14:22 PM, 8th September 2022, About A year ago 23
The National Residential Landlords’ Association (NRLA) has hit back at Conservative MP Natalie Elphicke who has been calling for a rent freeze on private rental homes.
Writing on the Conservative Home website, Ms Elphicke said that the rising cost of living has seen many households struggling and they are making hard financial choices.
She says those choices could become even harder over the next two years – with inflation at 10% currently and forecast to rise.
The Dover MP is a former chief executive of the Housing and Finance Institute and is currently co-chair of the government’s Housing Review. She is also a founding chair of the New Homes Quality Board.
In calling for help for renters by freezing rents, Ms Elphicke said: “There are now more people renting (nine million households) than those who own a house with a mortgage (6.8 million households). That means different policy interventions will be needed than from previous times.
“The latest ONS data show that private rents in England are now the highest on record. Average rents will set you back nearly £10,000 a year – or £17,400 a year in London. Rents are still rising.”
She says that with growing numbers of households now facing homelessness, there is a ‘strong case for Government intervention on rents’ for a limited period during these extraordinary times.
Ms Elphicke continues: “This could be done by freezing all rents at their current rates for up to two years. In addition, no property could be re-let at a higher price during that period. This would ensure that the rent freeze cannot be circumvented by re-letting. Such an intervention would have a real impact on families and inflation – equating to a saving over the next two years of around £2,000 for the average renter, and up to £4,000 in London.
“While landlords would, no doubt, protest, this would not be so problematic for landlords as might first appear. It is not landlords who are facing paying for the extraordinary energy rises in the homes they let out, but their tenants. Buy-to-let finance costs are still low, with two-year fixed rates available at less than 2.5 per cent.”
She goes on to say that there has been no justification for excessive rent hikes in recent times and the rents being charged do not reflect a landlord’s costs.
Ms Elphicke also says: “Rent levels are simply opportunistic and a result of lack of effective policy oversight in that market for far too many years.
Now the chief executive of the NRLA, Ben Beadle, has written to the MP and in his letter, he says: “One of your central arguments is a call for a two-year rent freeze in the private rented sector. I should be grateful if you could outline how this would help address the supply crisis that tenants now face.”
He highlights that 23% of landlords have said they are planning to reduce their portfolio over the next year – while tenant demand is growing for 60% of landlords.
Mr Beadle says he is willing to discuss the issues raised by Ms Elphicke in her article.
The NRLA’s letter is published, in full, below:
Dear Ms Elphicke,
I write following your recent article for Conservative Home, “Keeping people in their homes during harder times must be a top priority” in which you make a call for a freeze on private rents for two years.
Within your article you rightly raise concerns about the impact of increasing inflation on households. However, as you will know the Office for National Statistics1 shows that in the 12 months to July this year private rents across the UK rose by 3.2% well below all measurements of inflation. In London, an area you refer to in your article, they increased by 2.1%, the lowest annual growth of any region in the UK in the year to July.
In your article you make the assertion that: “It has been suggested that faster rising rents in London have fuelled 1.5 per cent higher inflation in the Capital.” The evidence cited for this is an analysis by City Hall drawing on data from Rightmove.
As the Office for National Statistics notes, Rightmove’s data covers only asking rents on newly available properties, not the actual rents being paid on all properties. In contrast, the official ONS data reflects price changes for all privately rented properties. In view of this, I am sure that you would agree that the ONS index is a more comprehensive assessment of changes in PRS rents across the sector as a whole.
One of your central arguments is a call for a two-year rent freeze in the private rented sector. I should be grateful if you could outline how this would help address the supply crisis that tenants now face.
Research for the NRLA has found that in Q2 2022, 23% of private landlords in England and Wales said they planned to cut the number of properties they let over the next 12 months. This was up from 20% the year before. In contrast, just 14% said they planned to increase the number of properties they let, unchanged since the same point last year and down 4 points since Q1 2022. Against this picture of falling supply, 60% of landlords reported increased demand for rental housing in the second quarter of the year. This represents a large increase on the 39% of landlords who reported increased demand a year ago.
This is a trend which has been charted also by:
Rightmove – Its latest figures show that in Q2 2022 the demand for private rented housing was up 6% compared with last year whilst the number of available properties was down 26%.
RICS – It has warned that rising demand from tenants for rental properties, coupled with a decline in new landlord instructions, will lead to rents increasing.
District Councils Network – Research by the DCN has found that 76% of councils surveyed have seen an increase in private landlords selling up properties causing a rise in housing waiting lists and making it harder to find permanent accommodation for those in need. 48% of these councils said they were now experiencing significant pressure on housing services due to this.
In particular, councils raised concerns about the drift of private landlords from the longer-term rental market to short-term holiday let accommodation.
The Government – Government data shows that the number of landlords planning to sell some or all of their properties is twice as high as the number planning to purchase properties. According to the 2021 English Private Landlord Survey, 11% of landlords, representing 15% of tenancies, planned to increase the size of their portfolio. In contrast, 22%, representing 29% of tenancies, plan to sell some or all of their portfolio.
I note that in Ireland, which has a form of rent control in operation known as Rent Pressure Zones, the leading property website Daft.ie, has noted that rental prices hit an all-time high in August, with supply at its lowest level since the website started tracking in 2006. It noted that in a country of 5.1 million people, there were just 716 homes available to rent on 1st August.
Given the public interest in this issue I shall be publishing a copy of this letter on the NRLA’s website and sending a copy to the trade press.
I would be happy to discuss these points with you.
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