Commentators report that home ownership is down to its lowest point in a generation, while in the same breath claiming that those living in the private rented sector (PRS) are at peak levels. Somehow that always seems to imply that renting is a second class option. Your view on that depends whether you look at your home as a piggy bank, as the government appears to. Repeated raids have resulted in Stamp Duty Land Tax levels that are a tax on mobility, as any observer of transaction levels will tell you. If you combine increasing difficulties in getting a mortgage with recent wage stagnation, it’s no great surprise that renting is gaining ground.
Assuming supply is of a satisfactory standard, quantity renting can offer real benefits, the most obvious being flexibility to move where the work is. As a result, it could allow the great British entrepreneurial spirit to flourish.
This all presupposes, though, that we are going to have an orderly and well-run increase in PRS supply. For tips, we should be looking to Germany, where pension funds and large scale investors have an excellent reputation as landlords offering solid long-term rentals and investors a sustainable return. Millions of European renters feel anything but second class, but that’s because their Governments have laid the foundations over many years.
Somehow, the discussion on investing in PRS has been hijacked, and buy-to-let landlords have been painted as grubby characters. We should be happy about increased investment in the sector, but the answer to quality renting lies in fresh thinking and a longer-term view, and we all know politicians struggle to look beyond the next election. For instance, could the affordable housing and commuted payments that developers give to local councils be split between providing PRS stock and affordable housing? At the moment PRS builders are failing to compete with build-to-sell developers and we need to find a solution.
We shouldn’t be afraid to learn from our European neighbours, and private renters certainly shouldn’t be made to feel second class because of their housing choices.
City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.