More than a third of renters can’t afford rents – TDS

More than a third of renters can’t afford rents – TDS

0:06 AM, 21st June 2024, About 6 months ago 14

Text Size

Rising rents and stagnant benefits are creating a financial squeeze for private renters in the UK, with a study revealing more than a third (35%) are struggling to afford their rent.

The research by the TDS Charitable Foundation surveyed more than 2,000 tenants and found a big rise in financial strain compared to last year.

It also warns politicians that simply ending Section 21 ‘no fault’ evictions will not solve the affordability problem.

The findings reveal the proportion of tenants facing difficulties affording rent has risen from 32% in 2023 to 35% in 2024.

Also, the situation is worse for those who are not in work due to long-term sickness or disability – with 56% saying they are struggling.

Students (45%) and those on benefits (43%) also face significant challenges, TDS says.

Landlords with tenants in arrears

The head of policy and research at TDS Group, Dr Jennifer Harris, said: “Being able to afford a home should be the foundation for anyone to flourish.

“However, our data paints a worrying picture of the pressures many renters are now under and has implications for landlords with tenants in arrears.

“Whilst all the main parties have focused on ending section 21, this will not address the fundamental challenges many tenants face in affording their rents.”

She adds: “The next Government needs to avoid the temptation to reach for simple solutions.

“This means addressing the gap between supply and demand in the rental market, reducing costs on the sector and providing certainty about housing benefit levels to enable tenants and landlords to plan for the medium to long term.”

Rents in small towns have risen

While the average rent increase was 7% over the last year, the TDS data highlights a geographical disparity as rents in small towns have risen the most – by 11%.

However, in suburban areas rents have seen a small decrease (-0.3%).

The survey also reveals that rising rents is forcing many tenants to cut back on essentials.

TDS says that 55% of all renters have had to reduce spending on food, heating and clothing.

This figure jumps to 72% for single parent renters and 62% for households with children.

Banning Section 21 won’t work to resolve affordability

TDS says that banning Section 21 won’t work to resolve affordability and it is urging the next government to focus on long-term solutions, including:

  • Increasing supply of rental properties to meet demand and reduce rent pressure
  • Implement measures to reduce costs within the rental sector
  • Committing to keeping housing benefit rates in line with inflation to ensure renters can afford their homes.

Share This Article


Comments

Cider Drinker

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

9:23 AM, 21st June 2024, About 6 months ago

Local Housing Allowance was set in 2020 based on rental data gathered in September 2019. At the time (April 2020), more than 70% of rents would have been higher than the LHA Rates.
These rates were frozen until April 2024.
During the intervening period, the BofE base rate rocketed from 0.1% to 5.25%. Inflation was out of control therefore tradespeople increased their costs significantly and the cost of materials rose sharply. We had the pandemic and the government made life very difficult for private landlords by banning evictions and encouraging tenants not to pay rent.
Government, in its wisdom, had introduced Section 24. With rising mortgage rates, the full impact of this unfair and spiteful tax hit landlords at the worst possible time. Especially when you add in more unnecessary regulation such as EICR and the threat of revising minimum EPC targets.
In summary, costs for landlords have increased massively since 2019. BofE’s CPI calculator suggests inflation was 23.8% between 2019 and April 2024 whilst Hargreaves Lansdown’s RPI calculator suggests inflation was 34% over the same period.
In April 2024, the LHA Rates were revised (based on data from September 2023) and the rates in my area rose by less than 11%.
Government recognised the risk of landlords leaving the sector and unfairly reduced CGT allowances to slow the exodus down.
With all of the increased risks that are coming our way, rents will need to rise much more. And the Media, in their ignorance, will blame landlords.

Beaver

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

10:23 AM, 21st June 2024, About 6 months ago

She [Jennifer Harris] adds: “The next Government needs to avoid the temptation to reach for simple solutions....This means addressing the gap between supply and demand in the rental market, reducing costs on the sector and providing certainty about housing benefit levels to enable tenants and landlords to plan for the medium to long term.”

Well done to Jennifer Harris for saying something truthful and intelligent to government when we are presently hearing so much b******* from political parties who either don't understand the issue or are too cynical to care in their headlong rush to buy votes.

GlanACC

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

10:36 AM, 21st June 2024, About 6 months ago

If they can't afford the rent they can always move. Its the governments job to subsidise not the landlords.

Beaver

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

10:46 AM, 21st June 2024, About 6 months ago

Reply to the comment left by GlanACC at 21/06/2024 - 10:36
That's partly true. But it's also true that it's government's job to ensure that there is choice. Tenants might not be able to afford their 'own' home to rent. They might have to share. They might have to take a room in someone else's house so looking at the rent-a-room scheme and increasing the amount of tax-exempt income from that scheme would be a smart thing to look at.

Pursuing tax policies that favour big landlords like the Duke of Westminster and large, incorporated landlords whilst implementing measures that penalise small landlords by stopping them offsetting their finance costs against rents drives out competition. All that this does is decrease choice for tenants and drive rents up. Driving up costs in a way that does not benefit tenants also pushes up rents and decreases costs.

Being a landlord is a socially useful activity. It's not as though landlords are selling drugs, robbing banks or promoting knife-crime. But all the mainstream parties are proposing to penalise it to score short-term political points off each other.

GlanACC

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:42 AM, 21st June 2024, About 6 months ago

Reply to the comment left by Beaver at 21/06/2024 - 10:46
Yup, I agree with most of what you have said. If you are a LTD company then a lot of the issues go away, but a LTD company is no good to anyone who only has a 1 or 2 house portfolio as the costs of running a LTD company will outweigh the benefits

I had 14 properties in a LTD company and that was great until I sold 10 of them. The remaining 4 are now on the borderline of making it sensible for them being in a LTD company (especially as I have no mortgage)

Beaver

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

11:56 AM, 21st June 2024, About 6 months ago

Reply to the comment left by GlanACC at 21/06/2024 - 11:42
But you still potentially benefit from paying corporation tax on them when you sell as opposed to capital gains tax at your marginal rate. Anybody with 1-2 properties will struggle to incorporate and claim roll-over relief and faces a capital gains tax charge if they sell There might even still be a benefit to you from incorporation in terms of IHT, although I don't know your circumstances.

But small portfolio landlords are the majority of the market. And the tax policies of all the main parties...conservative, labour and SNP...have all penalised the majority of landlords in the market and driven competition out at a time when there is a problem with supply of housing. And they are still proposing similar policies now in the run up to an election and relying on the fact that many of the people they are trying to get to vote for them either do not understand the issue at all or are too left-wing to care.

Well done to TDS for pointing out the nonsense in the run-up to an election.

GlanACC

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

12:12 PM, 21st June 2024, About 6 months ago

Reply to the comment left by Beaver at 21/06/2024 - 11:56
and another expense is MTD for Landlords reporting which I think comes in in 2026. Most landlords with 1 or 2 properties will likely come in under the proposed £50K limit for reporting .. but watch this space after the election.

Beaver

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

15:05 PM, 21st June 2024, About 6 months ago

Reply to the comment left by GlanACC at 21/06/2024 - 12:12
I think some landlords will either exit or downsize before making tax digital comes in for landlords but I doubt that it's as significant a disincentive as the recent debacles over EPC certificates and EICR reports.

All the main parties still seem to be wedded to landlord-bashing and promising that they are going to build their way out of the problem by reforming the planning system. I was at a cafe this week sat near some builders/property developers who were discussing the fact that in the area in which I live they struggle to get the cost per square metre of what they are building down to a level at which they can build a property, find somebody who can afford to buy it, and make a profit.

Whatever lies they might be telling the electorate now the main parties can't build their way out of the problem. If any of them introduce rent controls the pain of the downstream rent increases as a consequences of lack of supply are likely to be felt by renters during the next parliament.

Michael Booth

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

19:20 PM, 21st June 2024, About 6 months ago

How about £320 pcm 3 bed house in decent area and tenant struggles to pay that and she recieves housing benifit l don't charge the market rate for ts5 area which is 600 + .you couldn't make it up the council even charge more.

Judith Wordsworth

Become a Member

If you login or become a member you can view this members profile, comments, posts and send them messages!

Sign Up

10:13 AM, 22nd June 2024, About 6 months ago

But can these renters who can’t afford their rent still afford take-aways? Booze? Running a car? Holidays? Cinema, clubs, pubs etc?

Just asking

1 2

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Automated Assistant Read More