The call is made as Labour blasts the government for failing to deliver on its pledge to end section 21 ‘no-fault’ evictions.
Rents in Britain are at the highest rate on record. Data shows that in seven out of 12 UK regions, rent affordability is at its worst for a decade. In London, rental costs equate to around 40 percent of tenants’ gross earnings.
Office for National Statistics data shows that private rental costs paid by tenants in Britain increased by 4.8 percent in the year leading up to February 2023.
Outside London, asking rents jumped almost 10 percent in 2022. This year, monthly payments have continued to rise and the national average asking rent outside the capital had reached a new record of £1,190 per month, having risen for 13 consecutive quarters, according to Rightmove. The property portal has also reported that average asking rents in London have surpassed £2,500 per month for the first time.
High demand for properties and a lack of supply are driving rising rents. A recent study compiled by the flat share website SpareRoom, shows that a third of tenants are spending more than half of their take-home pay on rent, as the housing crisis risks turning into a ‘housing disaster.’
While the government’s Renters’ Reform Bill is aimed at protecting tenant’s rights, little has been done at a government level to tackle the issue of rising rents.
At PMQs this week, Labour’s deputy leader Angela Rayner criticised the government for failing to deliver on its pledge to end section 21 ‘no fault evictions.’ The policy was first mooted by Theresa May as part of the Renters’ Reform Bill. Rayner said the government was ‘dragging its feet’ and giving ‘pathetic’ answers to Labour’s calls for urgent action. She said that no-fault evictions were ‘unfair and unjust’ and left tenants vulnerable to homelessness and insecurity.
Within this climate, it has been suggested that tenants who pay their landlords’ buy-to-let mortgages, get a share of any capital gains profit.
The suggestion was made by John Bird, founder and editor-in-chief of the street newspaper, the Big Issue, which is sold by street vendors who are homeless or vulnerably-housed.
Bird, who became homeless at the age of five, was nominated for life peerage by the House of Lords Appointments Commission in October 2015 to become a non-party-political ‘people’s peer.’ Writing for a recent edition of the magazine, he said:
“Making money from buy-to-let properties has long been like shooting fish in a barrel for landlords. It’s time renters got their share.”
The social entrepreneur tells the story of Jim, who, 20 years ago, started renting a flat which he could have bought for £100,000. He didn’t and in the ensuing years his rent doubled. Now the landlord wants to sell the flat and Jim has been ordered to leave under a section 21 ‘no fault’ eviction notice. Since Jim started renting the flat in 2003, it has increased in value by £400,000 to £500,000.
“As it was a buy-to-let, the money borrowed from the bank was paid for by Jim’s rent. The person who borrowed the money did not have to pay for the mortgage.
“The buy-to-let arrangement, as long as the property value does not fall, is an ingenious way of borrowing money so that you can increase your income, and also see the steady increase in the value of what you bought with your mortgage,” writes John Bird.
He continues that after 20 years, the money paid by Jim hasn’t improved his worth. Instead, his rent payments have increased his landlord’s value.
Rather than getting a share of that value, Jim will be forced to search for a new home and face a shortage of flats with fast-rising rents.
The Big Issue founder notes how it is not the landlord who has created the increased value, but the tenant, “so why not cut him in when you throw him out and sell the property for top price?”
Bird concludes by saying: “This is the ugly face of capitalism and something must be done to end this turning of the basic need for a roof over your head into the biggest bonanza for some to make themselves wealthy. At the expense of the renter.”
Gabrielle Pickard-Whitehead is a contributing editor to Left Foot Forward
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