Tackling the affordability crisis in the private rented sector

Tenant Discussion
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We all know there’s an affordability crisis in the private rented sector, but what can we actually do about it?

Toynbee Hall’s Young Private Renters group want help to understand what changes can be made to tackle the problem.

We have been investigating the challenges young people face renting in London since 2019. Our research shows that the scarcity of affordable housing in the capital can force young renters like us into situations that harm their mental, physical and financial health.

More than half of young renters we surveyed spend more than half of their income on rent. The shortage of affordable, well-maintained properties is forcing young people into properties with inadequate living space, poor living conditions or illegal subletting. Many described tolerating improper and even illegal behaviour by landlords and letting agents to avoid rent raises or eviction.

We heard from renters who would not exercise their rights to ask for repairs or the documents they were legally entitled to for fear of being forced to leave their home, with no guarantee of finding another suitable property they could afford.

Our research has allowed us to explore and take action on many of the issues we know affect young private renters like ourselves. But the affordability crisis is at the heart of the broken private rental system, and we want to know how we can escape.

To answer this question, we have invited the Joseph Rowntree Foundation, Renters’ Rights London and the Institute for Public Policy Research to help us to understand how renting can be made more affordable.

Together we will be exploring:

  • What’s the role of welfare benefits in making sure we can all afford to pay the rent? Is benefits reform possible?
  • Is rent control the answer? Everybody talks about it, but what does it really mean?
  • What’s missing? What really needs to happen to tackle the crisis, so all renters can afford their housing costs?

Join us for an interactive panel event, hosted by us, in conversation with housing experts. There’ll be interactive polling throughout, and you’ll be able to vote on your favourite policies. Your input will help us reach policy positions on the affordability crisis, and we really appreciate you spending your time with us to tackle this vital issue.

All private renters welcome to join the discussion, please sign up here!

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Its interesting that you only mention “improper or illegal behaviour” by landlords. If you truly want to understand what is going on and to tackle it then you need to accept there are two parties in the system, the tenant and the landlord. Both have hopes expectations and in most cases both behave fairly and decently. The exceptions tend to polarise opinion and those that say they want to tackle it often get stuck trying to address the issues wholly from one side, (eg more anti-landlord legislation or efforts to force change upon landlords without any real consideration or possibly even care for how it will affect them). Renting is a system and effective change needs to work for both parties. It is telling that the only organisations you mention having invited in your post are tenant support bodies. No mention of NRLA or any other landlord/agent industry body. You need to change your frame of reference if you really want to help young people secure decent accommodation.

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well said David122. Simple solution to affordability = (interesting that council owned property 50 years ago were poorly maintained.). Goverment do the job!!! They allowed the selling off cheap of council owned houses in thatcher era. So they stitched up the affordability . Young renters do not realise this

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Although even 50 years ago, young people were not given council accommodation, unless pregnant .

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and the men found that difficult!

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Completely agree with David, this is a Renters Woe-Is-Me Pity Party without any representation from Landlords or their representative bodies.

To be honest, many of us here could save them a whole load of time and expense by looking in our crystal balls and predicting what comes out of it.

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To give some context, throughout this project we have brought together landlords and private renters in London to work on solutions to the challenges faced by renters in the sector. The motivation for many of the landlords was that while they may be striving to be good and law-abiding landlords, they know of many other landlords and their representatives who are not. Quite a few landlords were also parents with children who were private renters, and had seen first-hand how some landlords and letting agents had acted illegally or treated their children poorly.

We brought together 13 landlords with our group of young private renters to work together to design a number of proposals to tackle problems in the sector. These include modelling a not-for-profit ethical letting agency model and a record keeping app that will help renters/landlords make sure all the right documents have been provided/ photographs of damage are all in one place etc.

One of the big problems that we weren’t able to work out during the project was what could be done about the lack of affordable housing available to renters. We found for young renters, more than half paid spent over 50% of their income in rent, and were particularly at risk financially when they had to move home. We also found lack of affordability was one of the factors that made renters not feel confident to exercise their rights - they were scared if they asked for a contract, pushed for repairs, or reported to environmental health they’d be evicted or have a rent raise and not be able to find another affordable property.

We see affordability as a major problem that’s hard to tackle – so we invited some people with good knowledge around housing economics to join us in a conversation so we could understand more and help us make recommendations. I wasn’t aware the NRLA was doing work on tackling the affordability crisis in the sector or I would have recommended that we invite them.

Once the research findings are published, I’ll be sure to share them here!

Warm wishes

Beth

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Have to disagree there. We got council property easily in those days. It’s only on the sale of council properties that the crisis started. Trouble is the government don’t want to take back responsibility for social housing as its much easier and more fun to hit private landlords most of whom provide fantastic accommodation at a fair price. Big cities always have and always will be a problem if you choose to live or remain there. We moved several times to find the right balance. At the end of the day you have to do whatever you have to do to make life work for you.

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I certainly don’t doubt your intentions and its important work. However, affordability is a complex systemic issue. Many landlords make little or no profit from their rental properties. Some even make losses. Others, especially older landlords may be dependent on the income from the rent. Average rental prices are governed by the market so as landlord costs increase and demand exceeds supply, prices obviously go up. A two tier private rental market where some properties are on a social rent may be theoretically possible, but its hard to see without legislation limiting the rent why they wouldn’t just be sublet at a higher price and I’m not sure what the incentive would be for private landlords to opt into such a system. High rents are very difficult for young people, but its not an option for landlords to just cut them. As long as houses and flats are a market commodity that can be traded for profit, affordability of property will be an issue worldwide and its pointless trying to simply tackle it from a single perspective.

An ethical letting agency that ensures the property it represents is well maintained and that tenants are dealt with fairly is an interesting idea, but it would probably need to be not for profit or even subsidised as I don’t see the economics stacking up if its a business. Perhaps tax incentives for landlords to use it might also help.

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I don’t think you can say it’s not an option for landlords to keep rents lower - before my current tenants, I looked into going with a letting agency. By self-managing, I’m able to charge £100pm less than the agency & thus actually below market price (I believe it’s the cheapest in the building full of identical flats), whilst still covering costs and making a small profit (that goes back into emergency savings for the property). The difference is that I see the equity in the property as my profit from investing, not the rental income.

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It’s rarely advisable for landlords to deliberately charge less than the market rent for their property imo as it can trap both landlord and tenant to a tenancy they can’t afford to move on from. There have been a few reports on this and other forums of tenants needing to move, (eg expanding family, job on the other side of town), but not being able to afford the rents elsewhere. As I said, I think the problem is systemic, not solvable by a few landlords cutting their rents.

However, I dont think this project is really thinking of the savings you can make by not using an agent, (which I don’t rally accept is a saving since someone has to do the work - probably you). A real social rent is likely to be a lot less than that.

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So, I think charging less than you can is not a good idea.

For instance. I have over £100,000 tied up in a property in London. After all costs, taxes etc. I make roughly £500 profit a month from that property.

Gasp greedy landlord

However, the profit per year is 4.6% on my invested capital. My investment on stock markets etc. make a lot more than that on average.

The profit per year on the total value is around 1.5%. not even beating inflation.

So, I really don’t understand why anyone would charge less than they could.

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You don’t accept not using an agent is a saving? The agent wanted to charge 10% a month to nothing except collect the rent.
Even drawing up the AST was £300 on top - something I did in under 15mins. Everything an agent offers apart from serving notices is additional to that 10%. Given that the GRL has a template notice for everything & it only costs £90 a year, I think a pretty big saving, not using an agent.

I guess that they offer tenant find & viewings, but I certainly don’t trust anyone else to find a tenant & conduct viewings - I want to meet my perspective tenants before they apply. And I got over 40 expressions of interest in less than a day’s advertising here on open rent - ended up doing 30 viewings+ 3 video viewings that were well worth it, but certainly not worth near an agent’s fees on a 1 bed flat - 15 mins a viewing maximum & not a single no-show, only person one didn’t actually want the property. No agent could have done better & it “cost” less that 3hrs a day over 3 days. Even if we give my time eg. £10\hr, that’s £90 - less than the agent takes in 2 months.

So if the agent isn’t sucking ~£75\month for sitting on their arse, why shouldn’t I deduct that from the rent? What exactly would I be charging it for - I’m making the same profit, either way?

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I dont know about your agent, but if you think there is nothing to the job then you could be heading for trouble. Staying on top of the legislation is practically a full time job and simple admin mistakes can have very costly consequences.

My own view is that this business is no longer one for the amateur of accident landlord. I’m not a big fan of agents so if I was no longer able to dedicate my full time and attention to everything involved in being a landlord, I would sell up.

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I am an amateur accidental landlord! I find the regular emails from the GRL keep me on top of the legislation etc - I also only use their forms etc, that I trust to be updated in line with the law. Any legal issues & they’ve got a phone number & online knowledge base where I can also ask questions. I’ve not done any of their online CPD, but I do intend too.

I manage my property whilst having a full time job. Technology has really helped - online application & digital contract signing, digital inventory etc. 99% of it from my phone. But it’s also only a 1 bed flat that I used to live in - I know exactly all of it’s quirks, and what does & doesn’t currently need doing. My only agent now is OpenRent.

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So, what has the tenant got to do with your “saving”? Nothing?

If you went with an agent charging 20% would you put rents up? No. If your mortgage interest went to 10% would you put rents up? No. Why? Because the market value sets rent.

So why, by doing some of the work yourself, would you hand the tenant £80 of your money each month? Do you have that much money?

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I think full time and part time landlords take a different view on maximising rents. I also work full time and as a result am happy with lower rents as this normally leads to happier tenants which in turn leads to less work from dealing with unhappy tenants and tenants are more likely to stay longer so again less work on tenant changeover as well as lower costs for voids and maintenance.

People that work full time in another job are normally not dependent on the rents and are more likely to value their time to be able to do other more fun things. It does also depend on the area you are in as in some areas very decent returns are available even with rents a bit below market but where property prices are higher then yields are very low so can understand the desire to maximise them.

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I am with you… I also do other things which gives me a good income .

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I’m not giving anyone money, I started off self managing & set the rent as I thought appropriate - slightly less than the most recently advertised property in the building to ensure I got a tennant. I’ve put the rent up slightly now & then, mostly between tenants.

I looked into getting an between tenants agent who suggested a £100 increase in rent, that they take 15% of the increased rent & then that they charge me additionally for every service they offer. In short, like almost all lettings and estate agents, they’re rip-off merchants. So by not going with them & not giving 15% of the rent to a parasite, I no longer had any reason to increase the rent. They’re the only reason I would have increased the rent to the alleged market level (it’s not, they were trying to push it to the top end of the building)

And if you really think high street agents are good value, why are you here on a site specifically designed in opposition to them that undercuts them massively & does a far better job at finding tenants.

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I’ve worked with Bethan at Toynbee Hall, the young renters and several other landlords, like myself, who all volunteered to be part of their investigation. We had multiple sessions together over several evenings. The conversation and proposals put forward were not at all one-sided. The majority of people on this thread are regular, valuable and mostly even handed contributors to the OR Community. You get thanked many times over for your input, experience and advice on numerous topics. I’m sure the panel session would have been illuminating for all of us.

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