NRLA hits back at Conservative MP calling for a rent freeze

NRLA hits back at Conservative MP calling for a rent freeze

14:22 PM, 8th September 2022, About 4 weeks ago 23

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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.

‘Different policy interventions will be needed’

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.

‘Freezing all rents at their current rates for up to two years’

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.

‘Call for a two-year rent freeze in the private rented sector’

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.

Ben Beadle

Chief Executive.



Comments

DSR

14:38 PM, 8th September 2022, About 4 weeks ago

His reply just adds a lot of detail which she will not read. The issue at the heart of her statement above suggests she thinks Landlords are 'profitering' by increasing rents she believes as a direct result of energy hikes.
This is where she is adding 2 and 2 and coming up with 46!
Ben should have stuck to a simply easy to understanding reply stating that rent increases are as a direct result of rising LL costs which include maintenance, insurance, necessary compliance
checks on elec and gas and upgrades where needed, selective licencing and other requirements JUST TO MEET the standards to ensure a safe and good home for the tenant to actually rent in the first place.

Monty Bodkin

15:08 PM, 8th September 2022, About 4 weeks ago

Section 24 plays a large part in the current lack of rental supply. It was an obvious consequence.

This article is from 2015;

https://www.ft.com/content/b94cd0d2-95a8-11e4-a390-00144feabdc0

Charlie Elphicke, Conservative MP for Dover, said there was a strong case for ministers to call a halt to relief on mortgage interest, for example, and look at other perks such as wear and tear allocations.

“Most people would say that is money which could have gone to people owning their own homes rather than investors,” he said. “It underlines that tax breaks that buy-to-let investors get would be better off used to help first time buyers to own their own homes.”

Monty Bodkin

15:25 PM, 8th September 2022, About 4 weeks ago

Reply to the comment left by Monty Bodkin at 08/09/2022 - 15:08
https://www.bbc.com/news/uk-england-kent-59354059

"I have no job. I have no career. I am long-term unemployed."

The court heard Elphicke received £51,000 from the sale of his marital home, but most of the money had been used "in legal fees and to pay rent".

He said he had paid six months' rent up front for a one-bedroom flat

Dylan Morris

8:23 AM, 9th September 2022, About 4 weeks ago

Some of my rental properties are flats where the annual service charge is rising way above inflation. Also ground rent is linked to RPI. None of these factors affect the tenant only me.
So we are in a situation whereby if there is an uptick in inflation a landlord can’t increase the rent and also cannot evict a tenant due to non payment as there’s an eviction moratorium.

Dennis Leverett

10:12 AM, 9th September 2022, About 4 weeks ago

Same old, same old, total lack of understanding of basic economics and how to run a business and why there are businesses. I bet she wouldn't take a pay cut and no doubt will get the usual yearly increase in her salary as an MP let alone all her expenses paid.

TheMaluka View Profile

10:20 AM, 9th September 2022, About 4 weeks ago

Reply to the comment left by Dennis Leverett at 09/09/2022 - 10:12
Perhaps the NLRA should be calling for a two year moratorium on pay increases for MP's?

Graham Turrell, Landlord & Entrepreneur View Profile

10:35 AM, 9th September 2022, About 4 weeks ago

I suppose I can understand the NRLA's non-political or ideological stance in their letter. However, IMO that is precisely what is needed, now more than ever. As has been mentioned in earlier comments, Elphicke will not read this, and frankly nor will anyone already remotely swayed by her populist and headline-grabbing comments.

With its lacklustre rebuttal, the NRLA misses the point that the government continue to regard the PRS as a ministerial department to be shaped for their own ends, rather than a life-breathing network of SMEs supported and encouraged by former governments.

Landlords are real businesses who have been struggling for years to survive under governmental oppression, not least of which being Section 28 (not even mentioned by the NRLA in their reply).

Where are our true lobbyists? Do we need a new landlord association to represent us?

paul thomason View Profile

10:46 AM, 9th September 2022, About 4 weeks ago

Reply to the comment left by Graham Turrell at 09/09/2022 - 10:35
It’s a pity she isn’t asking for a Morgage rate freeze to go with it

Dennis Leverett

12:14 PM, 9th September 2022, About 4 weeks ago

Reply to the comment left by TheMaluka at 09/09/2022 - 10:20
Pigs can fly, so I'm told!!!!!

Claire Smith

14:04 PM, 9th September 2022, About 4 weeks ago

Please would Ms Elphicke tell me where I can access a BTL mortgage at 2.5%? This may make the difference between us selling a house where the fixed rate mortgage is coming to an end or reletting it.

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