The Resolution Foundation’s latest housing outlook found that private rented homes were the worst-performing when it came to the cost, size of properties and quality. It said the Renters’ Rights Act could lead to the improvement of the quality of private rented homes, noting the requirement for homes to be energy efficient by 2030 and meet a new Decent Homes Standard in the mid-to-late 2030s.
The organisation said the target was ambitious, as 47% of homes in England did not currently meet the proposed standard. It said the typical cost of improving a home to an Energy Performance Certificate (EPC) rating of C was £9,000, equivalent to around 75% of the median annual rental income for landlords with one property.
It added that it was possible some landlords operating at narrow margins could exit the market, but, similar to the introduction of other energy-efficiency regulations, “large-scale exits seem unlikely”.
PRS to grow despite focus on homeownership and mortgage access
The report said the size of the sector had stabilised since 2015, but it was “hard to see a scenario where it falls back to the levels we saw in the early 2000s as rapidly as it grew”.
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The increased tax burden and policy changes had not resulted in fewer private rented homes, the report said, and only a small number of tenants moved into social housing.
The Resolution Foundation said it was more likely that any net outflow from the PRS would be tenants moving into homeownership, but said this would still be a challenge for many because of the price of homes relative to income.
It said even if the government fulfilled its aim of building more homes and increasing homeownership, “we can expect large numbers of people to be living in the PRS for a significant period of their lives”. The report also noted that the number of renters aged 65 and over is expected to triple from 4% in 2022 to 13% in 2040.
The Renters’ Rights Act is the first step
The Resolution Foundation said the PRS had doubled over 25 years, rising from 5.1 million people in two-and-a-half million households in 2000-01 to 12.9 million people in 5.2 million households in 2024-45, with more young families as tenants.
It said its growth had “profound implications for living standards”, as it was the most expensive and poorest value for money tenure. It added that the insecurity of the PRS made it harder to plan for the future and could negatively affect health.
The Renters’ Rights Act places “guard rails in a largely unregulated market”, the report said, but Resolution Foundation added that the law “cannot address everything”.
It also said the freeze on local housing allowance widened the gap between support and rents to record levels, leaving lower-income tenants exposed to rent increases.
The report said: “With the PRS set to remain a major tenure for the foreseeable future and the first home of one in four babies, the stakes for getting policy right in this area are high.
“Consequently, over the next year, we will be undertaking a research programme on the PRS to identify the policies needed to transform it into a tenure that enhances rather than undermines living standards.”
