By Thomas Villeneuve, CEO and Founder of flatsharing network Weroom:
Britain is in the midst of a housing crisis and today the number of people in privately rented accommodation in the UK has never been higher.
A recent article stated that private rents grew faster than house prices in June for the first time in nearly two years – a new record high. More worryingly for Londoners, the report which was based on 20,000 properties, states that London is the place with the highest rents in the UK, with London tenants paying a whopping 72% of their income on rent.
While the average rent is increasing disproportionately to wages, Brits, and particularly Londoners, are getting priced out of the housing market at a considerably fast rate. The property ladder which many hope to get their foot on is becoming harder to reach and the idea of ownership slipping further away.
In the Budget, George Osborne had the opportunity to address key issues about how the government will provide support to a huge number of people renting and flatsharing. Instead, he failed to provide a much-needed long-term solution that would give renters an opportunity to be secure in their tenancy and less vulnerable to the hands of landlords.
While the Budget brought welcomed news for those renting in social housing, as their rents will be reduced by 1% a year, with it came potential hidden consequences for tenants. By removing a tax break which landlords currently enjoy, landlords may now increase their rents or even sell their property to cover losses. Ultimately this could spell more bad news for tenants, and this was not the solution that was hoped for. In fact, the current Budget proposal means that with the ever-increasing rising house prices, people on lower incomes will find themselves with more and more shortfalls in their rents.
It’s time that a long-term solution to control the inflation of rents and regulate the market is implemented, which would in turn make life easier and cheaper for flatsharers and renters whilst providing them security of tenure.
Recent research Weroom conducted with YouGov found that a third (30%) of Brits said they would most like to see a cap on rents, and a further 55 per cent would be happy to never buy a home if stricter rent controls were introduced. Additionally half of respondents (50%) were even calling for a dedicated Renting Minister to be employed.
As Brits move away from the idea of property ownership, the prospect of renting as a long term housing solution can only realistically become viable if the market is fair and rents stabilised; the introduction of a rental minister could create and enforce this.
Whilst it does not seem that a dedicated renting minister will be introduced in the short term, with rents rising disproportionately across the UK, the government needs to fundamentally address how to regulate the renting market and make it affordable and secure for Brits otherwise the prospect of affordable housing become even bleaker for the future generations.
