UK Housing News
Generation Stuck:
Can Labour's Proposed Reforms Break the Rental Cycle?
Industry expert highlights the major reforms needed to help the 42% of renters fearing that they will be stuck renting of the rest of their lives
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19% of tenants have experienced having to change rental properties more than five times in five years because of landlords and not through any fault of theirs
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17% of tenants say that they have lost out on a property they wanted to rent in the last two years due to a bidding war
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15% of landlords say that they are considering selling up due to rising costs
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18% of Brits say they were about to become a buy-to-let landlord, but the increased rules and regulations dissuaded them from doing so
David Hannah – Group Chairman of Cornerstone Group – highlights that the next UK Government must address the clear affordability issues that remain in the housing market, helping Generation Stuck
Labour's potential impact on the housing market if victorious in the general election, is set to include the backing of a ban on no-fault evictions and potentially allowing councils to cap rents in some areas. While some experts believe these tenant protections could negatively affect landlords and investment in the property market, others see it as an opportunity for a housing market reset with a focus on building new homes. Labour also plans to ease planning controls to promote house building, including creating new towns. Concerns include tighter regulations on landlords, possible private rent regulations, and a scheme akin to Right to Buy.
In light of this alternative to the Conservative Party's policies, David Hannah, Group Chairman of Cornerstone, argues that whichever party is elected to government must address the clear affordability issues that remain in the housing market, helping Generation Stuck – those Brits currently unable to buy a home and leave the rental market – with 42% of these renters fearing that they will be stuck renting of the rest of their lives.
Highlighting that whilst speculation of an interest rate cut later in the year could mean that there is a glimmer of hope on the horizon for those currently stuck in the perpetual cycle of renting, Cornerstone’s research report highlights the dire need for change in the rental market, which has been marred by rising prices and increased competition. Notably, 17% of tenants report losing out on their desired rental properties due to bidding wars within the last two years. The situation is also desperate for those who are lucky enough to secure a property, with a staggering 19% of Brits saying they have had to change rental properties more than five times in five years because of landlords and not through any fault of their own.
The escalating cost of renting has been a significant driver of change in the rental market, with the average cost of rent increasing by 8.3% over 2023; a figure buttressed by soaring interest rates and landlords passing on their escalating expenses to tenants. As a result, 15% of buy-to-let landlords have decided to exit the sector, as revealed by Cornerstone's research. The tax advisory firm cites the mounting costs as a primary reason for selling their rental properties. Furthermore, the survey uncovers that 18% of potential buy-to-let landlords have been discouraged from entering the market due to increased regulations and rules. This growing reluctance of buy-to-let landlords to enter the market will only serve to exacerbate the supply and demand issues which are currently causing upward pressure on prices and bidding wars due to the lack of stock.
Group Chairman of Cornerstone, David Hannah comments:
“Leading up to this year’s general election, the government must urgently recognise the ever-pressing need for drastic changes to the housing market. Its decision to abolish Multiple Dwellings Relief (MDR) on the 1st of June is beyond counterproductive and will result in fewer new homes being built, with a significant drop in both domestic and overseas investment into housing delivery.
By removing a critical tax break such as MDR, the government is undermining the build-to-rent sector, which relies heavily on such incentives to maintain and expand the housing supply. New policies need to promote affordability, accessibility and support for businesses building in Britain. The government must now listen to property firms and industry stakeholders to solve this vitally discouraging situation for Brits, otherwise this crisis will continue to cause chaos for years to come."
David Hannah, Group Chairman
