Should the UK be more focused on its PRS?
There is an obligation for the UK to focus its attention on the Private Renting Sector, this comes after over-hyped statistics recently published, stating that the number of first-time buyers hit the highest level for a decade in 2017. In reality, experts have predicted that the renting market is going to expand, but also that rents are expected to exceed the rises in house sale prices. Therefore, it is more in our interest, particularly as tenants, to address this ongoing change.
The Private Renting Sector (PRS) in the UK has continued to grow at a steady rate since 2001, as statistics from PwC show that 2.3 million households were renting privately and by 2014 this had risen to 5.4 million. The prediction for the PRS is that by 2025, around 7.2 million will live in privately rented households. Still one of the obvious statistics is that the largest tenure remains in London. However, there has been a notable increase in tenure of rented properties outside of London. In fact, some reports show it to be doubling in recent years.
So, as a nation, are we enthusiastic about this on-going change to the PRS?
Perception of Renting in the UK
Firstly, renting to us is a stepping stone, an opportunity to save for the future, until we can inevitably climb the property ladder. There is something about our nature in which we don’t feel successful until we own a home. In fact, according to The Telegraph, homeownership is a priority for a quarter of the under 40 population in the UK.
Secondly, renting means freedom and liberation, which is understood differently between generations. For the young professionals, renting gives people freedom to travel and to relocate at short notice. For the older generations, freedom means no more DIY! Some people are more than happy to leave the maintenance and upkeep of a property to the landlord.
Thirdly, we may be forced into a position in which renting is our only option, the main example of this would be a relationship break down or even worse, a divorce… but we don’t need to get into all of that!
Are we on our own?
No, according to Deloitte’s Property Index 2017, 24.1% (2016) of households live in a rent-dwelling, which is comparable to; Czech Republic (23.4%), Ireland (24.4%), Belgium (24.4%) France (25.3%) and the Netherlands (26.5%).
However, it is fair to say that Germany is standing in favour of the PRS, whereby a staggering 54.3% of the households in Germany are rent dwelling. The only other two that push the 30% boundary are Denmark and Austria with 34.4% and 30.2% living in the PRS, respectively.
Should we take some advice from our German neighbours?
The UK’s PRS is growing at an alarming rate, and so it’s only right that we should take some lessons from the Germans.
Renting is a political power base in Germany, with 40% living in the PRS, compared to 19% of English. This level of support helps enable policies aimed at benefiting the PRS in Germany. For example, they have a strong security of tenure, the length of tenancy is indefinite and termination of contract only in limited circumstances e.g. rent arrears, landlord needs dwelling for own family. The political strength the PRS has gained, is represented in the three million German tenants that are involved in local tenant organisations. For instance, The German Tenants ‘Association (DMB) is one of Germany’s largest organisations that acts on behalf of private tenants, helping to provide legal cover.
How does the UK compare?
On the one hand, the UK is showing signs of improvement and interest into the PRS. Parliament has already implemented schemes to benefit the PRS and has predicted that by 2030, 240,000 homes will be built specifically for renting. The government has changed building regulations to encourage local councils to push for build-to-rent schemes, where needed. Alok Sharma, the Minister of State for Housing and Planning (June 2017- Jan 2018), granted £65 million to boost the Homes-to-rent scheme. The Wembley Park scheme is a great example of how this injection of funding has helped to secure 7,600 new homes, 6,800 of which, will be to rent.
On the other hand, much more is to be done with regards to a political influence. Compared with Germany’s political backing for private tenants, the UK needs to improve its support.
At the moment, there are no groups that mirror the size and strength of Germany’s DMB. Instead, a lot of reliance is put on free advice from either the Citizens Advice or Shelter, both of which are struggling in financial backing. Generation Rent has also been influential in legislation and policy, as well helping to form a network of private tenants. However, they don’t focus on union based action and instead rely on campaign work.
Additionally, the debate over legislation concerning longer tenancies is still ongoing. Although, over 35,000 homes have been offered three-year tenancies in the Wembley Park development, landlords across the UK aren’t in unison over the concept. Nothing has officially been confirmed nationwide.
