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

Text Size

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.


Share This Article


Comments

northern landlord

14:51 PM, 11th September 2022, About A year ago

Correct Dylan. Some lenders are even pulling their buy to let products as they obviously anticipate hard times ahead for landlords. They seem to anticipate that landlords might not be able to increase rents to cover rising interest rates putting them into arrears with lenders. Have they been tipped off? What about tenant arrears? We can all predict they will rise. I recently saw an ad on the TV for landlord rent protection insurance, never seen that before. The insurance companies obviously see this as a growth area. As for the NRLA they need to grow a pair. I gave up on them a few years back when they put the subs up, as all they ever seemed to do was roll over and do a bit of hand wringing in the face of Government regulation and try to sell me stuff. We do need an organisation that tells the Government straight that if they do these things they had better be ready to house the hundreds of thousands of homeless ex tenants that will be coming their way.

G Master

16:07 PM, 11th September 2022, About A year ago

Rent freeze is fine to the landlords. Could she use her power to do interest rate freeze to the landlords, building material rate freeze, labour cost freeze, freeze on obtaining all certificates and freeze on court fees and solicitors fees for the landlords to make it fair on all concerned.

TheMaluka

17:45 PM, 11th September 2022, About A year ago

Reply to the comment left by G Master at 11/09/2022 - 16:07
No need to freeze court fees for all legal action against tenants will be barred.

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 Tax Planning Book Now