Rental affordability is ‘spot on’, not that you’d know that from the headlines!
The real story from the rental report is that all the headlines accusing ‘greedy landlords’ and ‘letting agents’ of charging extortionate rent and rents ‘sky rocketing’ are incorrect.
I’ve known and worked with Richard Donnell from Hometrack on many occasions and trust his analysis and data. He is good at his job, so this report is an excellent summary of what’s going on in the rental market – and, more importantly, those looking at rent controls and accusing landlords of fleecing and mistreating tenants should take note.
Policy decisions based on bad data and poor, sensational research will lead to more problems for tenants than any help to them, and we are just starting to see this happening with the latest rent rises higher than before, but still moving in line with wages.
Want to find out more? Take a look at the full report here.
Rent controls will make affordability worse for tenants, not better. As an example, from 2008-13, controlled housing association rents went up by 21% (i.e. in line with inflation) while private rents went up in England by just 7% - much more in line with wage growth. Why would anyone think controlling a ‘perfectly performing’ market is a good idea with this evidence?
Of course there are rogues and poor landlords who do make tenants lives a misery but, again, lets drop the hugely draining, expensive and, in my view, failing licensing system and introduce a Property MOT instead so properties can’t be let without a health and safety check at the start.
OK, enough of my ranting …... Here are the key points I think are worth taking from the rental report: -
Rental affordability has remained broadly stable over the last decade and has been trending downwards over the last three years.
Affordability of rents is good! Despite what we are regularly being told, the analysis from Hometrack shows:-
“Rental affordability has been improving since 2016 Q1 as earnings rise faster than rents. We define affordability as the monthly rent (weighted average for a 1-4 bed home) as a proportion of gross earnings for a single person (ONS). UK rents are 31.8% of average earnings, lower than the 10-year average of 32.1% and a recent high of 33.3% (2016 Q1)
For more great analysis on the private rental market, download the rest of this report here.
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