With many Londoners paying at least half their salary in rent, Landlords have been cast as the greedy villains but who’s really responsible?
The housing crisis is probably the UK’s worst kept secret. For the first time in half a century home ownership has nosedived while homelessness is on the rise and millions are stretching their paychecks to breaking point in an attempt to keep a roof over their heads. While many of these problems can be linked to the spectacular rise of property prices in recent times, there is a growing feeling that private landlords are taking advantage of the situation by charging excessive rent rates. As a result calls for a rent cap, a limit on the amount landlords can charge a tenant for rent, are growing ever louder but is this proper response to the housing crisis?
On the one hand – it seems like a no brainer. With homeownership a distant dream for many and social housing harder than ever to come by, landlords have undoubtedly benefited from the explosion of the private property market. In addition to high rents, the fact that Landlords can evict tenants with a 2 months’ notice can make private renting a risky business. The solution campaigners argue is to force landlords to make rents affordable and extend tenancies to up to 3 years. The public benefit from cheaper and more secure housing and the government benefit from good PR. Everybody wins…except landlords of course. And why should they? After all housing is a public need.
The question is though – does it make sense to force social responsibility onto landlords while energy companies, utility providers and even banks are free to make unrestrained profits?
Contrary to popular belief, the majority of Landlords are not villainous property barons but ordinary people fortunate/wise enough to get on the property ladder before it was snatched up. The Governments most recent last landlord survey found 78% of landlords owned just one rented property and only 8% were full time landlords. The vast majority had been landlords for less than 10 years and are unlikely to be raking in a great deal of profit. For many people property is their primary asset and means of eventual escape from the 9 to 5 cycle. It’s something they can pass onto their children to give them a better start or a boost in their later life.
So is it really fair to place such restrictions on landlords while utility companies, banks and big businesses continue to rake in obscene profits?
The big six energy companies increased their profits tenfold between 2007 and 2013 and when wholesale costs dropped 30 per cent last year, they reduced bills by only 1.3 per cent. The UK’s water companies made over 2billion in profit in 2013 and this year the biggest water provider, Thames Water announced it was to increase household bills despite profits being up 29.5%.
At the same time, the focus on landlords seems to have distracted from the primary causes of the housing crisis. Firstly the Government’s selling of social housing and secondly failing to build enough houses to replace let alone increase the supply of houses. It is widely agreed that the UK needs about 240,000 new homes each year to match demand but last year less than 120,000 were built.
At the launch of the government’s revamped right-to-buy scheme which enabled tenants to buy their council houses at a discounted rate in 2011, David Cameron pledged to replace every property sold with a new one. Between 2012 and the end of 2014, just one new affordable was built for every five sold.
Altogether, there’s no doubt the housing crisis is a serious issue in need of a well thought out solution. Whether targeting and essentially scapegoating private landlords is the answer however appears highly unlikely.