a fairer rental market has to be introduced as a reflection of our society moving away from owning to rental to protect tenants
In my recent blog I challenged the theory that the solution to the shortage in housing is to build more homes, and suggested that we should focus on a fairer rental system akin to that in Europe. There is no socialist intention on my part, just a frustration that we go for the easy vote winning strategy, rather than trying to get to the root of the problem and tackling that.
The number of new homes needed in the UK is something close to 1 million however research from emptyhomes.com shows that there are 610,000 empty homes in the UK, plus 200,000 long-term vacant dwellings. It is unclear how many shops, old schools and offices lie empty but if these could be converted to homes then clearly the solution to the housing problem lies right in front of us.
According to the Office of National Statistics youth unemployment in the UK is 14.4%, and young people are three times more likely to be unemployed than the rest of the population.
To me there seems a basic connection between empty homes and doing something about youth unemployment.
There are many excellent projects which look to refurbish empty and often dangerous buildings into homes of which people can be proud. These projects often take on ex-offenders and homeless people giving them employment, training and skills and in some cases helping them secure employment once the projects are completed.
The point is that rather than focusing on building new homes let’s put the energy into renovating those that are empty and dangerous. Let’s encourage the unemployed to be part of these projects so that they can learn new skills and contribute to a positive transformation in their communities.
A rental society that works
If the focus moves on to turning empty homes into occupied homes this will make a significant impact on the demand for new builds. If done in tandem with a fairer rental system; affordable rent helps to tackle the problem of those people who are desperate to find a place of their own.
Take one example, Places for People, they are currently redeveloping 1200 homes; this will eventually provide 800 homes for sale and 400 long term affordable tenancy properties. I am not against the idea of buying and this project provides a good balance of affordable homes to rent as well as buy.
Fairer rent is important alongside long term tenancy agreements because it enables people to afford rental payments (which many are struggling to do in this market) and provides the security we tend to associate with owning a property. Affordable rent also enables those who want to (and can afford to) the potential to save and eventually buy a property if they want.
If we can encourage the government to support these initiatives it gives people not only the aspiration to buy if they want to, but also the ability to rent more affordably.
But what about private landlords?
A counter argument to a fairer rental system is that it will price private landlords out of the market. Equally if the market is ‘flooded’ with affordable rental homes then this will impact on their earnings.
There are two points to consider. Firstly a fairer rental market has to be introduced as a reflection of our society moving away from owning to rental to protect tenants, and secondly there must be affordable rents. Having affordable rents might bring down prices in the private sector, but only if it is a reflection that the rents being charged are excessive.
Whatever industry you work in there are fears about cheaper competition but quality always survives. Likewise good quality properties, at a fair rent, will always attract tenants. Landlords who should be worried are those who offer poor quality properties and unfair rents.
Although it may seem good to line the pockets of house builders (and yes some new houses should be built), building to replace a shortage of homes when there are enough empty properties that can be converted is crazy and illogical.
Not only does converting empty properties remove blots on the landscape, it creates employment, training and responds to the need for affordable homes (whether to buy or rent).
Full list of sources:
Office of National Statistics
Places for People
NOTE: This is written in a personal capacity and reflects the view of the author. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog and the reader should accept that by its very nature many of the points are subjective and opinions of the author. This is not a recommendation to buy any product or service including any share or fund mentioned. Individuals wishing to buy any product or service as a result of this blog must seek advice or carry out their own research before making any decision, the author will not be held liable for decisions made as a result of this blog (particularly where no advice has been sought). Investors should also note that past performance is not a guide to future performance and investments can fall as well as rise.