One of the things I like about being a long-time reporter and editor within the property industry is being able to see patterns. And one of the most obvious is that all governments whatever their political leanings are hugely adept at backing themselves against ideological walls when it comes to housing.
The most obvious for sales agents is that housing ministers love to talk about building more homes while the rump of Tory voters don’t want more homes built in their area. Successive Governments have tried to handle that by pretending to back both camps at the same time with predictable results – too few homes are being built.
For letting agents the most recent example of ideological idiocy is the Renters (Reform) Bill which, anyone with any level of thoughtfulness knows, will achieve the opposite of what it hopes to achieve, i.e. a better-quality private rented sector. The current Tory government, and several of those before it, have embraced the Shelter approach to housing – namely that most landlords who are given a free hand in the private rented sector will provide terrible homes.
It is clear that political ideology and on-the-ground practicality are colliding.
The answer to this of course is more legislation and for successive Tory housing secretaries and ministers to position themselves as ‘pro tenant’ and ‘anti landlord’. This makes sense politically – there are at least nine million tenants in the UK within the PRS many of whom the Tories would like to vote Conservative, while most of the country’s 1.5 million landlords probably already do.
But it doesn’t make sense for landlords, agents or in the long run tenants. Higher taxes, regular drubbings in the media and Parliament, plus greater red tape, will persuade enough landlords to leave the sector that it will shorten supply and jack up rents even more. This is already happening. And it’s not just over-statement by trade organisations like the National Residential Landlords Association or Propertymark; data from independent organisations including Savills and the Office of National Statistics show more landlords than normal are quitting the sector, not helped by spiralling interest rates for BTL mortgages.
It is clear therefore that political ideology and on-the-ground practicality are colliding. The annoying bit is that this makes it difficult for letting agents and tenants, both of whom need more properties within the PRS, but also the Government which has created a situation where rents are spiralling out of control particularly in London and the South of England.
I am not exaggerating here – the main rental indices including Rightmove, Goodlord and the ONS have all reported historic average rents across England and Wales, and at least two of them have cited the landlord exodus as a contributing factor.
BTR to the rescue?
The Tories say they have a solution to this – the build-to-rent sector. Billions of pounds are being poured into this kind of corporate accommodation and the sector’s advocates like to point out how its tenants get ‘professional’ property management, insinuating agents and private landlords are ‘amateurs’.
But it’s going to take decades before BTR makes an impression on the housing market. Even its keenest supporters agree there are only 80,000 completed, a similar number under construction and 110,000 in planning within a market of 4.5 million privately rented households – or 5%. Those completed represent just 1.7%.
It is also disingenuous of politicians to hang their hopes on this sector. BTR developments are land-hungry and despite protestations to the contrary, are largely affordable only for professionals in city centres.
I would urge Labour, who (it is very likely) will be running housing policy from next year onwards, to take a less ideological and more practical approach to running the private rented sector. It needs it.