Soaring demand could see renters priced out
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A potential housing crisis is brewing which could lead to renters being priced out of the market, John Heron, managing director of Paragon Mortgages, has warned.
A shrinking owner-occupier sector, lack of new homes and fewer homes in the social rented sector means tenant demand is at an all-time high.
Heron says: “It’s clear we have a potential housing crisis brewing. The issue we have is much broader than the mortgage market but is a housing issue.
“Pressure is being put on the private rental sector and we are in need of a proper co-ordinated housing policy to expand the supply of housing and that’s only going to come from the government.”
He says we are in the midst of a major socio-economic change regarding how the country views housing which is not a temporary blip.
He adds: “Unless the government, lenders, builders, intermediaries and investors manage this process effectively, we could see rents rising beyond acceptable levels and people priced out of the sector.”
Research last week from Halifax revealed that 64% of those who do not own homes believe they have no prospect of buying a property.
It surveyed 8,000 20 to 45 year olds, 95% of whom claimed they have no spare cash, no interest in saving for a deposit, or were trying to save but failing to do so.
But Chris Norris, policy manager at the National Landlords Association, says every region in the UK is different and while rents in parts of London might be rising sharply, nationally the picture is different.
He says: “Average rent inflation over the past year has been 4.4% which is almost on a par with inflation.”
Norris agrees that the issue of housing supply should be addressed because for rents to go down more landlords will need to invest in the buy-to-let sector.
But if more landlords were to invest they could be viewed as taking properties from owner-occupiers.
He adds: “It’s not just landlords sitting with their calculators working out how much they can charge, they are working out how they can cover the increased cost of finance and keep investing in the property.”
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Readers' comments (4)
luke | 7 Jun 2011 3:23 am
Well you can raise the rents, when that happens i'll just leave the country and take my skills with me to somewhere with cheaper rents.
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Nick | 7 Jun 2011 4:53 am
So if the renters are priced out, presumably all the rentals will be empty.
Looks like bus shelters and shop doorways are going to get busy.
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david barker | 7 Jun 2011 9:14 am
If renters are priced out then surely rental prices have to fall otherwise the houses remain empty?
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D Cameron | 7 Jun 2011 12:30 pm
this is an excelent stratargy to ensure britan is populated by the wealthy which adds to a better economy from higher income earners, by pushing out the poor.
Making the poor consider moving to other countrys such as poland this will free up the UK economy from paying out benifits and add the the economic growth to poorer countrys in the EU buy filling there job markets with skilled english working class. win win situation for the UK and EU goverments
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