Inflexible, insecure, and losing them money: what the “tenancy trap” means for Britain’s renters

Oh god. Image: Getty.

All across the UK, renting is the new normal. The proportion of UK renters has doubled in the last twenty years. Yet when you think of the word “renting”, what springs to mind? The chances are that you’ll still think of students, flat-shares, arguments over milk. Alternatively, dodgy estate agents, sky-high deposits, and a tenancy agreement you need a law degree to read.

This isn’t an attempt to demonise renting – I’m a renter myself. And as both a renter and the CEO of a housing association I think that the rental offer needs to change. Gone are the days when you got the keys to your first home at 30 – middle-aged renters are one of the fastest-growing demographics. More people than ever will be renting into retirement. And the crisis of rental affordability certainly isn’t limited to London – recently Your Housing Group revealed that in the North West, average rents eat up nearly a third (26.7 per cent) of average incomes. With more people than ever renting privately for longer it’s high time that policy-makers thought long and hard about how to make renting better. Renting could and should be an attractive offer in and of itself – not something you’re strong-armed into because you can’t afford to get on the ladder.

It was with this in mind that I commissioned research about the state of renting in my home patch, the North West of England. I wanted to explore the experiences of renters – private and social – of all ages in order to understand their wants and needs, and how the sector could better work for them. There are 1,143,438 people renting in the North West – how do they feel about homes they live in?

Disappointingly, one in six respondents – equivalent to 205,818 households across the North-West – believe that they get a “poor level” of service from their landlord. This wasn’t hugely surprising – new data from MHCLG shows that hobbyist landlords dominate the market. Some 45 per cent of landlords just own one property, and only a meagre 4 per cent of private landlords are in the sector as a full-time job or business.

I know from experience that the upkeep and maintenance of tenants’ homes really is a full-time job – which begs the question of why professional landlords such as housing associations aren’t given a more substantial role in housing Britain’s growing population of renters.

Another issue that really struck me was how many renters feel fundamentally insecure in their own homes – the place they should feel safest. Around 47 per cent of those living in the North West disclosed to our pollsters that they wanted a longer-term tenancy – that’s equivalent to 537,415 households. What’s more, 83 per cent of respondents explicitly said that this was because they wanted greater “security”. Frankly, I don’t blame them – tenancies ended by landlords accounted for 28 per cent of all local authority homelessness acceptances in 2017, and Citizen’s Advice research revealed that renters who complain about problems with their homes are 46 per cent more likely to be evicted.

Precarious tenancies are clearly a really big issue for renters. However, inflexibility – and the imbalance of contractual power between renter and landlord – is also a big problem. Around 15 per cent of North-Western renters revealed that they had been forced to turn down a job opportunity because of the terms of their tenancy. That’s 171,515 people in the North-West turning down jobs.

We hired a former Bank of England economist to crunch the numbers and ascertain the lost income of those tenants having to turn down new roles. His calculations showed that the average tenant is losing out on the new job bump of £1,012 per year because of this “tenancy trap”.

Looking at these figures, it becomes clearer why tenants are turning down opportunities. Fear of excessive costs is clearly a factor. Whilst it’s excellent news that the Tenancy Fees Act will reduce the considerable costs private tenants face when moving, tenants can still be liable for “reasonable costs” for “loss suffered” if they wish to terminate a tenancy early. What’s more, stumping up the cost of a new deposit – even without the additional tenancy fees – can still be costly. For the average earner, after tax that additional £1012 per year will come to about £800. The typical deposit required by a private landlord is 4-6 weeks’ rent, and based on average rental prices in the North West, that could come to between £524-£786. This could all but wipe out that post-tax new job bonus.


As both a tenant and a housing association landlord, these findings really hammered home the need for a new rental offer to me. It’s encouraging that the government is making legislative changes – from exploring scrapping ‘no-fault’ Section 21 evictions to getting rid of tenancy fees – but piecemeal change won’t be enough to deliver the homes and tenancies renters urgently need.

Successive governments’ failure to build enough homes has meant that a housing shortage has entrenched unaffordability in both the purchase and rental market. Only building more homes will turn this sorry state of affairs around. What’s more, it’s time for a serious conversation about what a decent tenancy looks like. At Your Housing Group we’ve been thinking hard about how a life-long “passporting” tenancy could allow our tenants to move with ease from property to property, upgrading and downsizing as their needs change; from the city to the suburbs to a shared community development in old age. We’d like to see more people given the option to enjoy a housing offer that meets their needs, not those of their landlord.

In order to deliver the homes – and tenancies – Britain’s renters need, housing associations must be given a more prominent role in providing homes to Britain’s renters – of every financial and social background. Housing associations are raring to build, and at Your Housing Group we’re working on a number of proposals that could see sustainable sources of finance such as pension funds investing in delivering homes all over the country.

Unless Britain gets building we’ll never tackle the housing crisis in the UK. We need more homes and a radically improved tenancy offer that meets renters’ needs. It’s high time the government ended our country’s reliance on volume builders and private landlords for housing delivery, and let housing associations take the reins.

We build quality, affordable rental and purchase homes, where they’re needed. Tenants are at the absolute heart of our vision. We know what renters want – and with the right money and powers, we can deliver it.

Brian Cronin is the chief executive of Your Housing Group, a housing association with more than 28,000 homes in the midlands and the north.

 
 
 
 

“Without rent control we can’t hope to solve London’s housing crisis”

You BET! Oh GOD. Image: Getty.

Today, the mayor of London called for new powers to introduce rent controls in London. With ever increasing rents swallowing more of people’s income and driving poverty, the free market has clearly failed to provide affordable homes for Londoners. 

Created in 1988, the modern private rented sector was designed primarily to attract investment, with the balance of power weighted almost entirely in landlords’ favour. As social housing stock has been eroded, with more than 1 million fewer social rented homes today compared to 1980, and as the financialisation of homes has driven up house prices, more and more people are getting trapped private renting. In 1990 just 11 per cent of households in London rented privately, but by 2017 this figure had grown to 27 per cent; it is also home to an increasing number of families and older people. 

When I first moved to London, I spent years spending well over 50 per cent of my income on rent. Even without any dependent to support, after essentials my disposable income was vanishingly small. London has the highest rent to income ratio of any region, and the highest proportion of households spending over a third of their income on rent. High rents limit people’s lives, and in London this has become a major driver of poverty and inequality. In the three years leading up to 2015-16, 960,000 private renters were living in poverty, and over half of children growing up in private rented housing are living in poverty.

So carefully designed rent controls therefore have the potential to reduce poverty and may also contribute over time to the reduction of the housing benefit bill (although any housing bill reductions have to come after an expansion of the system, which has been subject to brutal cuts over the last decade). Rent controls may also support London’s employers, two-thirds of whom are struggling to recruit entry-level staff because of the shortage of affordable homes. 

It’s obvious that London rents are far too high, and now an increasing number of voices are calling for rent controls as part of the solution: 68 per cent of Londoners are in favour, and a growing renters’ movement has emerged. Groups like the London Renters Union have already secured a massive victory in the outlawing of section 21 ‘no fault’ evictions. But without rent control, landlords can still unfairly get rid of tenants by jacking up rents.


At the New Economics Foundation we’ve been working with the Mayor of London and the Greater London Authority to research what kind of rent control would work in London. Rent controls are often polarising in the UK but are commonplace elsewhere. New York controls rents on many properties, and Berlin has just introduced a five year “rental lid”, with the mayor citing a desire to not become “like London” as a motivation for the policy. 

A rent control that helps to solve London’s housing crisis would need to meet several criteria. Since rents have risen three times faster than average wages since 2010, rent control should initially brings rents down. Our research found that a 1 per cent reduction in rents for four years could lead to 20 per cent cheaper rents compared to where they would be otherwise. London also needs a rent control both within and between tenancies because otherwise landlords can just reset rents when tenancies end.

Without rent control we can’t hope to solve London’s housing crisis – but it’s not without risk. Decreases in landlord profits could encourage current landlords to exit the sector and discourage new ones from entering it. And a sharp reduction in the supply of privately rented homes would severely reduce housing options for Londoners, whilst reducing incentives for landlords to maintain and improve their properties.

Rent controls should be introduced in a stepped way to minimise risks for tenants. And we need more information on landlords, rents, and their business models in order to design a rent control which avoids unintended consequences.

Rent controls are also not a silver bullet. They need to be part of a package of solutions to London’s housing affordability crisis, including a large scale increase in social housebuilding and an improvement in housing benefit. However, private renting will be part of London’s housing system for some time to come, and the scale of the affordability crisis in London means that the question of rent controls is no longer “if”, but increasingly “how”. 

Joe Beswick is head of housing & land at the New Economics Foundation.