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 A year 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.


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Comments

H MD

17:25 PM, 9th September 2022, About A year ago

NRLA Hits Back? with what? A wordy wet tissue!
We need a body that represents our interests and is able to answer these populist airhead politicians much more directly.

Ben, I think you can do better than this. Just read some of the comments for guidance.

OH

9:06 AM, 10th September 2022, About A year ago

Poor response on this particular issue and poor representation of landlord by NRLA in general.

NRLA should head hunt Shelter's copy writers, campaign managers and lobbyists to give our industry a chance.

Monty Bodkin

11:03 AM, 10th September 2022, About A year ago

https://propertyinvestorpost.com/nrla-hits-back-at-shelter-with-lengthy-letter/

"The NRLA went on to say that it doesn’t oppose the abolition of Section 21"

I bet the vast majority of landlords oppose the abolition of Section 21.

Who do the NRLA actually represent?

Accommodation Provider

11:36 AM, 10th September 2022, About A year ago

She is not even correct - and NRLA could say more - let us map also the increase in cost for landlords resulting from the increase in "certificates" for safety, EICR, smoke, emergency lighting, PAT testing, EPC etc etc certificates and renewing these more and more often, and forcing landlords to magically somehow without getting tenants to leave the property to do work, to increase EPCs to impossible level C ??

Also she is not correct - I am an HMO landlord with 25 tenants in two big houses, my former home in London, they are bills included and it's not practically possible to split the bill and even if it would be I would be on email and phone all day long with people arguing over 10 quid being not for them but for someone else.

Also she is not correct - and does not mention inflation her government caused, now running at 12-20 percent per year - far far far higher than rents have risen.

Is it acceptable for her to call landlords and me "opportunistic" - this is discriminatory and she is demonizing us landlords where we already face generation rent who abuse us on a daily basis - no one understands landlords can never say anything - as they are already in such a weak position and have tenants in their houses that can easily wreck things and do expensive damage which landlords with the joke of an english "court" system can never ever recover.

It's become very bad over very many years steadily - this is indeed now the point I feel very tired and old and want to sell and emigrate to the sun just eating my hard earnt, after taxes paid life savings instead of slaving for the government and random people first for free and now at a loss !

Accommodation Provider

11:43 AM, 10th September 2022, About A year ago

Ms Elphicke writes in a non-balanced, inflammatory way, as if she is an activist or uninformed journalist, and does not discuss all aspects involved and insults landlords calling them opportunistic.

NRLA replies like wet tissue and misses a whole bunch of things.

Nice landlords who have not raised much are being penalized here - and incentivized to raise rents as much as they can as quick as they can. We need professionals, not dumb politicians who don't think things through. They created inflation with their moneywasting 60bn track and trace, letting thousands of economic refugees in every day, 45 bn covid loan fraud. If only she had been clever and adopted the Swedish model of not locking down and killing the economy making us pay for it, borrowing thinking interest rates would remain at zero ........

David

20:17 PM, 10th September 2022, About A year ago

Is there no end to PRS bashing ? We are just running a business like any other small entrepreneur, yet we are taxed on our income rather than profits (thanks to S24), can’t claim wear and tear, paying out endless compliance checks (gas cert, EPC, EIRC, Licensing etc) and now you want to cap our income to some arbitrary matrix that does not allow us to take account of inflation ? Really ?? Let’s not forget why we are currently in this housing crisis - repeated Gvts have not built enough houses for decades, the population is rising and now the PRS, disillusioned with all the new legislation and “easy target” victimisation, are selling up in droves thus reducing the number of properties available to rent. Profit margins in the sector are now razor thin (particularly in London). Most landlords are on fixed rate deals and Interest rates are rising much faster than rents, so it is no surprise that many are leaving the market altogether. We are in this crisis simply because demand now massively outstrips supply as the Gvt has gone too far in recent years and not respected or appreciated the service and accommodation the PRS provide to a younger and growing population, many of whom would prefer to rent rather than buy, net result a huge shrinkage of the PRS. How about the Gvt giving the PRS a lift for a change instead of beating us up - that would be a novelty…. We might actually be able to help with the housing crisis.

Simon Williams

21:37 PM, 10th September 2022, About A year ago

Ladies and gentlemen - wake up! If any of your rents are currently below market, now is the time to increase them before it is too late. It is time to think the unthinkable - that a Tory government will freeze rents. This Elphicke MP may be flying a kite on behalf of the government. Don't delay.

Of course she talks nonsense. For starters, many landlords ARE affected by energy rises. In most shared accommodation, the landlord is still paying the bills (i.e offering bills included in the rent.) And interest rates are going a lot higher. 1.75% isn't even half way there. And she ignores how government red tape has piled on the costs (Electrical safety and energy efficiency most obviously.) And then there's the taxation changes we all know about.

The government has engineered a supply crises of it's own making but hopes people will just blame landlords. That won't change anytime soon.

And we know these Elphicke-type people talk nonsense, but no-one really cares (except landlords and the brilliant Daily Telegraph - our only friends in Fleet Street.)

As for the NRLA, they are absolutely hopeless when it comes to the modern sound-bite media age. No wonder we are losing the war so spectacularly.

Anne Nixon

8:22 AM, 11th September 2022, About A year ago

The rise in rents has not been caused by 'opportunistic' or 'excessive' rent rises, that could not be further from the truth, it has caused purely through the excessive rise in landlords' costs caused by a whole raft of new measures introduced over recent years, including of course S24 and the loss of wear and tear costs.

A large proportion of landlords in the PRS have come to the conclusion that diminishing returns and relentless and continuing introduction of compliance hoops to be jumped through makes being a landlord no longer a viable option. It is just not worth the stress and hassle for such meagre returns and there are far better investment options available.

It is no co incidence the the number of properties in the PRS has halved over the last three years. The exit of large number of landlords from the market means our customers have a diminishing supply of properties available to them and the answer is not to continue on this trajectory of getting rid of the PRS, it is to make the climate more landlord friendly, to encourage and incentivise landlords instead of forcing them out of business.

The Tories mishandling of the PRS has been epic and they are now reaping what they have sown.

The words party and brewery come to mind . . .

Dylan Morris

11:29 AM, 11th September 2022, About A year ago

I have a couple of modern City centre rental flats in West Midlands, purchased in 2014 …..so 8 years ago. Market rent when purchased was £650pm and now around £750. Not much of an increase in 8 years and tenants will have had salary increases in that time. Rents just going up as they do with inflation and to some extent property values.
Regarding a rent freeze how would this work with one of my two bed rental houses. Long term tenant of 13 years currently pays £450pm (I increased rent by £25 in March from £425). Market rent £725 to £750. Now let’s say there’s a rent freeze and tenant decides to move out. House needs a full refurb (hence why I’ve hardly increased the rent in 13 years) with a new kitchen and all wallpaper needs removing and walls skimming and painting. New flooring (kitchen tiles and carpets) throughout the house. Approx cost £15k to bring fully up to spec to put it back on market. Would a rent freeze restrict me to letting the house out when refurbished to only £450 ? Which would be £300 below market rate ? If that’s the case then I will have no option but to remove it from the rental market and sell it. I doubt this would ever cross this lame excuse for an MP’s mind.

Dylan Morris

11:38 AM, 11th September 2022, About A year ago

“Buy-to-let finance costs are still low, with two-year fixed rates available at less than 2.5 per cent.”
What planet is this woman on. I always have a look at Coventry BS rates as that’s where most of my rental mortgages are situated. Not always the very best rates but always fairly good. Two year fixed BTL (up to 75% ltv) coming in at 4.27% with a £1,999 product fee. Or 4.42% with no fee. Where this clown gets BELOW 2.5% from is beyond me. There again lying comes with the job …. like her old boss !!

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