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Pity the nation’s renters

Ben Chu

uk house prices2 150x150 Pity the nations rentersYoung people in this country are in a double bind when it comes to housing.

Houses are still too expensive for them to buy (and the banks will no longer give them the finance to do so). Meanwhile, rents are rising far above the rate of inflation.

This chart from HomeLet, a credit reference firm, shows the average rental price across the UK, based on its own data:

MonthlychangesinUKrentalpri Pity the nations renters

That’s a considerable squeeze on tenants over the past two years. Average rents are up around 7% on this time last year. Average salaries have increased by 2.5% in that time.

And the situation in London is even more painful for renters, as this chart shows:

monthlychangesingreaterlond1 1024x409 Pity the nations renters

The average London rent is now more than £1,200 a month. That’s a brutal 12% rise on this time last year.

There’s some other depressing facts in the HomeLet research. It found that the average tenancy length in the capital has dropped from 27 months to 22 months. As anyone who has ever rented will know, there’s massive expense in moving to another property. Plus landlords use new tenants as an opportunity to push up rents. So shorter tenancies are another source of financial pain.

The research also confirms that it is primarily relatively young people in the capital who are being penalised by soaring rents. The average age of tenants in London is 30.5.

So what’s going on here? Why is renting getting more expensive when interest rates are being kept down by the Bank of England? One might expect low interest rates to benefit buy-to-let landlords meaning that they don’t have to raise rents to cover their mortgage costs.

The answer is that landlords are gouging tenants because they can. The demand for rental properties is high because young people cannot get the finance to buy. And there’s severe restrictions on the supply of new rental properties. Developers have stopped building because they are in financial trouble, or because they cannot get planning approval for new projects.

The Government wants to free up the planning laws, in part to allow more homes to be built to ease the pressure on the young. Yet there’s a backlash from people who don’t want new developments in their back yard.

Nimbyism, as always, is being dressed up as a concern for the countryside.

Perhaps those campaigning against more property development should be forced to meet those young Londoners who are beggaring themselves to keep a roof over their heads. Let them witness the consequences of their selfish behaviour.

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  • http://twitter.com/ClaireatWaves Claire Thompson

    Hold up. You’re perpetuating a great myth. Developers are currently sitting on a mass of brownfield land that they won’t let go because they want massive prices once the market starts moving, rather than taking a lower margin now.  We should be incentivising and encouraging them to get moving. The double benefit of this is the old economic argument that building helps create an upturn, because of the low-ish wages in the sector (meaning they have a higher marginal propensity to spend ie they need what they earn and will spend it.)

    The planning laws have already been changed through the back door – the problem isn’t lack of property – ask the people who are currently trying to sell – but a complex mix of finance, affordability and pressure in certain key areas. 

    Paving over Britain’s beautiful countryside, destroying our environment, isn’t the answer. 
    Here’s an idea. Moving the centre of power away from London and into a more deprived area (Nottingham? Hull?) might bring wealth to those areas, free up the Houses of Commons as a major piece of real estate for development and mark a fresh start for a jaded political system. Building a new, eco-friendly house of parliament, with disabled access and childcare facilities would encourage a new breed of politicians in. Providing accommodation as part of the package would stop any expenses nonsense.  And lots of people would be encouraged out of London into a cheaper place to live, and in the process take some much needed commerce with them.

    Something like that might not prove a workable solution, but it’s the kind of joined up thinking that serves genuine developers rather than the money grabbing developers who only have their eyes on villages because of the existing high prices to live in those places. And why are the prices high? Because they are beautiful, desirable places to live. Wrecking them is a gamble, and an unnecessary one at that!

    We need a bigger shift in thinking than allowing a few, already wealthy developers carte blanche to destroy beautiful Britain for ever. And no, I don’t live in a big beautiful house threatened by developers, before you ask!

  • manwhosees

    I think that sounds like a one off extortion racket, I’d be suprised if that is typical for a rented room, you can still get rooms in London for around the £90-00 a week mark. And don’t forget, the more the Landlord squeezes, the more trouble he’ll find from the tenants. I think generally everyone is just looking for a hassle free arrangement, where both sides are reasonably content.

  • http://openid.markwilson.co.uk/mark Mark Wilson

    Don’t blame those of us who would like to keep some fields in the countryside… blame Tesco (et al). Admittedly not in London but a 1 hour-or-so commute away in Newport Pagnell, the former Aston Martin car factory was set to become a housing development, until permission was given to build a Tesco store on it instead (there are something like 20 Tesco stores of varying sizes already within a 7.5 mile radius). If there was less development like this, there would be plenty of housing stock without concreting over the countryside.

    And before I’m accused of being a NIMBY, the town where I live has already grown from 2000 people to 6500 over the last 40 years… now the transport links, local services etc. are stretched to their limits – there is a reason that we have separate development plans for urban and rural areas and it’s not about being selfish…

    …as I keep reminding my 20-something-year-old colleague who complains about high London rents, I can’t afford to live in London either – that’s why I live 50 miles away and commute… it’s just a fact of life…


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