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Private renting and affordability: where to point the finger?

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John Stewart
Written by John Stewart

Lack of supply, increased regulation and stagnating incomes are the real issue, when it comes to affordability, says RLA policy manager John Stewart

There is widespread concern that housing is becoming unaffordable. The barriers for first time buyers are well documented and string of government interventions have sought to boost declining levels of home ownership.

But with the private rented sector predicted to grow to 25% of housing stock over the next 10 years, increasing attention has been focussed on the affordability of private renting.

Indeed, DCLG established an ‘affordability and stability’ working group to look at non-legislative ways of cutting costs for renters and providing greater security of tenure.

Predictably, much of the media comment and response from poverty, tenant and consumer campaigners closes in on rent levels, with landlords charging ‘exorbitant’ rents cast as the villains.

This usually followed by a demand for rent controls or rent stabilisation and cries of ‘Look at Germany!’.

However, private rents are market led, and many factors influence rent levels.

There are also many markets within the PRS, both consumer and geographic.

And affordability isn’t just about how much rent is being paid, but also about household income and other household costs.

It’s just lazy to blame affordability on ‘rocketing private sector rents’.

Statistics show that rent increases have been remarkably stable over the last five years, averaging a little under 2% per annum. Hardly out of control.

The English Housing Survey shows a strong correlation between length of tenancy and private rents – those who have stayed longest, on average, paid less in rent.

This backs up what most people in the sector know – landlords are keen to keep good tenants and will often forgo rent increases or market rents to retain tenants who pay on time and look after the property.

The one thing the entire housing sector seems to be able to agree about is a lack of supply of housing of all tenures.

Since 2010, the number of housing completions across the UK has struggled to hit 150,000, while estimated demand is closer to 250,000.

This is a huge gap to bridge.

Increasing supply cannot assist with affordability in the short-term.

It just isn’t possible to deliver the land, labour and supplies in the quantities required, let alone navigate the planning process.

It’s doubtful, even if a significant increase in supply can be delivered in the medium term, so a lack of housing supply will continue to put upward pressure on both house prices and rents.

Other factors that put upward pressure on rents are legislative changes, and the PRS has had its fill over the last few years.

Some are practical and reinforce market norms – smoke and carbon monoxide detectors regulations for example.

Others create unnecessary work or add complexity – immigration checks and section 21 changes.

There are new offences and penalties – civil penalties and banning orders – and local licensing.

Yet others are financial – restriction on mortgage interest relief and additional stamp duty.


Most add cost, undermine stability in the sector and introduce new risk and are passed on to tenants, via increased rents.

Despite lack of supply and new regulatory burdens putting upward pressure on rents, the real affordability issue is now household income.

On average, in the PRS, 35% of household income is spent on rent.

Nationwide, one in seven tenants are paying more than half their income on rent.

This rises sharply in areas of high demand, like London. Over the last five years, weekly average earnings have failed to keep pace with either rents or inflation.

Crucially, while average disposable household income has risen slightly, this has been uneven.

Retired households have done well while the income of other household – those in work or claiming benefits – has flatlined.


Working households have been hit by wage freezes, the growth of low paid and insecure work, and zero hours contracts.

Government has given a clear lead on wage suppression, with public sector pay increases capped at 1% since 2012.

With over five million people working directly in the public sector, and many more dependent on public sector contracts, this can’t help but impact on household income.

Likewise, the government’s welfare reforms have eaten in to the income of non- pensioner households claiming benefits.

Restrictions on housing benefits, including the LHA freeze and the benefit cap mean, in many areas, private rents are out of reach, and landlords are reluctant to take on benefit tenants for fear of arrears.

Meanwhile, the availability of social housing is shrinking and housing associa- tions are vetting prospective tenants on their ability to pay.

The private rented sector is now playing a substantial role in accommodating the poor.

Little wonder affordability is a major concern for privat tenants today.

The government’s response to making private renting more affordable has so far concentrated on limiting up-front costs – banning lettings agent fees charged to tenants and limiting deposits to one month’s rent.

This is tinkering at the edges.

It’s not landlords and rising rents that are the issue.

Responsibility for the main causes of any affordability crisis – lack of supply, regulatory burdens and stagnating incomes of working age households – lies squarely with the government.

About the author

John Stewart

John Stewart

John is the Deputy Director of Policy and Research for the NRLA. He has over 20 years experience working in politics, as a successful election agent, MP’s assistant, local councillor and council leader, and is a former charity chief executive.

He oversees RLA policy work across all levels of government – central, devolved and local – working to ensure that landlords’ views are represented and officials, MPs, Assembly Members and local councillors have key information and evidence about the PRS before they take decisions.


  • Here, here John.

    Andrew Turner, our chief executive here at Commercial Trust, made much the same observation when we spoke to former Housing Minister Gavin Barwell earlier in the year, after the Housing White Paper announcement.

    When confronted on the scapegoating of UK landlords, Mr Barwell recognised the valuable contribution made and alluded to the fact that given the changes would be phased in over four years the impact could be looked at and, one assumes, revised if not working.

    Given the storm cloud everyone within the industry can quite clearly see coming, in terms of rent increases driven by added costs to landlords, it is imperative the government revisits this sooner rather than later.

    Hopefully the newly formed Nationwide Partnership Board will have some success in raising these points and helping the government to make better-informed decisions and policies that do actually achieve a positive outcome for all.

  • I wholeheartedley agree with everything thats been said here. Over the last 5 years I have seen a massive improvement of the housing in Blackpool some areas were positively slum areas. Due to the purchasing of these properties from whatever sector these slum areas have significantly improved and what were damp mouldy practically uninhabitable houses have been transformed into lovely tenable properties that anyone would be happy to live in. Landlords in general are becoming more socially conscious of who they allow to rent to and yes people who have been long term benefits do figure in the equation for me. Reason? Not because they are on benefits but because they have been allowed to remain on benefits too long. We have worked hard taking whatever employment we could to pay our way. A matter of pride really. So taking on someone with the latest iphone, smoker and no pride in appearance with a bad work history is a no no. The money we spend on run down houses be it wallpaper or carpets is to ensure we get good hard working long rterm tenants. At the end of the day rentals are a business just like a shop and we need to attract the customers to purchase. Why should we not be allowed to claim as expenses something that benefits everyone including the government by allowing the property to rent out quickly and long term. Our government appear to be blinkered as far as private rentals are concerned seeing it as only a benefit to the owner. Not so. It gives people they are unable or unwilling to house nice liveable homes and tax on the profits of those rentals. That never seems to be enough though. They see landlords as someone else to turn over and tax to the hilt. They will not let good businesses thrive preferring to see them as money making machines instead of the backbone of whats good and right for the British economy. Its time they looked at making British businesses easier to succeed allowing them to expand and bring in further revenue without browbeating them.

  • Anyone pointing the finger at Germany as a great example should also research how the law puts a lot more responsibility on tenants over there to maintain properties. You can’t have it both ways…..

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