Do we have a housing crisis in the East Midlands? You bet we do. It would seem that whichever party enters Westminster they do not grasp the simple concept of demand and supply.
Rightmove state that for every property on the market currently up for rental there are between 13 & 15 households queueing up to rent the same property. It is no surprise that rents are on the rise. This situation will only get worse in the short and medium term as Westminster makes plans to build the required 120,000 homes per annum in order to hold the crisis at bay, let alone resolve it.
An article on the BBC highlighted the issue when a spokeswoman for the Ministry of Housing, Communities and Local Government said:
“Since 2010 this government has delivered over 464,000 new affordable homes, including 114,000 social homes.”
Over 14 years that is an average of 35,000 homes and just over 8,000 social homes per annum, you do not need to be a mathematician to realise this is hopelessly short of where we need to be. Add into the formula the persecution of landlords in the same period you can see why the supply of rental properties is being massively squeezed.
Let us take a look at the factors involved here:
- Landlords are exiting the market as they no longer are seeing £300-£400 buy to let monthly profits coming their way, in fact with the rise in interest rates and the legislation that has been brought in many landlords are losing money, making maintenance and repairs a bitter pill, particularly if the tenant is not paying promptly. Section 24 removed the ability to offset mortgage interest against their tax liability reducing that profit and with interest rates having more than trebled in some cases this has wiped out any profit completely. Like any business if it is not making money then it probably is not viable.
- As the NRLA points out, without changes to the Homelessness Reduction Act, once Section 21 is removed, those finding themselves homeless, regardless of whether they were at fault or not, will need to be tested to see if they are intentionally homeless. This presents a serious problem for tenants and local authorities because, as NRLA research shows, landlords usually have a reason to serve a Section 21 notice. These reasons often include anti-social behaviour or arrears, however choosing the Section 21 route is simpler than using Section 8. Section 8 sees the tenant as making themselves deliberately homeless and not able to seek assistance from the council, another reason why the removal of section 21 is baffling.
- The government sees build to rent as one way of solving this issue however this plan only works in the much larger conurbations. New build apartment blocks and office blocks converted to flats does solve an issue in some areas, they are working in London, Manchester, Liverpool etc., even Peterborough and Derby on a smaller scale but these types of development do not work in towns and villages across the UK. There is a solution in the smaller conurbations and that is via the private rental sector, the very same sector that Westminster has persecuted for almost a decade now and are causing landlords to exit the sector en mass!
Do we have bad landlords? Of course we do, fortunately they are a huge minority, but as with all minorities the focus is on them rather than the silent majority who do a great job of providing quality housing at an affordable price. Councils have the power to take enforcement action, what they lack is resource and appetite.
The solution is complex as the government has already made it clear that landlords are going to get a hard time and they are hardly likely to reverse the rhetoric and buddy up with the private rental sector to help resolve the problems we see today.
As Mr. Starmer has said today, things will get worse before they get better, my only concern is that I do not see the rental sector getting any better in the lifetime of this government. We will remain in a housing crisis until an independent body is brought in to assess the situation and make a plan to resolve it. Logic dictates that many of the policies imposed in the last 5 years will be reversed but that will be met with resistance.
If you wish to contact us regarding any of the points raised here then feel free to do so.
