The Joseph Rowntree Foundation (JRF) is calling for fundamental reforms to the private rented sector (PRS) to open the market to those locked out of home ownership and social housing.
A paper by senior policy adviser Darren Baxter reveals that in the last 20 years the proportion of adults owning multiple homes doubled while the percentage of 16-34 year-olds buying a home almost halved.
He says the problem has arisen because we are now a country of multiple home ownership and private renters thanks to changes in regulation, policy and economic conditions that have made becoming a private landlord and property speculation much easier and more attractive
These changes have driven huge shifts in housing tenure over the last 40 years, and the huge growth of the private rented sector over the last two decades has reversed the late-20th Century trend of increasing home ownership.
Over the last twenty years, for every four homes built in England the equivalent of three of these have gone into the private rented sector. The proportion of adults owning any homes has fallen from 62 per cent to 55 per cent, but the proportion owning multiple homes has doubled.
Successive governments have promised to solve the housing crisis by building more houses, but a new JRF report suggests that who owns the 25 million homes available now, and who they are available to, is as important as new construction.
The report says landlords are likely considering their future in the sector due to planned reforms to the PRS to improve tenants’ rights alongside existing tax changes and obligations on landlords to meet higher energy efficiency standards.
The report says the government should see this as an opportunity to implement policies which see homes change hands from landlords to tenants. This would help budding homeowners previously unable to access the market find affordable, secure homes and give them the chance to build wealth.
JRF’s latest report puts forward ambitious but practical measures to achieve this. These measures include:
Setting a strategy for reducing the size of the PRS by rebalancing the position of first-time buyers and landlords in the mortgage market and discouraging property speculation. This could be achieved by reviewing the regulations that govern mortgage lending to prioritise lending towards those looking to buy for the first time over landlords alongside fiscal reforms to reduce speculation on property.
Supporting any reduction in the size of the PRS with policies that expand the supply of social housing and support households into homeownership. This could include:
Funding local councils or housing associations to buy existing homes, upgrade them, and then let them out at genuinely affordable rents.
Supporting renters to buy the home they live in, including through a Right to Buy for private renters.
Creating mechanisms to allow landlords to receive funding to retrofit their home to high environmental standards, in return for leasing it to a housing provider to provide to tenants at lower than market rents.
Expanding the routes available to renters to build sustainable wealth by addressing the barriers to part-rent part-buy models such as Shared Ownership.
Ensuring that the transition to a smaller PRS is managed equitably, with a particular regard for renters on lower incomes. This could in part be achieved by reforming support for renters on the lowest incomes, including Local Housing Allowance.
Darren Baxter, Senior Policy Advisor at JRF, says:
“The housing market is not working. In recent decades we have seen the rapid growth of the private rented sector alongside the decline in the proportion of households in social housing or owner occupation. Consequently, millions of people are stuck paying unaffordable rents, worried about being evicted by their landlord and have little opportunity to save.
“Right to Buy and the expansion of the private rented sector following the global financial crisis have already shown that rapid shifts in the distribution of homes are possible. Reforming the private rented sector by shifting the distribution of homes within it should be the gateway to further, fundamental reform of the housing market. Reforms of this type would ensure the housing market supports those looking for somewhere to call home over those seeking assets to invest in.”