Landlords should be considered a solution to our housing crisis not part of the problem!
The Royal Institution of Chartered Surveyors have suggested that Theresa May needs to “get out [her] hard hat” as they estimate the UK faces 1.8 million shortage of rental properties.
They also highlighted that this is a major problem for the country as “86% of landlords say they have no plans to increase rental portfolios this year” sparking a suggestion that the new Prime Minister “abandon David Cameron’s previous home ownership focus”.
Landlords large and small will also be pleased to hear that RICS called on the government to “reverse April’s stamp duty measures in order to address short term rental supply issues.” However they point more towards the government supporting large scale build-to-rent schemes funded by pension funds and organisations such as Grainger and Legal and General as opposed to smaller, individual landlords.
Whether the government listens to this plea or not is something we are not likely to learn until the new cabinet’s budget on November 23rd but, in the meantime, it certainly appears that the new government is keen to make sure people see them as a party which is going to continue to drive housebuilding to help make a dent in the housing stock crisis we have.
New announcements by Sajid Javid and Phillip Hammond are offering a new Home Building Fund to help drive 25,000 more homes in the short term and up to 200,000 longer term. The aim is to support small and medium sized builders and indeed custom builders, who offer consumers the opportunity to buy a plot of land through to building a home they have helped to design.
The reality is that although it’s good for developers to be supported as we are desperate for new stock, many smaller developers are actually landlords who previously purely invested in existing homes to rent and indeed and are now finding ways of buying and creating ways of making our housing stock more efficient.
So it seems a sensible step for policy makers to start looking at landlords as a way to help solve the housing crisis, rather than as part of the problem, which is how most landlords feel they are being treated at the moment.
How have landlords contributed to housing the nation to date?
Currently landlords are often accused of ‘taking stock’ away from first-time buyers and driving up house prices as a result. Respected housing analysts Hometrack point out that “The reality is that those buying a property to live in still account for around eight in every ten sales.” Although they do state that “strong private investor demand will explain some of the additional growth in city level house prices relative to the UK rate of growth.”
In addition, the Residential Landlords Association points out that, “we very often buy the houses no-one else wants in areas owner occupiers don’t want to live… adding to supply,” rather than taking it away from existing homes purchases.
They estimate that private landlords added “60% of all new housing units between 1986 and 2012”. And of course if a landlord buys a big property in a town centre and turns it into five or more rooms to rent, as long as they are legally and safely let, that is one way landlords have helped provide higher quality rental stock at a lower cost to tenants, saving them having to rent a whole property and cover all the costs themselves.
How else can landlords contribute to providing new home stock for tenants?
Other ways landlords are helping to provide more stock is taking fire damaged or poor condition properties which need to be bought with cash and restoring them to homes that people can rent. Or they can take large homes that people would struggle to afford and turn them into smaller units; this way an unaffordable five-bed property can become two or three flats with one or two bedrooms for sale or rent.
Thanks to changes in the planning laws, a new trend is to take unused commercial properties and convert them into homes that people can live in, both on a small and a large scale.
There are an estimated two million landlords in the UK, if we could encourage just 1% of you to build or bring a new home back to life each year, that would be an amazing 20,000 new homes a year landlords could contribute to new housing stock.
If it was 10%, that would be an extra 200,000 homes.
Let us hope that the new cabinet can see that penalising landlords financially only makes it tougher for tenants – as they will either end up paying higher rents or - worse still if the landlord sells - end up losing somewhere they hoped to have called home.
On the other hand, encouraging landlords to create new homes could seriously help solve the housing crisis.