A recent report from the Resolution Foundation and Shelter starkly outlined the rapidly changing housing patterns now evident in almost every community throughout the UK. This has been fed by a rapid increase in the number of short-term private rental lets by the under-35 age group, and it’s not difficult to see why this is happening. The under-35s have increasing levels of unsecured debt; their incomes are being squeezed and they are more likely to be on temporary/part-time contracts. In addition they face a significant contraction in both mortgage finance and housing supply.
Despite the severe economic downturn, the buy-to-let market remains buoyant. Rental levels are increasing above inflation and have reached eye-watering levels in the south east, with demand increasing year on year. Many urban neighbourhoods are now being impacted by a much larger transient population. But many stakeholders, including the UK government and financial institutions would have you believe that we simply need to grit our teeth through the pain on the premise that at some undefined point everything will return to where we were in 2007 or even 2000.
But the changes in the jobs market may be much more permanent and there are valid concerns that ‘back to normal’ simply leads us to precisely the kind of unsustainable behaviour which caused our current economic problems. Is it really sensible, in an increasingly fractured labour market, to encourage those on modest incomes to exhaust all their savings to meet such hefty deposits at a time when their outgoings will be at the highest during their lifetime?
A more sustainable solution might be to look at alternative forms of property tenure, and to question why in the UK we place such an emphasis on outright ownership. When we look at other European nations, we see a more relaxed attitude to home ownership which often starts at 40-plus age group and an emphasis put instead on long-term, good quality rental accommodation, creating a stable market of supply and demand for responsible landlords and tenants and long term residential leasehold interests. If the purpose of property ownership is to provide a family home and to create the stability of long-term residence, the tenure which is held by the occupier becomes less relevant if adequate protections.
We need to establish both a legal and financial structure that encourages a long-term private/not-for-profit rental sector which will provide good quality affordable accommodation. That means proper regulation that supports reputable landlords – possible partnerships between major builders and housing associations should be considered –and a regime that controls rent levels so they do not thwart a reasonable return for investors but are still within the reach of those on middle incomes.