Heal Yes these stories are common place to me and my team but it doesnt stop them being common place generally, whilst we are a specialist team, working across just 11 of the 308 UK councils. The attitude of the landlord lobby, NRLA etc is that our usual suspects represent a “Few rotten apples”. By your original reckoning of a possible 7,000 cases annually, that is one hell of a barrel……..more like an orchard and is, as I pointed out woefully askew as it only accounts for landlords, not their victims.
The bun fest presents a housing shortage, rocketing rents, stranglehold on the housing market by private landlords in the name of ‘Landlordism’, savage cuts in housing enforcement officers means, as you would expect, that criminals are flooding the market to make a killing, whether you, as a decent landlord likes it or not.
The decent landlord lobby can staple themselves to the mast of the ENHS as much as they like but it doesnt take away the fact that there is some serious shit going down at the bottom end of renting. It’s not small….it’s not a barrell……its an organised industry, through which people are having their homes stolen, their and their children permanent sense of security being robbed along with their personal possessions. We have to keep employing new caseworkers to meet demand, one of the few growth industries in the pandemic and no…….were not for profit, we arent making a killing, things are just getting worse and worse, while landlords feverishly tug on the medallion of 83% satisfaction like a talisman
Ben, I have no wish to minimise the harm being done by criminal landlords, but like it or not they are a small proportion of the 4.4 million. You will know that NRLA and most landlords are totally in favour of LAs using their existing powers to root them out. We are sick and tired of being tarred with the same brush.
And normal landlords will continue to be tarred by the same brush whilst they continue to sweep the problem under the carpet and claim, as you did earlier that these people amount to only “approximately 0.16%.” of the landlord market.
You also said ” it would still only equate to an annual total of 7,000 cases” and I pointed out to you the falsehood of counting the number of criminal landlords as opposed to the number of their victims.
You couldnt Limbo dance under the amount of sympathy people have for landlords at the moment. Moaning about being tarred with the same brush as the sorts of people who steal people’s homes, terrify them and push them onto the street is not going to get you a fan club David.
Your industry, the method through which you stack up your pension, make your future safe, landlordism, is wide open to criminal enterprises, why should people care about you? You arent a housing provider, you are a property investor
Ben, what proportion of the landlord market do you say is in the criminal category? All that I have done is extrapolate from the figures you provided.
The number of tenants affected does not increase the number of cases to be dealt with but should increase the pressure on LAs to protect them.
You seem to be saying that it is acceptable to lump all landlords together. If that’s what you think, so be it, but it is hardly a reasoned position to adopt.
Please rest assured that I am not looking for sympathy or a fan club, just a rational debate.
By investing in property I make housing available to those who for whatever reason want or have to rent rather than buy. If I don’t do it, who will? What’s your point?
Read the NAO report – Govt failure to actually have a joined up policy and implementation on enforcement is what it is in large part about! And agin with this ‘small proportion’ stuff – it is just like the ‘satisfication survey’ – it is wholly besides the point, when the actual point is the Govt being ineffectual in sorting out the issues. It is just something that gets trotted out by landlords to try to make it sound like it isn’t a really serious problem (it is a really serious problem) and that nothing should change because they are lovely (the whole point of the NAO report is that things needs to change).
I have been for a long time, and continue to be, very tired of the bog standard PRS response to any criticism of any aspect of the PRS. It is always the same. Oh, small proportion, oh tenant satisfaction figures. As if any criticism of any part of the PRS was part of a dastardly plot to do away with the PRS. The sector can’t self regulate, that is abundantly clear.
Of course criminality is serious but the answer is to deal with it by hammering those concerned and I entirely agree that dysfunctional government is a major contributor to the problem. The obvious answer is to give LAs the resources they need to get to grips with the issue.
What is the point of tenant satisfaction figures if they are to be ignored? The report criticises the lack of data but you choose to dismiss as irrelevant the data that is available. The only other measure of tenant satisfaction is each landlord’s personal experience, which is obviously limited and of no interest to anyone else.
What other response do you expect to criticism of the PRS based on the failings of a small minority and how on earth can such a diverse sector be expected to self-regulate other than on an individual basis? If LAs and/or the police are incapable of dealing with criminal landlords effectively, how do you suppose that other landlords would be able to do so?
Giles, I gave a real life example of how things are on the ground in our part of the South West. The Halifax report does not take account of local variations – rents and prices can differ greatly even within the same street so averages are no more than a generalisation.
Even based on the report however it is clear that the proportion of income spent on housing is broadly similar whether renting or buying a similar house. For those who can raise the deposit and satisfy the stringent affordability criteria which lenders have to follow, the decision whether to buy or rent is theirs to make. Others who have no alternative to renting are obliged to live in an area where rents are affordable to them. The harsh reality is that we all have to cut our coat according to our cloth.
Obviously no report can take account of property by property variations. But equally obviously, those variations are not numerous enough or significant enough to change the overall picture.
And really? ‘broadly similar’? Let us take the annual difference in the South West – your area. £1,836. Now, if that represents the difference between 18% of income ownership costs and 32% of income rental costs, that would be 14% of annual income. That would be an annual income of about £13,100 – very low but not out of possibility. Now take the South East – £2580 difference, meaning an annual income of c. £18,500. Plausible. London difference gives an income of £33,000, that is well above the average annual income.
Now that, as you observed earlier, is on new purchases, not on the majority of old ones with ongoing mortgages, where the costs would be lower. So the 18% – 32% of income difference looks eminently plausible as an average.
As for cutting our coats – this is simply not the case. It is a matter of policy, of regulation and of where public funds are put. For example, the many billions put into ‘help to buy’ which only inflated new build prices, or right to buy and the effective ban on councils building new stock. And ‘cutting our coats’ doesn’t explain why we all should be paying billions in housing benefits, and losing £340 million a year in costs to the NHS, for substandard, non-decent, unsafe private sector accommodation.
The Which report has misquoted some of the figures – see the Halifax press release at https://www.lloydsbankinggroup.com/assets/pdfs/media/press-releases/2021-press-releases/halifax/20210401-halifax-buying-versus-renting.pdf – the rent cost for the South West should be £927 but the £1827 figure is “correct”, as is your calculation, but on an annual income of £13,100 how could anyone afford rent at that level or mortgage payments of £775 per month, let alone fund the £53,358 deposit on which the figures are based or obtain a mortgage in the first place? Paying that level of deposit obviously reduces the monthly cost of buying which accounts for some, maybe all of the difference between the cost of buying and renting.
I note that you are happy to accept the estimated annual cost to the NHS of £340 million of “substandard, non-decent, unsafe private sector accommodation” but am not convinced that the alleged causation would stand up to proper examination. If it does, there is a niche opportunity for the ambulance chasing lawyers.
I agree with your other comments on “cutting our coats”, policy and regulation over the years has been marked by lack of foresight, unforeseen consequences and general chaos. But the fact remains that each individual can only have what he can afford in his particular circumstances.
David
On the calculations, you miss the point. All I was saying is that even on ‘new’ mortgages, mortgage costs are still less than rent. When you factor in the older, lower mortgages, the 18% v 32% gap is eminently plausible.
On ‘ambulance chasing lawyers’, I’m afraid that use of that phrase is one of the things that automatically causes me to mark down someone’s argument. It is a clear sign of unthinking, knee jerk, self interest. Apparently you don’t believe that tenants should be able to exercise their rights, or be able to take action on their landlord’s failures to fulfil their legal obligations. (That is assuming they are able to find a solicitor able to take the work on. Most are flat out – there is no shortage of properties that are unfit for human habitation).
And, of course, all tenants (social or PRS) can look forward to an eye-watering 4.1% rent increase next April courtesy of the regulator. Happy New Year.
Well no. The increase is social rents is effectively set by the Govt. It has nothing to do with PRS rents whatsoever.
Okay I’ll settle for being 50% correct, it beats my normal performance.
Giles, you too have missed the point that the large deposit distorts the comparison. I do not doubt that when older mortgages are included 18% might be correct. The problem I have with that headline figure is that it will be seized on to support the argument that rents are unfairly high. I have run the Halifax figures for the South West assuming a 100% mortgage and find that the monthly payments would be £1273 compared with renting at £927 so buying with no deposit – the fairest comparison – would cost £346 per month more than renting.
Your reaction to my ambulance chasing lawyers comment is similar to mine when I hear the phrase “rogue landlords” or unfounded objections to the 83% satisfaction figure, which as I said before should more correctly be 97%. Sorry if it stopped you responding to the preceding points.
For the record, I have no objection to tenants or anyone else exercising their rights, although I certainly have misgivings about some of the rights that have been invented in recent years.
No, it doesn’t distort the comparison – it is not about the cost of purchase, it is about monthly housing costs – ie, the proportion of income it costs to live there on a month by month basis. Therefore on a typical mortgage, not a particular hypothetical you have come up with to distort the figures.
Rents are high relative to income. That, as I mentioned before means either or both of incomes are too low, and rents are too high. However, it does mean that there is a severe problem with the PRS, particularly at the lower income end, which you just keep waving away as ‘cut your coat’. It doesn’t work like that. In the absence of a decent supply of affordable social housing, it will inevitably be a problem for the PRS – both one of perception and one of actuality – the PRS does not provide the housing the country needs.
The difference between my reaction and yours is that your ‘ambulance chasing lawyers’ comment reveals that you do not think tenants should be able to take legal action where their landlords have failed to meet their obligations. But anyone talking about rogue landlords are talking about something that demonstrably exists – just that you don’t want to believe it because it is inconvenient. In both cases, you are trying to deny problems. I’m not. Thank you for confirming you would like to see some tenants rights taken away.
As before, the satisfaction survey is irrelevant to the issues here, even if it is accurate. The measurement for whether housing stock is hazard free and of decent standard is not whether anyone has complained.
The difficulty for you, David, and indeed the PRS to the extent that landlords share your approach, is that it doesn’t help you. In fact – in PR terms and in terms of responding to Govt consultation and proposed legislation – it just makes things worse, because it makes clear that the PRS will never be able to sort out its own problems. This is the bit that continually surprises me – it shouldn’t after all these years, but it does – just how incredibly bad PRS landlords are at PR, and/or about dealing with the perception of the PRS.
Monthly housing costs for an owner occupier with a mortgage are dependent upon a combination of interest rates (currently at an all time low but likely to increase) and the amount of deposit paid. Renters pay only the monthly rent so the only meaningful comparison is with the cost of a 100% mortgage. My figures are no more hypothetical than those contained in the Halifax report, in fact I used the same figures and obtained an online quote from Halifax to establish the cost, only changing the deposit from 22% to 0%. If the only objective of the exercise is as you suggest, you might as well include outright owners in the calculation.
Housing costs, not just rent, may be perceived as high relative to income, depending on how you define “high”. Mortgage lenders and landlords make their own assessment of affordability when considering applications, which means that some applicants cannot afford to live in their ideal property. The PRS does not claim to meet every housing need, although it will in the nature of a free economy usually respond to demand where it can be met on reasonable terms, but not when the returns do not satisfy a landlord’s risk/reward criteria. Each new restriction and regulation with its associated penalties increases the risk side of that equation, whilst tax changes and additional costs reduce the reward side. Some landlords who have previously structured their businesses to cater for those at the lower income end are withdrawing from that part of the market, so you are right, there is a growing shortage of social housing. I see that as a problem for Government rather than the PRS.
Rogue landlords number 10,500 according to Government estimates i.e. approximately 0.24% of the total. It is a large number but a tiny proportion who fall into that category. I believe that they exist and need to be dealt with, but not that the whole PRS should be tainted any more than all lawyers should be tarnished by the activities of a few.
Yes, I would like to see some tenants’ rights removed e.g. the right to stop paying rent and remain in occupation until the Courts and bailiffs have got their act together.
I am not sure what you mean by “my approach”.
You seem to regard the PRS as a homogeneous whole, which is far from reality. It consists of individuals, partnerships, limited companies ranging from very small to large nationals. They have no links with each other, no common representation and no single voice. The largest landlords’ association has probably only around 150,000 members. Little wonder that effective PR may be lacking.
According to DLUHC figures, 46% of PRS landlords fail to comply with all their legal and regulatory requirements. That seems like quite a lot to me. As does that 23% of PRS properties (29% for tenancies with UC support) don’t meet decent homes standard and 13% have at least one category 1 hazard.
“The PRS does not claim to meet every housing need” – therein is the problem, and a part of the NAO’s point. A failure of policy, regulation and implementation means that those on lower incomes have been left with increasing unaffordable, poor quality, unhealthy accommodation. There is, obviously, no one simple way to deal with this.
I don’t regard the PRS as an homogenous whole at all, quite the reverse. That is my objection to your approach, where everything is sunny, just look at the satisfaction figures.
I’m going to inject my own two-pennyworth into the conversation although I’ve no doubt that whatever I might say will be shot down as trite and obvious etc. Ben Reeve-Lewis, God bless him, toils away at the coalface dealing with the criminal end of ‘landlordism’. If that’s all he does that will inevitably colour his views. The same could be said for someone doing rent arrears possessions, all day, everyday. They may well tend to the view that tenants are all a bunch of feckless ne’er-do-wells. I’ve been reading Ben’s stuff for many years now and absolutely respect his writing, his intelligence and his insights but I don’t agree with him on some points, eg the usefulness of compulsory property licencing (or when an authority make selective property licensing compulsory for their area. Ben’s argument, if I recall correctly, was that it helped identify the ‘rogue landlords’ who would inevitably be unlicensed. Well, it doesn’t seem to have helped eradicate the problem one iota as far as I can see. it just seems to put costs on to the ‘decent’ landlords – who will inevitably pass them on to their tenants in the form of higher rents – and, of course, where the tenants are on benefits, the higher rents just become an increased cost to the taxpayer.
As for J taking umbrage at the phrase ambulance chasing lawyers, well I do seem to recall a piece in the blog (possibly Gile’s work rather than J’s) about claims farmers and the solicitors who use them to drum up disrepair work so lets not pretend that every housing lawyer holds every other housing lawyer in the highest possible regard.
The comparison of owner-occupiers accommodation costs vs renters accommodation costs, the 18% v 32% statistics doesn’t really tell us very much. If I were a renter who was looking to buy, that comparison, factoring in as it does (because it is an average) older owner-occupiers who bought cheap, many, many years ago and are paying off relatively small sums from relatively small mortgages isn’t going to be useful or meaningful. Obviously that renter would be more concerned about what it would cost him (or her) to buy a property broadly equivalent to the one that he is renting. Are there figures available as would suggest that the cost of renting as a percentage of average median income has increased over the last several decades? Saying that renters now spend a third of their income on rent might be meaningful if it is some new development but not if it was ever thus.
I expect the landlord-bashers and the landlord-promoters may well share some common ground. I don’t suppose either side was much enamoured with the Government enacting laws which oblige landlords to make enquiries to satisfy themselves that prospective renters have a ‘right to rent’ by virtue of their immigration status. Those lacking a right to rent may account for a considerable part of Ben’s workload, victimwise. It surely tends to drive people towards those persons, very often members of their own ‘communities’, who will exploit them. To return to whether rents as a percentage of median income has gone up in the last few decades if there has been an increase this doesn’t necessarily mean that the fault lies with the DLUHC and its predecessors. Correlation does not always mean cause. An increase in rents over time may just be down to an increase in population size what with inward migration, etc. Yes, good old supply and demand can cause prices of rents to increase . . .
Hi Chris
It was my comment on ambulance chasing lawyers, and my piece on claims farmers. Claims farmers are indeed a problem that needs to be addressed. That does not change my broader point (which was wholly congruent with the issue of the tiring pointlessness of some taking any (rightful) criticism of part of the PRS as an attack on the PRS generally).
On housing costs, PRS rent has certainly increased as a proportion of income over the last 10-15 years, with some regional variability. The significance is that it has increased in particular for those on lower incomes (who are also those most likely to occupy poor quality housing). There is a useful IFS report from 2017 here – https://www.ifs.org.uk/uploads/publications/comms/R132.pdf The position has not improved since 2017, if anything the reverse.
Increasingly unaffordable rents for poor quality accommodation (particularly at the lower income end) may not have been directly caused by DLUHC/Govt etc, but the point (including the NAO’s point) is that not doing anything effective about it is indeed both a policy decision and a failure of implementation, and one which has costs (both personal costs and costs to NHS and the benefit bill).
And heavens yes, right to rent checks are a terrible thing!
Sorry all. Weekend over and I dont have time for prolonged debate but Chris, the fact “licensing doesn’t seem to have helped eradicate the problem” is a spurious comment. Nobody says licensing is the sole solution. Its ONE solution, among many others, IMOs, FMOs, prohibition orders, emergency remedial notices, Works in Default, RROs as well as civil damages claims, demolition orders and PFEA prosecutions.
Housing enforcement types are at war everyday. Yes lack of resources is one hurdle but it isnt the only hurdle. Fragmented and poorly drafted legislation doesnt help, nor does lack of legal aid, the committed practices of criminals using aliases and chains of dubious companies to evade detection and prosecution. Nor does it help that local authority enforcement still so often fails to get beyond silo working and into multi-disciplinary targeting of criminals.
Everyone in my world is a bit overwhelmed really. whatever we need to utilise to get the bastards we will utilise, if there is collateral damage in there I can live with it and yes I know that doesnt sound great but there you go
Oh and woah woah woah….what’s this comment? “it just seems to put costs on to the ‘decent’ landlords – who will inevitably pass them on to their tenants in the form of higher rents”….Its not my fault, any laws you pass that adversely affect my income will mean I have to punch to the tenant in the face?!?!?! That’s a tired argument that doesnt do landlords any PR favours
Steady on a bit, Ben. ‘Woah, woah, woah”, even.
Where exactly did I say or imply that landlords should go around punching tenants in the face? All that was said was that costs put upon landlords get passed on to the tenants – and if those tenants are on benefits, ultimately to the taxpayer. The average (non-criminal) landlord even if he disagrees with the basis on which selective licensing has been imposed [and by way of reminder the justification was originally just supposed to be that “that the area is, or is likely to become, an area of low housing demand” and/or “the area is experiencing a significant and persistent problem caused by anti-social behaviour”] will just sigh, regard it as a cost of doing business, and put the rent up a bit at the next opportunity, if he can. Or he might try and make a deduction against his income tax or whatever.
I stand 100% by the assertion that property licensing has not helped eradicate the problem of rogue landlords. If it had done you’d be out of a job in those boroughs where it was a thing. That you might find it a possibly useful tool to have in your toolbox, I’ll concede. But that’s the thing about tools (or weapons): once you have a tool in your toolbox (or a weapon in your armoury) it’s very hard to let go of it, even if its a bit rubbish. You’ll find a justification for keeping it even if it is rarely used and if you find yourself using it often you’ll be dead-set against giving it up even if it were, say, a costly and disproportionate interference in the rights and freedoms of others.
And I’m all for the multi-disciplinary targeting of criminals, etc – but because they’re, you know, criminals shouldn’t that really be lead by the police. As with other instances where local authorities find themselves getting involved – such as ASB – often it comes down to a failure of policing. The police’s ability to ‘no crime’ something that they can’t be bothered to deal with should never be underestimated
“ I have to punch to the tenant in the face?!?!?!”
It’s nothing to do with punching tenants in the face Ben nor getting all emotional about it.
It’s just very simple, basic, cold, hard economics.
I told you this would happen many years ago. I take no pleasure in being right.
I dont think anyone mentioned that the local authorities are often dependant on the PRS for housing stock especially for the most vulnerable. A small landlord is one thing but many have large landlords on whom they rely and strict enforcement of regulation chases off landlords. it is that muddy puddle of is a roof better than no roof over your head? I recall meeting with a london council officer and mentioned a recent tvshow on the beds in sheds, they stated they could not widely enforce as doubtless many would have then a right to be housed the kitchen kettle training was therefore “go softly”
And back we go to failures of policy, regulation and effective implementation. Which is the point of the NAO report.
Indeed GP yet my underlying point is that whatever government proposes the civil service local and national and “go softly” -as above- managers find ways to tweak.Like the blocks built along the thames east of canary wharf, the issues are dominos , no one really wants to push one lest it all fall down. Easier to manage, or not, the exceptions as there is more political risk than capital
No, really? That was your point and I hadn’t realised? Silly me.
Giles, in reply to your comment “I don’t regard the PRS as an homogenous whole at all, quite the reverse. That is my objection to your approach, where everything is sunny, just look at the satisfaction figures.”
You mirror my objection to your approach, where everything is disastrous, just look at the figures on disrepair etc.
Maybe my objection is as much of a misinterpretation as yours.
Oh David, you disappoint me still more. I’m not saying everything is disastrous. Not at all. Look at the percentages I cited. I am merely pointing out that things are a lot worse than you are willing to admit, as you have just confirmed. And that, I’m afraid, makes you a big part of the problem.
I don’t think there is any point in continuing this conversation, to be honest.
Giles, my final sentence anticipated your reply. I am really not in a position to admit or deny anything, all I have tried to do is interpret the available data and draw on my own limited experience.
I agree that this conversation has run its course.