Two years ago, Vodafone became one of the first big businesses to issue a warning over Britain’s housing costs. It said that the sheer cost of renting was making it harder for firms to attract talent. Within weeks, its concerns were echoed by the Confederation of British Industry (CBI) and KPMG’s London Business Survey.
London’s population is exploding, and we’re experiencing record levels of employment. But housing affordability remains a grave challenge. The long-term answer is turning around a 30-year failure to build enough homes. This means doubling the housing supply, and making significant structural changes to the market.
Mayor of London Boris Johnson’s plans include a Housing Bank, offering loans to accelerate big schemes and the release of surplus public land. He’s also unveiled 20 new Housing Zones, which will provide incentives and infrastructure to build thousands of homes similar to the enterprise zone concept that transformed Canary Wharf.
In the long term, businesses can support these efforts by encouraging their pension funds to invest in housing, providing the patient capital the sector lacks, especially for housing aimed at the mid market.
But as The Co-operative Group showed this week, there is a more immediate way businesses can help employees daunted by housing costs. The group announced that its 70,000 employees will now benefit from a scheme offering interest-free loans to staff to pay for rent deposits. The idea, proposed by homeless charity Shelter, was piloted by Greater London Authority last year, and works exactly like the season ticket loan offered by many firms to help commuters pay for their travel costs.
With 2m renters in London, businesses offering this scheme as an employee benefit should have a competitive edge in the labour market. For most businesses, the sums involved are relatively small, but can make a huge difference to the individuals involved. At one Co-op store, staff said how it would allow them to move out of their parents’ home, or into a larger flat with their children. With average rental deposits at £1,700 last year, saving for a rental deposit – let alone buying a home – can be a real hurdle for many on low incomes.
The initiative is part of a wider effort to improve London’s rental market. Last year, the London Rental Standard set the first professional standards for property management, with an estimated 98,000 properties already operating under it.
And momentum is growing. Both the CBI and London First are backing the rent deposit loan scheme and are offering it to their staff. The government has announced that all civil servants will benefit from it. A law firm and a major housing association are also signing up. What we need now is a campaign to raise awareness and get more businesses on board.
More information on the new rental deposit loan scheme can be found on Shelter’s website.