The rent trap
7:10am Friday 22nd February 2013
One of the housing sectors that can sometimes slip under the radar is the rental market. The media machine is seemingly forever in a tizzy over house prices. Not a month goes by without a front page update on the latest miniscule rise or fall in house prices, by the likes of Halifax and Nationwide (amongst many others).
Call me an old cynic, but this initiative on the part of lenders is more about maintaining their profile than imparting useful information.
However, more pertinent perhaps, is a new report from housing charity Shelter that shows rents are rising by an average of almost £300 a year in England. With average wages remaining static, many people are left unable to save for a deposit – and are trapped in a cycle of unstable renting.
The “Rent Trap” report also reveals that in 1 in 7 local authorities rents rose by more than £500 in a year and six areas saw equivalent rent rises of more than £1,500 in a year.
As a result, 72% of renters say they are only able to put aside £50 a month or less in savings. 58% report being unable to save anything at all. Campbell Robb, Chief Executive of Shelter, said: “The renters we speak to have never been less hopeful. A relentless stream of rent rises means that most feel they will never move on from a life paying ‘dead money’ to landlords, in a home they can’t make their own”.
“And for some, rising rents have more immediate consequences – not enough money to spend on food, fuel or other essentials”.
“Unless something changes, the chances of the next generation getting a home to call their own look increasingly bleak. The Government needs to show young people and families exactly how it plans to dismantle the rent trap for good.”
I don’t see the rental landscape fundamentally changing anytime soon. House prices have held up pretty well throughout the economic malaise. My feeling is prices won’t fall too much further – if at all.
Also, with the austerity programme well underway, it’s hard to imagine where the money would come from to dramatically alter the current housing environment.
My appraisal of the current state of the housing market can be summed up as “steady as she goes”. However, tenants unable to progress into home ownership are in many ways the worst off. In comparison, it’s not so bad for home owners who are more concerned about the value of their property, which will likely recover to previous levels in time.
NEIL THWAITES, Westfields Property