15th
Sep 2022
A leading industry trade body has issued a direct challenge to the Tory MP who has demanding a rent freeze.
The MP in question a certain Natalie Elphicke has wrote an article on the Conservative Home website where she calls for a “a newly shaped Department for Housing and Households” which would “robustly challenge the total costs of household bills.”
Elphicke wants the “freezing of all rents at their current rates for up to two years. In addition, no property could be re-let at a higher price during that period. This would ensure that the rent freeze cannot be circumvented by re-letting.” She backs up her demands by claiming that by legislating a rent freeze it would save an average tenant up to £2,000 per year and for those in London as much as £4,000.
However the chief executive of the leading industry body, totally agrees with the MP’s analysis of the private rental housing supply shortfall but he challenges her call for rent freezes when asking her: “I should be grateful if you could outline how this [two year rent freeze] would help address the supply crisis that tenants now face.”
In his correspondence to Elphicke he destroys her ‘assertions’ with clear reasoning and finishes explaining how the Republic of Ireland’s introduction of rent controls has had the opposite effect of saving money for renters, and directly caused a lowering of rental housing supply in the country.
I write following your recent article for Conservative Home, “Keeping people in their homes during harder times must be a top priority” in which you make a call for a freeze on private rents for two years.
Within your article you rightly raise concerns about the impact of increasing inflation on households. However, as you will know the Office for National Statistics1 shows that in the 12 months to July this year private rents across the UK rose by 3.2% well below all measurements of inflation. In London, an area you refer to in your article, they increased by 2.1%, the lowest annual growth of any region in the UK in the year to July.
In your article you make the assertion that: “It has been suggested that faster rising rents in London have fuelled 1.5 per cent higher inflation in the Capital.” The evidence cited for this is an analysis by City Hall drawing on data from Rightmove.
As the Office for National Statistics notes, Rightmove’s data covers only asking rents on newly available properties, not the actual rents being paid on all properties. In contrast, the official ONS data reflects price changes for all privately rented properties. In view of this, I am sure that you would agree that the ONS index is a more comprehensive assessment of changes in PRS rents across the sector as a whole.
One of your central arguments is a call for a two-year rent freeze in the private rented sector. I should be grateful if you could outline how this would help address the supply crisis that tenants now face.
Research has found that in Q2 2022, 23% of private landlords in England and Wales said they planned to cut the number of properties they let over the next 12 months. This was up from 20% the year before. In contrast, just 14% said they planned to increase the number of properties they let, unchanged since the same point last year and down 4 points since Q1 2022.
Against this picture of falling supply, 60% of landlords reported increased demand for rental housing in the second quarter of the year. This represents a large increase on the 39% of landlords who reported increased demand a year ago.
This is a trend which has been charted also by:
Rightmove – Its latest figures show that in Q2 2022 the demand for private rented housing was up 6% compared with last year whilst the number of available properties was down 26%.
RICS – It has warned that rising demand from tenants for rental properties, coupled with a decline in new landlord instructions, will lead to rents increasing.
District Councils Network - Research by the DCN has found that 76% of councils surveyed have seen an increase in private landlords selling up properties causing a rise in housing waiting lists and making it harder to find permanent accommodation for those in need. 48% of these councils said they were now experiencing significant pressure on housing services due to this. In particular, councils raised concerns about the drift of private landlords from the longer-term rental market to short-term holiday let accommodation.
The Government – Government data shows that the number of landlords planning to sell some or all of their properties is twice as high as the number planning to purchase properties. According to the 2021 English Private Landlord Survey, 11% of landlords, representing 15% of tenancies, planned to increase the size of their portfolio. In contrast, 22%, representing 29% of tenancies, plan to sell some or all of their portfolio.
I note that in Ireland, which has a form of rent control in operation known as Rent Pressure Zones, the leading property website Daft.ie, has noted that rental prices hit an all-time high in August, with supply at its lowest level since the website started tracking in 2006. It noted that in a country of 5.1 million people, there were just 716 homes available to rent on 1st August.
Given the public interest in this issue I shall be sending a copy to the trade press.
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