Landlords are exploiting generation rent

As interest rates hit nearly 2 per cent and inflation tops 9 per cent, many Brits are feeling the pinch. But once again it seems that generation rent is worst off. Last month, my landlord hiked my rent by £450, or nearly 30 per cent. I’m far from alone: rents across the UK have gone up by as much as 17 per cent.

Renters in the UK have been overlooked since the cost of living crisis began to grip the country earlier this year. With inflation soaring and the cost of energy, water, food, petrol and other essentials also rocketing, life is suddenly, alarmingly, getting more expensive. The Bank of England’s decision to raise interest rates has got homeowners in a flap, with many understandably concerned about the impact this will have on their mortgage repayments.

But what about those who, like me, don’t own their own homes and remain at the mercy of their landlords? Every year, the summer marks the start of rental musical chairs: it's when graduates move to London ahead of starting new jobs in the Autumn. As a result, rental contracts typically come up for renewal between July and September. Competition for flats is always fierce, but this year the challenge of finding somewhere affordable to live feels particularly acute.

On cue with the cost-of-living crisis, rental prices began to shoot up. Frequently the increases, as in the case of my own flat, seem quite arbitrary: the quality of flats has hardly gone up in tandem. My flat has maintenance issues that the landlord has been promising to fix for approaching twelve months – somehow, I don’t think receiving more of my hard-earned cash is going to get him to pull his finger out.

Perhaps I’m one of the lucky ones. My friends tell me stories of living in flats where ceilings have collapsed from untreated damp, faulty heating systems, rodent infestations or a lack of basic appliances. Because of the demand for rental properties in London, there’s little incentive for landlords to get their act together. Put simply, the attitude among estate agents who often manage properties on the landlords’ behalf is: if you don’t like it, find somewhere else.

The current economic situation has left renters more vulnerable than ever. They are being strong-armed into the position of getting less bang for more buck. Some landlords have not even waited for their tenants’ leases to expire to hike the rent, contacting them at their break clauses to squeeze more money out.

The argument estate agents and landlords alike have been making is that the pandemic caused rental demand and prices to plummet. Now, after two years of suffering, the market is rightfully rebounding and they can recoup the losses they are owed. Figures released by the Office for National Statistics however suggest the opposite: that while the rate at which rental prices grew over the pandemic did indeed slow down, stop growing they did not. Indeed between February 2020 (just before the pandemic began) and June 2022, average national rent prices grew by nearly 5 per cent.

The blatant profiteering in the rental market, driven by landlords taking advantage of an economic environment in which everything is getting more expensive, must be curbed.

As my colleague Hannah Tomes has written on Coffee House, mortgage repayments for a property are often cheaper than the equivalent rent. Many of the people renting are unable to get onto the property ladder simply because they can’t afford to stump up the huge deposits. Instead, due to circumstances beyond our control, we are forced to fritter away increasing amounts of money we will never see again on rent.

Is there any way to solve this problem? Given the Tory leadership candidates’ reluctance to build new homes, it doesn’t seem so. But another politician, Sadiq Khan, might have the answer. The Mayor of London has called, not for the first time, to be given the power to implement rent controls in the city. Across the country, a survey published by Ipsos in June found that 72 per cent of Britons are in favour of the idea.

Rent controls already exist in various forms around the world, in New York and Germany, for instance. Critics of the idea say that they discourage investment in property and encourage neglect of the existing housing stock. In part, they may be correct. Yes, rent controls may well discourage investment in housing. After all, if landlords are restricted in how much money they can make by renting a property out, why bother in the first place? But would that be such a bad thing?

The current housing market is severely choked. Disincentivising people from purchasing property as investments would free up the market, house prices would realign and drop, thereby becoming more affordable. While the rental housing pool would potentially shrink, the pool of properties for sale would grow. Introducing rent controls could also present an opportunity to bring in accompanying regulations to oblige landlords to maintain their properties to an acceptable standard, as they do in Germany.

Rent controls don’t necessarily mean freezing rent prices indefinitely. Different models exist that allow landlords to increase rent between tenancies by fixed amounts, usually in line with inflation, plus occasionally by a few extra per cent. Even in the current economic climate, with inflation at 9.4 per cent, a model such as this would help curb the rental crisis heading our way.

The country is bracing itself for a difficult winter, with the prospect of blackouts, inaccessible healthcare and poverty for millions. With many at risk of being priced out of their areas, or worse falling into arrears or homelessness as a result of money-grabbing rent hikes, the list of cost of living woes is about to get longer. To allow landlords to profit from the chaos is immoral at best, dangerous at worst.