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Shelter Report Says Over Half Of Private Rents 'Unaffordable'

Shelter Private Rent

Huffington Post UK   First Posted: 13/10/11 08:01 BST Updated: 13/10/11 08:28 BST

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Over half of private rents in England are unaffordable, according to a report by the housing charity Shelter.

Their research shows 55% of rents cost more than 35 per cent of the median average take home pay within an area, the standard measure of affordability - and they're rising dramatically. The charity said the figures were a "wake-up call".

On Thursday morning their chief executive Campbell Robb said working families were being "priced out": "Mostly what we're talking about here is families who are trying hard".

Shelter's Private Rent Watch report highlighted how 38% of families are cutting down on essentials like food to afford rent. Robb told BBC Radio 4's Today programme that the government needed to bring out initiatives immediately, saying "the governent can do more to help people that are really struggling."

And he said it was time to build more homes.

In 8 per cent of local authorities in England, rents were "extremely unaffordable" - and the geographic breakdown showed areas like Hereforshire were worst hit.

Housing minister Grant Shapps said the government was taking measures to cut red tape: "This Government recognises the importance of the private rented sector in providing accessible and affordable accommodation. We have stopped the imposition of excessive new red tape on the private rented sector, which would have pushed up rents and reduced choice for tenants.

"We also need to build more homes given new house building fell to its lowest peacetime levels since the 1920s under the last administration. Our housing initiatives include freeing up disused public land to build more homes, rewarding councils for helping build more homes through a New Homes Bonus."

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Over half of private rents in England are unaffordable, according to a report by the housing charity Shelter. Their research shows 55% of rents cost more than 35 per cent of the median average take...
Over half of private rents in England are unaffordable, according to a report by the housing charity Shelter. Their research shows 55% of rents cost more than 35 per cent of the median average take...
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jrms
6 Fans
 
05:04 PM on 10/13/2011
Blaming greedy landlords serves the government, just as viewing "criminality, pure and simple" as causing the riots, rather than the pound's inflation, served them: it places focus on an unsolvable problem: virtue in other (and "othered") people, and distracts from an easily solved one: government meddling driving up the cost of living.

Governments rarely suggest freeing markets to solve problems, since they generally created market restrictions in response to lobbying by the rich and powerful.

Who would benefit most from rent caps? The larger and richer the landlord, the less, thanks to economies of scale, rent caps will affect them. Rent caps would force smaller landlords out, and home ownership would flow to ever-larger, ever-richer landlords. Those landlords would then have enough power and money to lobby future governments not to impose further rent caps.

Homes cost little to build. Rather, restrictions in the market, like planning permission and the green belt, create a bottleneck between supply and demand. With supply artificially squeezed, the increased demand instead increases prices. Remove the bottleneck, and house prices will drop. A large number of people could then buy homes who currently can only rent, which would reduce the price of rents as landlords work harder to attract fewer customers.

This comes with a moral bonus: respecting a person's right to own property, and to use it, and lend it out, as they please.

Blaming landlords for high rents benefits the government and doesn't address the underlying economic restrictions.
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sid5
22 Fans
05:57 PM on 10/13/2011
Lots of things serves the government and doesn't mean that landlords aren't part of the problem.

Right now the rental market is becoming more and artificial having a roof over peoples heads isn't something they choose to do without and getting off the roundabout is hard and yes I get your point about squeezing smaller landlords out but even though there are many responsible maybe some of them shouldn't be landlords as some have no idea what is involved other than handing the keys over to the letting agency - the one that thought that the letting agency was responsible for dealing his insurance company when the property was flooded by upstairs got me, not to mention the fuss with the boiler.

Simply just building more houses isn't the way forward. It may be part of it but it isn't the whole answer as people can't buy without lending, banks won't ease up without more confidence in the market place and having prices coming down too fast you hit more and more people stuck with negative equity so creating another bottle neck in the market with those who are trying to move up the scale.
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jrms
6 Fans
 
07:09 PM on 10/13/2011
Interesting points, sid5.

I have experienced shoddy landlords, too: in fact, out of 3 previous landlords, I have had problems with 2. But I think we can view this as a result of the artificial bottleneck between supply and demand: landlords really don't have to work too hard to find tenants, when so many people have to rent. They can behave dishonestly and ignorantly and get away with it precisely because of the artificial restrictions placed on the property market. By removing the restrictions, you would crash house prices, reducing the number of people needing to rent, which would make landlords compete for fewer tenants. This means landlords would need to work rather harder, and behave rather more honestly, in order to stay in business.

At the moment people can't buy without taking out huge mortgages. The very size of the mortgage required to buy a house results in banks not wanting to lend out the money to people who may default. But if house prices fall, the risk of default would fall in proportion, since the mortgage would represent a much smaller fraction of a person's income. So a fall in house prices ought to free up, not freeze, the mortgage market.

I agree that people with existing mortgages would risk having houses worth less than their loan. However, at present we condemn a large number of people to eternally renting in order to prop up the value of those homes. Is THAT fair?
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unemploymentmov
25 Fans
 
03:30 PM on 10/13/2011
You think this is a problem; When they first introduced the privatisation of council housing the first requirement was that Rents were to rise market rates. Next it will be Social Housing (council Housing) that will be out of the reach of the vunerable but hey we have a governmenrt set on that course anyway as only the working will be able to afford to live in a HOUSE!
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sid5
22 Fans
11:36 AM on 10/13/2011
excessive red tape that pushes up rent and gives renters less choice - please. It is greed pure and simple because like it or not they have their tenants over a barrel because really what is the choice a tent?

Finally got landlord to agree to let me paint place I was in and said he'd pay for paint and repairs that needed done if I did the work. Said he was happy with job and many tenants wouldn't have done such a good job only to be handed an eviction notice due to the fact he wanted to sell and trade up for a bigger property for him to rent out after I did all the work freshening up the place. But he was sorry about that.

Excessive red tape imposed on private rental sector - yeah I believe that if any of it any of it was actually enforced.
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MolliBlum
2328 Fans
01:16 PM on 10/13/2011
Know that feeling. I also rented a totally dilapidated flat (re4lativerly cheap for the location), did loads of work improving it at my own cost -- and then the landlord announced his intention to sell, so I had to find another place. But the market was flat, so he didn't manage to shift it, and now I see he has rented out the old place again -- for considerably more than I was paying (presumably thanks to said improvements). It's a strange bind. I pay more than 50% of my income towards rent, and so have no hope of ever accumulating the deposit I would need to buy a place of my own. Vicious circle.
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sid5
22 Fans
02:01 PM on 10/13/2011
Tell me about it.

Flat I moved out of has been on market for a while and can't see anyone buying it unless they are going to rent it, which in turn hikes up the prices not only for renting but buying even in this climate and the landlords hold all the cards.

All bar one of those I know who have been given notice to move have similar stories of landlords wanting to sell and seeing the place coming back on the market to rent later on with huge hike. The only exception is one who's landlord took the property back to live in it himself after downsizing.

I know that makes me sound bitter but part of me is as have ended up in smaller place with more expensive rent and seem to be trapped on this roundabout.

As for buying it seems that the landlords are the only ones with easy access to money to buy - friend got gazumped by buy to let recently, not the sellar's fault as they want as much as they can but still it is a pain.
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langej
220 Fans
11:17 AM on 10/13/2011
I love Britain: don't build up (high-rises are bad), don't build out (protect rural areas and green belts), don't build near me (I don't want the noise or the spoiled views) - but do whine when house prices inevitably go through the roof.
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HUFFPOST SUPER USER
Miserable Swine
240 Fans
02:41 PM on 10/13/2011
Indeed. If hypocrisy and double standards were an Olympic event, this country would win hands down.
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HUFFPOST SUPER USER
Fudgefase
Boldly going nowhere...
165 Fans
 
11:10 AM on 10/13/2011
An inevitable consequence of getting rid of the council stocks. But then profits for the few was always the mantra.
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MolliBlum
2328 Fans
05:16 PM on 10/13/2011
That, indeed, is one of the main problems. Another is that no cap was ever put on the profits allowed for right-to-buy tenants. I actually know someone who managed to buy her council property (prime city-centre location) for just 40K and sold it as soon as legally possible for over 300K. If the government ever intended the right-to-buy scheme to merely give people a "leg up" on the housing ladder, then they should at least have thought of capping the profit and demanding that any excess be paid back into the pot to build new affordable housing.
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Sickofpoliticians2
239 Fans
10:19 AM on 10/13/2011
My local council, Labour, demolished two estates of perfectly serviceable council housing at the beginning of their term, this land was sold to private developers, two new housing estates, renamed and put on the market at 80,000 and upwards, in some cases to 1/2 a million depending on house size. Prior to this housing here was cheap, even the largest property topped out with a price less than 60 thousand and private rents were low. Yuppie investors bought and sold these new houses, prices were massively inflated and even the poorer properties have soared to the 80,000 mark. The private rental mark now for what I consider a doss house in this town is around £85-100 a week, meanwhile jobs on offer are all minimum wage, prior to this boom in property prices you kids took jobs, left home and rented, now, they're moving back in as few can afford to rent from the greedy landlords, housing benefits are capped by the same council who caused the problem, at £66 a week, their council rent for a similar 2 bed house, anyone unemployed or low waged in private rented are making this up from money they can ill afford, control landlords greed and you'll solve the problem.
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John michael Adams
40 Fans
09:05 AM on 10/13/2011
solution? build more houses. But never let development damage the green belt. And do not allow too much development otherwise this will end up like ireland's busted housing bubble. moderation is key.
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Matthew Harrold
Huzzah!
737 Fans
09:22 AM on 10/13/2011
The other problem with suddenly building a shed load of houses, is that it might lead to a depreciation in current house values, as the market adjusts to a sudden influx of very affordable houses. But the Tories are going to have to start building if they're serious about allowing council house owners buy their own properties, otherwise it's going to end up pushing the problem onto future generations. Mind you, that does seem to be world wide government(s) policy for the current boom/bust cycles that we experience.
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HUFFPOST BLOGGER
Peter Thornton
16 Fans
 
08:31 AM on 10/13/2011
Grant Shapps says: "We also need to build more homes given new house building fell to its lowest peacetime levels since the 1920s under the last administration. Our housing initiatives include freeing up disused public land to build more homes, rewarding councils for helping build more homes through a New Homes Bonus."
Sorry minister but that's not enough. We had this problem in the 50's, when the country was broke - after the war. We solved it by building a large amount of public housing and that's what we need to do now. Leaving everything to the private sector isn't going to work and as the Shelter report indicates its the "hard working families" that are paying the price. We look after the unemployed and the destitute but not the people who are in work, who we expect to cripple themselves with large unaffordable mortgages or pay sky high rents. How many ways can we say that we simply need several million new houses in the UK?
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Matthew Harrold
Huzzah!
737 Fans
08:07 AM on 10/13/2011
Having lived around the London area it's a regular thing to see single rooms going for £90+, and I distinctly remember one double room going for £150 in Clapham Common. The problem is that run down areas which are rejuvenated normally have large areas snapped up by private housing firms, which then price out the existing low wage tenants. Factor in the amount of low cost housing being built and the market is squeezed, allowing for private landlords to set a price they normally wouldn't dare consider.
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Lauren Holmes
6 Fans
08:01 AM on 10/13/2011
Completely agree. I rent privately and it's ridiculously expensive. But what are my other options?
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Matthew Harrold
Huzzah!
737 Fans
09:17 AM on 10/13/2011
The mental image of renting out always involves being bent over barrel, whilst looking behind (with a smile) and asking how much your land lord wants to shaft you. It hasn't helped that there's regular property programmes on tv which advocate becoming a land lord in order to secure some financial stability, so more people are seeing houses as better investments then banks, dwindling the available housing even further.
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MolliBlum
2328 Fans
05:24 PM on 10/13/2011
Not a lot at present. I am in the same position. A few years ago I would have had no problems getting a mortgage. This has changed. And yet the rent I pay is equal to or more than the mortgage repayments would be for a similar property -- which in turn prevents me saving up for the deposit I need in order to get a mortgage. No way out, really.
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sid5
22 Fans
11:53 PM on 10/13/2011
Only three options out are lotto, robbing a bank or shared equity on a new build scheme. None of which seem appealing
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HUFFPOST BLOGGER
Lawyer13
retired Lawyer, General and Psychiatric Nurse, wit
8236 Fans
 
07:56 AM on 10/13/2011
Private landords are being gready, I heard on Radio4 about half an hour ago that one was asking for a 25% increase, this is totally unacceptable, and if the tenants goes to Rent Tribunal she may be evicted.
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