The Private Rented Sector – PRS – much maligned and little understood.
However, this is the fastest growing sector in UK housing. Shouldn’t there be a greater awareness and understanding?
Here’s the history - in modern times, we have had those that can afford to buy their own homes striving towards home ownership (peaking at just short of 70% of overall tenure in 2002) with others renting. Post World War II saw a boom in council house building and local authorities became the country’s major landlords. Since the council housing sell offs started in the 1980’s, under the Right To Buy scheme, the rental market has shifted with social housing now provided by a mix of local authorities and housing associations. As home ownership grew, the rental sector shrank and no one seemed worried at the time, that new build homes to rent were not replacing those sold off.
Since the last economic crash we have seen the balance shift in the rental market to such an extent that Private Rentals now account for 20% of the overall tenure and the PRS (Private Rented Sector) is now larger than the social housing rental sector – both local authority and housing association tenancies combined. Wow! This is a major shift with absolutely huge ramifications.
Renting privately is the new norm, especially for the younger generations. Many believe obtaining a “council house” to be less attainable than actually owning your own home. A recent report estimated that within 5 years we will see the PRS account for over 24% of UK property. So does it matter – homes to rent are being provided by private investors, saving the local authorities tidy sums – surely everyone is happy?
Well I believe everyone has the right to their own home – whether it is rented or bought we should all have the security of a safe place to sleep at night and raise our families. If you are struggling, disadvantaged or just not earning enough to cope with rising house prices, you should still have the right to rent a home from a social body that will ensure affordable housing is available. (Abusing that home may forfeit that right but that’s a topic for another occasion).
The fact that social bodies are not providing housing to meet the needs of our society, is surely a massive failing. It is easy to demonise private landlords and I am sure there are many rogue, money grabbing and uncaring landlords out there but “where there’s muck there’s brass” surely we have enabled the unscrupulous landlord to enter the market place because of failings in provision of social housing and general failings in rental regulation.
The majority of private landlords are not faceless corporations but everyday people. I have private landlords as clients, we manage tenancies for them and find them tenants. I can honestly say that our landlords are not demons and many of them are saviours! If it was not for them providing homes then where would we be? Our landlords are individuals all with different circumstances and reasons for entering into the PRS market.
We have accidental landlords who are renting their former homes because they have moved away with jobs. A few years back we had clients forced to rent their properties because they could not afford to sell them or would have been in negative equity had they sold them. There was such a lot of this following the crash 2006-2008 that mortgage companies had to re-think their policies on letting.
We then have pension planning landlords who have invested in perhaps just one property as a means of maintaining an income into retirement. Following the last market crash, many felt safer investing in property than stocks and shares and low interest rates have lead to those with savings and pension annuities investing in property for similar reasons.
Yes some landlords and potential landlords are privileged and yes it must be nice to have the money to buy a second property but that doesn’t mean we should demonise investors in property. Benefitting from a pension pay out or saving hard throughout your working life shouldn’t make the younger generations envious and resentful. Thankfully, many private landlords or investors have strong social consciences and want to put something back into the local community. All our landlords want to offer their tenants a safe and secure home for the agreed duration of their tenancy.
But that is the rub – the agreed duration of the tenancy. Renting in the private sector will always be different from social housing because the ultimate ownership of the property lies with the landlord. When a council build 50 homes to rent, they are not thinking I will want this back in a couple of years. They are purpose built for renting. When a private landlord rents their property it is usually for a limited period of time. Also, they are investing their pensions and life savings and surely have the right to reclaim their investment when they want. The AST (Assured Shorthold Tenancy) act gives private landlords these protections but many feel it falls short in providing tenants with longer terms security they crave.
Right now the government appears to be on a path of tightening legislation in the PRS, and most reputable landlords and lettings agencies welcome this. However, I strongly believe that the provision of rental property via the PRS should not be a substitute for social housing and should not have the same legislation as with social housing. The AST should not be adapted to meet the needs of just tenants but should remain, alongside social housing and provide an alternative, particularly for those looking for short term rentals. All governments throughout the past forty-fifty years have failed to plan ahead for housing, all focussed on short term issues none brave enough to embark on projects that span beyond a parliamentary term. It is easy to blame the PRS for all the problems of housing in the UK today. It will be easy to ban lettings fees to agencies and insist upon minimum 3 year tenancies but all this will do is push up rents and deter those private landlords with the social conscience that want to help.
So when you next want to jump on the bandwagon and blame the private landlords – just think what would happen if they all disappeared!
Figures obtained from https://www.gov.uk/government/statistical-data-sets/live-tables-on-dwelling-stock-including-vacants