I’ll be sorry to leave my merry little apartment at the end of the month. I’ve grown rather attached to my little penthouse of (almost) three years. But like thousands of others, I’ve fallen victim to housing and rental costs spiralling well above the average rise in earnings.
The rent has been hiked beyond what I can reasonably afford, and there’s little that can be done about it. That’s just how the market is right now.
To put this into context: in the year to April, house prices in England rose by 10.4%. They’re now worth over 10 times the average salary in high-demand areas.
Meanwhile, the average cost of renting a home increased by 2.9% between March and April to £848 per month, according to the latest HomeLet Rental Index. This makes average UK rent 7% higher than during April 2013.
If you’re unfortunate enough to be vying for a rental property in Greater London, average rents here increased by 9.4% over the year to an average of £1,348. Sheesh!
MPs Taking the Biscuit
We’d all like to think that our hallowed MPs would be fighting our corner and sharing the pain, given that over half of them privately rent themselves. But unfortunately that’s far from the case.
Because we pick up the bill, it’s not their problem – it’s ours.
Research from Generation Rent has found that we’re paying a staggering £5.25 million to keep our MPs in rented accommodation. Their infographic tells us more.
Our MPs are entitled to a whopping £1,675 a month for rent – almost 25% more than the London average. But that wasn’t enough for one in every seven MPs last year, who decided to claim more.
Lucky for some, don’t you think?
By contrast, Generation Rent points out, 40% of us have to cut down on essentials such as energy consumption to be able to afford our rent.
There’s also a rather worrying conflict of interests here. A substantial proportion of MPs have a vested interest in the property market. According to the Register of Members’ Financial Interests, around a third of our MPs (219 in total) list property as an additional asset. 157 declare rental income. 86 are buy-to-let landlords in London.
Where is the motivation to deflate the housing market while members are profiting from it? You’d be inclined to say that the House is becoming increasingly representative of landowners rather than working people and tenants.
The extent to which MPs have become detached from their constituents was shown by their refusal to help tenants lower their costs when they voted against banning letting agent fees last month.
Agents: Adding to Renters’ Troubles
Agents can charge hundreds of pounds for reprinting the same contract paperwork time and again, changing nothing but the dates. I’ve coughed up £125 each time for the privilege.
The service in return has been far from exemplary. It took four weeks for an electric storage heater to be replaced, and over a month to repair the immersion heater that left me without hot water during a bitterly cold January and February last year.
Agents can also put the frighteners on whenever the subject of a periodic tenancy is raised because where there’s no contract, there’s no money in it for them. At this point, you’ve no idea what they’re saying to the landlord to ensure this doesn’t happen.
Like many others, I’d like to think that we had support where it counts, but how can you possibly count on that when you see how your representatives in parliament are able to milk the system so liberally?
So here’s GenRent’s conclusion:
Just living in a rented house doesn’t make an MP an expert on private renting. Because it’s not their money they have no idea what it’s really like to see half your income eaten up by rent, or scrimp together the fees involved in moving home. And because the allowance is so generous, they can afford the type of accommodation most private renters can only dream about.
We don’t object to the second home allowance, but if MPs realised how privileged they are compared to other private renters, they might finally take some action to improve a housing system that is failing millions.
Deflating the Market
When a market is flawed, there’s one thing we often fail to do, which is to find a solution – something I was reminded of in a post I saw recently which quoted the following:
Don’t find fault, find a remedy. Anybody can complain. – Henry Ford
One of the major underlying causes behind higher housing costs is the low supply of housing, which has lagged well behind demand.
The folks at Generation Rent haven’t just been idly complaining; they’ve been thinking about this as well. They’ve come up with an idea for a limited-gain scheme to deflate the housing market and support new buyers.
Restricting who can buy what is a political disaster – GenRent knows this. The problem is how to deter the cash buyers and investors, who are snapping up properties and either renting them out at sky-high levels or leaving them empty.
GenRent wants the government to provide £1 billion for the construction of 10,000 homes on public-sector land. But buyers would be limited to the profit or mark-up they can gain by selling on one of these homes.
By stripping away the profit incentive, this should deter the majority of speculators and keep the properties within affordable reach of most buyers.
It’s certainly somewhere along the right lines. Subsidies and mortgage guarantee schemes are well intended, but are only pushing prices up higher. Complaints are beginning to emerge that the Help to Buy scheme doesn’t offer value for taxpayers.
GenRent’s idea does offer value. That’s why it deserves to be heard.
Go and support their campaigns. It’s a more than worthy cause.