"Where do people who don’t, or can’t, fit the owner-occupier mould go to get quality properties to live in, that can meet their needs?"
There will be few stakeholders who disagree with that, and I think we can all recognise that – in many areas of the country – social housing has all but disappeared with Councils having to rely on private property developers to build their region’s homes, with apparently little say in just who might be able to access those properties.
Given that social housing has become an ever-decreasing circle in terms of our country’s UK housing stock, it will be readily apparent that the ‘heavy lifting’ was going to need to be done by other parts of the market, most notably the private rental sector (PRS).
That, being the case, you might therefore wonder why those self-same Governments have spent the best part of the last 14/15 years effectively trying to undermine the PRS, to move property out of it and back into the hands of owner-occupiers, particularly from those landlords who it deemed somehow to be ‘unworthy’ of owning investment properties, perhaps because they weren’t deemed ‘professional’ enough.
The perhaps more logical approach would have been to understand the need for property across all types of tenure; that the low supply of affordable homes wasn’t just an issue for wannabe owner-occupiers, but would also be a major concern for those who either couldn’t, or didn’t want to, get on the housing ladder.
That much-discussed housing mix, really needed to include social housing, private rental sector housing and property available to purchase, because we are not a one-size fits all society and that needs to be reflected in the housing choices we give people.
So, I fully agree with Michael Gove’s point about there needing to be more social housing, but in that sense, any new measures designed to help Councils build more of this stock, is effectively going to come up against the weight of history, and is therefore going to need a fair old amount of time before it comes to ‘market’ and before it begins to make a dent in that housing gap.
In the meantime, what do we do? Where do people who don’t, or can’t, fit the owner-occupier mould go to get quality properties to live in, that can meet their needs? The answer is they go to the PRS, but as discussed above, there is a supply-side shortage in this sector as much as there is elsewhere.
People might be looking at rising rent levels and be tempted to blame ‘greedy landlords’ for this, but it comes from a whole combination of factors all cemented on top of low supply meeting high tenant demand.
A recent Propertymark survey of its agent members recorded a record high number of tenant applicants – up 73% on last year. This increased demand, plus the increasing cost levels landlords have to cover in order to offer PRS properties, means that rents are likely to continue in an upward direction at least for the short-term and probably much longer.
And it’s not as if landlords aren’t trying to boost the supply of property to PRS. We deal with purchase borrowers every single day and there is a strong confidence in the sector, and a strong urge to add to portfolios.
However, as we know, purchase supply is also low, plus landlords have to factor in the increased stamp duty charges, the fact they can no longer secure any mortgage interest tax relief if they are buying as an individual, plus all manner of other costs just to bring a property to market. Again, this is still not putting off landlords in terms of their approach to acquisitions, but I suspect it is a stumbling point for many who would like to invest in property but feel they can’t at this moment.
Of course, this is a complicated conundrum for Government to try and figure out, and there has been a temptation to kick such issues into the long grass. Plus, of course, policies which appear to ‘reward’ landlords are not seen as overly popular amongst the voting public, especially at a time when many want the self-same Government to help people with their rising energy bills.
However, we saw last year what might be achieved if landlords were cut a tiny bit of slack on the stamp duty front. I think the mortgage interest tax relief ship has sailed however the Government may well need to bite the bullet on more fronts that just it’s recent approach to social housing, if it wants to bring in more supply for tenants to choose from.
That remains the heart of the matter – how can we get more supply into the PRS while the Government also tries to catch-up on its social housing commitments? New and existing landlords want to buy, there is a strong level of mortgage funding to allow them to do this, and clearly plenty of tenant demand to fill these properties, plus more supply will help stabilise rent levels.
A few policies that recognise this, or a change in heart on those that don’t, would certainly not go amiss.
