We've had seven years of pay caps - why is no one talking about rent caps?
Here’s a stat for you: just 2% of homeowners pay more than half their income on their mortgage. The figure for renters? Seven times that – 14%.
With the proportion of people owning their own home in decline, these figures from the Local Government Association aren’t just a warning call. This a housing catastrophe. Pay rises will mean nothing if rents rise higher than pay packets.
And as so often is the case, it’s the young who bare the brunt. The proportion of 25-34 year olds who own a home has collapsed from over 60% in 1981 to just over a third now – while actually surging among older people. All the while, the proportion of social housing has collapsed.
Make no mistake, this situation is spiralling. The number of affordable homes built in England crashed to a 24-year low last year. Despite all the rhetoric, that isn’t going to be solved with gentle nudges to private developers.
I spoke to Generation Rent about all this. Seb Klier, London Campaigns Manager, told me the problem is clear:
“Rents have risen and wages stagnated over the last decade, [while] private renters face an increasing crisis of affordability.
“The failure to build enough social housing stock, and a huge increase in house prices, has seen pressure grow on the private rented sector and see many tenants trapped, having to pay market rents well out of line with average earnings.”
But the eternal question ‘what is to be done’ needs addressing. And we need big, bold answers on this.
“We need a serious debate in this country about rent controls, as a means to counter the pressure being borne by tenants, and to bring down the close to £10 billion in housing benefit that is paid to private landlords each year.”
Alongside that, renters need greater security. The power to evict a tenant whenever the landlord wants creates the dangerous levels of churn which allow speculation and pushes up rents.
But the big issue is that councils need to be allowed to invest to build. The fact that they cannot borrow to do this is a scandal. Building social housing means a bigger asset base, more future rental income for councils and a more sustainable economy for all of us.
The real impact though would go way beyond that: developers know they can charge what they want for housing now because there is frankly no good quality social competition. If there was decent competition from social housing providers, that would simply not be the case.
Despite all the press releases, strong words and minor tweaks, we are getting nowhere on rent. It’s time for real reform – before my generation is priced out of leaving home altogether.
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