As the UK’s social housing stock has all but disappeared and homes have become increasingly unaffordable, the private rental sector has played a pivotal role in helping to address the UK’s housing problems.
Since the turn of the millennium, average house prices have more than doubled. In the same period, the percentage of households that are privately rented has grown from 9.9% to 17.4%, whilst the size of the social rental sector has shrunk from 20.2% of all tenures to 17.3% .
With most councils failing to replace their social housing as it is sold on, and home affordability at its lowest ever level, it is clear that without private investment, millions of tenants would be homeless.
The buy-to-let ‘boom’ is a myth
There is a misapprehension that buy-to-let activity is fuelling house price growth. It is true that the buy-to-let market is growing year-on-year, but the larger proportion of this activity is remortgages. Buy-to-let purchase lending accounts for little over a tenth of all lending for home purchase .
The real problems are a chronic shortage of housing and persistently low interest rates. An imbalance of supply and demand and record low rates making borrowing artificially cheap are the true contributors to the housing bubble.
Being a landlord could become more expensive
Given the importance of private landlords in servicing the UK’s housing requirements, the extent to which policymakers are attempting to hinder landlords is surprising.
Between new (and frequently changing) legislation, the government’s failure to effectively publicise that legislation and changes to the tax system that will see landlords taxed on a basis that applies to no other business – which means that running a property business is set to become significantly more expensive if not approached correctly.
Landlords have less of a voice than you might think
Yet, landlords face an uphill battle when it comes to making their voices heard. A common misapprehension is that, with the number of private landlords in parliament and the number and prominence of landlord associations, landlords are a strong lobbying group. Yet Peter Davis, CEO of the Eastern Landlords Association (ELA), believes that only 5–6% of landlords are members of such a network.
Britain’s landlords cannot afford to remain disparate. Collective engagement is vital if the government is to finally see the positive contribution that the private rental sector makes, and to start working with landlords – not against them.
