Labour’s controversial new shadow chancellor John McDonnell has laid into the private rented sector.
During his Labour party conference speech yesterday, McDonnell referred to cutting the “billion pound tax breaks given to buy-to-let landlords” and called for action to control “exorbitant” rents.
However, new data shows that rents have barely gone back up to 2008 levels across much of the UK.
The new data, from franchise chain Belvoir, shows how badly hit landlords’ rental incomes were during the recession – and how little they have recovered since.
Indeed, in 12 counties where Belvoir offices have been in business since the onset of the credit crunch, rents are still below 2008 levels.
Analysis of the Belvoir offices that have traded over the last seven years, shows that average rents in the second quarter of this year exceeded a peak in the third quarter of 2008 by just £6 per month.
Furthermore, the 2008 peak was not achieved again until the last quarter of last year.
The lowest rents over the last seven years were recorded in the third quarter of 2009, at an average of £670 per month.
In the first quarter of this year they hit £710, and in the second quarter £708.
For all Belvoir offices, including new ones, the average monthly rent recorded for the second quarter of this year was £756.
In London, rents are much higher than in 2008 – and indeed London tells a different story entirely.
Average monthly rents in 2008 were just under £1,200. While they fell back a little the following year, by the final quarter of 2009 they were exceeding 2008 levels.
London rents continued to rise unevenly until soaring to a significant new peak of about £1,700 per month in the first quarter of 2012.
Rents have since fallen back and in the second quarter of this year were £1,460.
Belvoir’s director of commercial and franchising, Dorian Gonsalves, said: “The Belvoir quarterly rental index, which is prepared by property analyst Kate Faulkner, has picked up rises in rents in most places across the country since Q4 2014, but contrary to media reports these are far from extortionate or spiralling out of control.
“Belvoir’s data shows that in 12 counties where Belvoir has been trading for the last seven years, Q2 2015 average rents have still to recover to the highs of 2008. These include Cheshire, Dorset and Northamptonshire.
“In contrast, inflation has risen by 19.17%.
“The number of Belvoir counties that exceeded the 2008 rental highs during Q2 2015 was 19, and these include Bedfordshire, Worcestershire and Wiltshire.
“Unsurprisingly, the highest increase over this time was in London where rents have increased by 22% since 2008, in line with inflation.
“However, in the East Midlands, rents are still 2.5% lower than they were in 2008.”
Comments (7)
I think the PRS needs to ask itself WHY there is so much growing resentment towards it.
The problem isn’t going to go away until renters feel more confortable with renting. Part of this is cultural, but with more and more renters and fewer and fewer houses available, bodies in the sector really do need to start thinking about how to improve perceptions of it. Political pressure for regulation is only going to increase.
– REAL meaning behind industry logos eg. ARLA. What does this mean for me as a tenant?
– Letting agents who actually care about standards in the properties they let, managed or not, and are prepared to pass over business.
– Fewer “dirty tricks” in contracts eg. signing me up for an expensive energy provider in the small print.
– Treat me like a customer, not a inconvenience in an investment.
– More honesty in checkouts. Letting agents
– Real justification (or elimination of… ) letting agent fees. Say what you like, tenants hate them.
– Treating responsible tenants as adults, I want to the property I am paying for as a home. Make changes and improvements easier.
– Longer contracts for families or where desired. The market has comprehensively failed here.
– “Inspections” handled more sensitively and sensibly. Why am I still being inspected every 3 months after 3 years of passing every time?
– Minimum standards for repair times, and robust response from letting agents towards landlords that fail to pay or approve repairs.
– Private landlords without letting agents – do something about them. Many don’t have a clue.
Just some ideas, but the point is that for many tenants, things are unsatisfactory, even removing the emotion around owning houses.
If the industry isn’t able to come up with coherent ideas to improve their PR, or push for coherent policies that will allow for some of the above, then Government will do it for you.
From my perspective, the landlord/agent side of the PRS is making very few progressive arguments and offering few solutions to make tenants lives easier.
Mat109
You have been posting a little while now, i appreciate your feedback as a member not in the industry but i do not agree with your line of thought (but thats what a debate is).
You ask “Why is there so much growing resentment for the PRS” – Well simply put the government have neglected housing for almost an entire generation and now are leaning on the PRS to sort the issue as oppose to deal with it themselves.
For debate i will copy and paste your questions and give my responses, bear in mind i am not a letting agent.
– REAL meaning behind industry logos eg. ARLA. What does this mean for me as a tenant? = Means Nothing in reality– Letting agents who actually care about standards in the properties they let, managed or not, and are prepared to pass over business. = I believe most agents care, hard to make landlords make changes to a property if not written in law– Fewer “dirty tricks” in contracts eg. signing me up for an expensive energy provider in the small print. = Agreed Tenants should choose their own providers, most do however, in some cases though some tenants neglect to tell the energy providers they have moved in and so letting agent is providing a service to the landlord– Treat me like a customer, not a inconvenience in an investment. = Again most do in my experiance treat tenants well, however tenants also need to be educated that letting a property is not like having a hotel, some responsibility is on them to maintain the property – More honesty in checkouts. Letting agents = If you have a full inventory this is not a problem, if you do not have a full inventory its in your favour– Real justification (or elimination of… ) letting agent fees. Say what you like, tenants hate them. = I am sure tenants do hate them but letting agents are not charities, buying a house has much higher fees and people do not like paying them.– Treating responsible tenants as adults, I want to the property I am paying for as a home. Make changes and improvements easier.= Usually not an issue but you need to leave as you find it. You maybe responsible with changes you want but others are not, only fair to ask.– Longer contracts for families or where desired. The market has comprehensively failed here. = Most tenants like a 6 month AST gives them more flexibility, ask for a longer contract, most landlords are more than happy in the knowledge they have a long term renter– “Inspections” handled more sensitively and sensibly. Why am I still being inspected every 3 months after 3 years of passing every time? = is a 20 min visit once a quarter really a hardship for the landlord ensuring the property is in order?– Minimum standards for repair times, and robust response from letting agents towards landlords that fail to pay or approve repairs. = Sometimes it takes longer to find the problem and who is at fault, if drains are blocked because of fat put down the drain why should the landlord pay? But yes if a roof has fallen in through a storm it should be repaired, is this a big issue in the industry?– Private landlords without letting agents – do something about them. Many don’t have a clue.= True many agents would agree but choice is there for the tenant, but then they need to pay a fee 😉
Appreciate the detailed response – I agree, there certainly are two sides.
Well simply put the government have neglected housing for almost an entire generation and now are leaning on the PRS to sort the issue as oppose to deal with it themselves.
Absolutely – it’s been kicked down the road for a long time. And yes, it is the fault of successive governments.
None of that is my fault either. From a moral perspective the PRS sector, along with owner occupiers in general, has gained tremendously. This is because of a number of government market distortions. You can certainly see the moral – albeit economically illiterate – for creating further distortions in the interests of fairness. My argument is that the PRS as a whole aren’t perceived as offering any solutions – however minor – in the short term and this destroys its moral authority. In the eyes of an angry crowd, it becomes the problem.
The price of bread has skyrocketed because there are only 10 loafs available for 100 people.
It’s OK we’ll just set the price of a loaf so that everyone can buy one. Genius.
What a brilliant analogy!
Will be stealing this one myself, hope you do not mind.
This bunch of communists will be the downfall of this country
Rent controls are in my opinion the prelude to far greater regulation / costs, but by having a mechanism in place first it is intended to prevent landlords and agents increasing their “prices” to compensate (as any other business would)