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Soaring Rents and Unscrupulous Landlords Are Exploiting Tenants

Elle Hunt / Kevan James

September 15, 2022

Want to rent a flat or house? Be prepared to queue in the street, get into a bidding war or put down a deposit for somewhere you haven’t even seen.

The Guardian's Elle Hunt and KJM Today's Kevan James comment on the problems facing renters.

Katharine had been renting in London for nearly two decades, almost all her adult life, when she lost her job last year. No longer able to afford £900 a month to rent her one-bedroom flat in Crystal Palace, she relocated to Stratford-upon-Avon. But she missed the capital. “I’m a Londoner through and through,” says Katharine, 40. “Coming back was a matter of when, rather than if.”

This spring Katharine got a new job and started making moves to return. But any hopes of a triumphant homecoming were quickly punctured. She soon discovered that the sum she had budgeted for a one-bedroom flat well outside the city centre got her much less than it did 12 months ago – if it got her anything at all.

The cheapest properties she could find cost more than £1,000 a month, about £150 above her price range. Those that were listed for less were snapped up, regardless of quality. Several times Katharine made the five-hour round trip from Stratford to London for viewings, only to find that the flat had already been let – or was being fiercely contested. “There were literally queues outside,” she says. After three months she realised that she could not afford to wait for a flat that she liked; she would have to chase whatever she could afford. “I was desperate,” she says.

Renters are used to having to make compromises between what’s available and what’s affordable, what will suit for now and what to aspire to. This summer, however, tenants looking for a new home are finding it increasingly difficult. A shortage of housing and a rise in demand have driven up prices and not just in London. The Office for National Statistics says that rents increased by 3.2% across the UK in the past year, the fastest rate since the financial crisis.

Dan Wilson Craw, the deputy director of Generation Rent, says this summer’s squeeze reflects pressures put on housing through the pandemic. “It’s really shocking to see how it’s still reverberating.” Young people who moved back in with their parents in the past two years are now seeking places of their own; many of those who left cities to work remotely are now wanting to come back, as employers ask them to return to offices. There has also been increased demand – from those who can afford it – for more space. “People working from home, even if only occasionally, are looking for one more bedroom than they would have sought previously, which has created more competition,” says Wilson Craw.

Meanwhile, the number of homes to let has drastically shrunk. The trade organisation Propertymark found that availability has halved since 2019, due in large part to a mass exodus of private landlords. An unusually high number have sold up in response to factors including high house prices, legislative reforms to protect tenants and improve conditions (disincentivising rogue operators), and what has been termed "the great re-evaluation", with many people rethinking their lives after the pandemic. Lucrative holiday lets are also reducing the availability of property for long-term rent. The result is more people jostling for fewer rooms – even in places where supply has previously satisfied demand.

A recent analysis, by the property market consultancy Dataloft, found that affordability has plummeted in towns including Rotherham, Bolton, Salford, Walsall and Dudley since the pandemic. Across the UK, it has become commonplace for prospective tenants to be asked how much rent they are willing to pay, with the property going to the highest bidder – sometimes as much as £300 over the asking price. Those properties on the affordable end are being snapped up unseen, often within minutes of being listed online.

Imo and a friend, both 25, began their hunt for a two-bedroom flat across north and east London in June. They made 20-odd inquiries, but were fast enough to view only five. “New places would be gone by the end of the day, making viewings near impossible,” says Imo – and each of their three bids was readily exceeded by others. Eventually they were offered a flat in Newham, east London, not yet on the market. It was listed as furnished but came without beds; it was available a month later than they needed, had a washing machine full of mould and “had not been cleaned in about a month”, says Imo. The estate agent told them they could take it as it came, or find somewhere else. They took it. “It’s made me very wary to move again,” says Imo. “Agents and landlords are treating this as a game, not considering how it impacts renters.”

Some might say that renting in London has been challenging for years, but a sharp reduction in supply – dating back to at least last summer – has exacerbated the problem. New figures from the estate agent Chestertons show that the number of homes available to rent in the capital fell by 38% in the year to July. “It’s a total disaster in London right now,” says John Myers, a co-founder of London Yimby (standing for Yes in My Backyard), advocating for affordable housing. “Rents have jumped, people are just not able to find something they can afford … There’s a real crunch.”

On social media, listings are circulated with unnerving regularity for studio flats where the shower is next to the kitchen sink, or lofts with such low ceilings that you can’t sit up in bed. Though the pictures are darkly comic, the real punchline is the asking price – often, in London, well in excess of £1,500 a month – and the knowledge that someone will certainly pay it. “It’s a classic kind of shortage economy,” says Myers. “There are a few good-quality flats out there but they cost the earth, and are out of range for anyone on a normal salary.”

Even those on good salaries are finding it hard. “It’s hell,” says Julia, 22. She and her partner, 23, had been planning to move from Cambridge to London this month and have a joint annual income of about £132,000. They do not want to spend more than £2,500 a month on rent, as they hope to buy a home one day. But even that budget no longer stretches to a two-bed in zone two.

“Prices have just gone up so much,” Julia says. “We’re in an objectively very fortunate position, but we’re still struggling to find somewhere within budget.” In the past, “you used to be able to compromise” on available properties, she says; now, hardly anything is within reach. She was shocked to find that the small three-bedroom flat she rented with friends in Maida Vale in 2020, and which “reeked of mouse”, has gone from £2,250 monthly to £3,400 in just two years. With their relocation only waiting on a place to live, the search has been taking its toll on Julia. “It’s not good for your anxiety to be checking your phone 20 times a day, whenever a property comes up, and deciding if you like it,” she says.

Londoners’ complaints about renting used to be met with broader indifference as the cost of big-city living. But now, strikingly, the problem is spreading rapidly across the country. Figures from the property site Rightmove show that market rents across the UK increased by nearly 12% between the second quarter of 2021 and the same period of this year – equating to an extra £119 a month on average, or £1,428 a year. Those who had already moved out of cities in search of affordable housing may now be feeling as though the crisis has caught up to them.

Fi left London for Essex four years ago, in part because she has a disability and cannot work full-time. Earlier this year she and her partner, Paul, both 33, decided to look for a place to rent together in his Suffolk home town. They soon realised that they would have to act fast. “The number of people trying to get to each place was just insane,” says Fi. On the day she ended up in hospital for an operation, the couple had two viewings booked. Fi told Paul to go ahead without her. “I said, ‘We don’t have a choice. We need somewhere to live.’”

One house was more or less ideal; Paul was told that if he was interested he would have to apply on the spot. “It came down to a case of fastest finger first – so I was filling in application forms from my hospital bed,” says Fi. “It’s just the kind of craziness of the rental market that they couldn’t wait.” Their application was supposedly successful, but, with two weeks to go until their move-in date, they have not been asked to pay a deposit or sign a lease; Fi is still worried that it might fall through. In the meantime, she and Paul are sharing a room at his parents’ house, sleeping in single beds.

“We’re stressed out about it all the time,” Fi says. “We’re supposed to be moving in two weeks and we still don’t know if we’ve got the place and what will happen, or if we’ll have to start from square one again.”

In such an overheated market, landlords can dictate their terms, such as requesting that financial records be included with applications, or for six or even 12 months’ rent to be paid in advance. Tenants for new leases are selected on the basis of uncertain, potentially discriminatory criteria. Katharine feared that her surname, of Slavic origin, would disadvantage her against the competition. “Anybody with a name that’s not Anglo-Saxon will get a little bit paranoid, especially with Brexit,” she says. One Generation Rent survey found that 19% of LGBT+ private renters said they felt that they had been discriminated against on the basis of their gender identity or sexual orientation.

Lucy, 27, explored houseshares and “co-living” homes for her move to London from Manchester, without success. She ended up shelling out for a studio flat in Stockwell, south London. “I’m paying a lot more than I originally intended, but the process was causing me to have sleepless nights,” she says. When the estate agent asked Lucy to drop the six-month break clause that she had requested in her offer, she agreed – anything, she says, to put a stop to the insecurity and “the endless scrolling”.

Lucy points to figures from the flat-sharing site SpareRoom, showing that since 2011 it has seen a 239% rise in 55-to 64-year-olds looking for houseshares. Relative to other prospective renters, she was lucky to have options, she says; “Yet I can’t help but be bitter about the overall process.”

Some unscrupulous landlords are capitalising on the crisis by increasing rents mid-lease, confident in the knowledge that if their existing tenants refuse to pay it, others will. A recent Generation Rent survey of private renters found that 45% had been approached about a rent increase in the past year, with one in five (20%) asked for more than £100 a month extra. Though some successfully negotiated a smaller rise, more were forced to accept their landlords’ terms. Some tenants have seen hikes of as much as 20%, says Wilson Craw. “Alongside rising energy bills, it is ultimately going to lead to people losing their homes,” he says.

On top of the cost of living crisis, the squeeze in the rental market is pushing people into financial hardship or destitution. The homelessness charity Shelter says inquiries about emergency support have risen 177% since the start of the year. Already Generation Rent’s survey shows that tenants unable to afford rent rises have been forced out into a hostile market. The group is calling on the government to freeze rents for existing tenancies, immediately suspend no-fault evictions (soon to be banned under the renters reform bill) and introduce protections for tenants who fall behind on rent for reasons beyond their control.

Wilson Craw suggests the crisis might force a rebalance of the rental sector. “Landlords are going to start taking a hit because people simply don’t have enough to pay rent, energy bills and everything else.” Greater taxation and regulation of holiday homes and lets would also ensure they go to tenants, not tourists, while compelling landlords to properly insulate properties would reduce heating costs. But while such measures might help alleviate the immediate pressures of the crisis, they don’t address the root cause.

“In the long term, things will only get better when we start to build more houses,” says Freddie Poser, the director of the Priced Out campaign. “The reason that landlords are able to put the rent up so much is because there is no competition in the sector: there are simply too few places to live. We’re calling on the government to tackle not just the short-term crisis, but also face up to the long-term economic damage being wrought by our continued failure to build homes.”

Younger generations in particular are at a disadvantage. According to Dataloft, four in every 10 under-30s are now spending more than 30% of their earnings on rent. “In a proper world, you wouldn’t have people in their 30s sharing a flat,” says John Myers of London Yimby. “It didn’t used to be this way – and it doesn’t have to be this way.” Likewise, more social housing will be needed for the increasing numbers who cannot afford market rent. “We need everything: more housing of all types,” he says. “All parts of government need to be pushing on this.”

In the meantime, renters are taking what they can get. Katharine eventually nabbed a one-bedroom flat in Streatham “because I was just refreshing Rightmove every half an hour, for half a month”, she says. The letting agent had had 30 inquiries about the flat within 30 minutes of it being listed online; Katharine put down a deposit, sight unseen, within 10 minutes. “I realised that I just had to be realistic, and grab whatever was out there that was affordable,” she says. The flat has proved to be small, and noisy. Katharine hopes to be able to move somewhere more comfortable next year. But, she adds with foreboding: “Who knows?”

All case studies’ names have been changed

© Elle Hunt / The Guardian 2022.

Illustrations: Alexander Naughton/The Guardian

Published on September 1, 2022.

Guardian Letters

Following Elle Hunt's article, the paper subsequently published these letters on September 7, 2022:

I was saddened but not surprised to see the article on the rental crisis in the UK. I am in a similar situation. I am a midwife, so a key worker, and after living in Mexico for the last four years, decided to move back to the UK to work for the NHS.

I was offered a job in York in May and I have been house hunting there since early June. I’ve made countless trips to York from Northumberland, where I am staying with my parents, and have been turned down for every property that I’ve applied for, even though I have good references and a guarantor if needed. On one occasion, I was on the train going to view a property only to be called and told that it had already gone. On another, I was told by an agent that they were waiting for a response from the landlord, only to be told later by their colleague that the landlord had turned down my application days ago.

My children have been very excited about the move, but I am at the point where we may have to return to Mexico just so we can find a place to live and they can go to school. I have rented all my adult life in the UK and the situation has never been anything close to this stressful. At least I now know that I’m not alone.

Sophie Hall Hexham, Northumberland

Elle Hunt’s article talks about the disaster of soaring rents, queues for tenancies and the horrors of private renting as if this were a national scandal. Most examples cited are in London, and that is where the problem really lies. It is not happening in Newcastle upon Tyne.

I bought my first investment property in 1986 and since then, the rent on that property has increased by 1.6% a year – hardly rampant rental inflation. Now to the reality of investing in housing. I am obtaining quotes for a new roof on a property. The job will cost about £22,000 and I will also improve the existing insulation and have the building repainted.

The rough price will be £30,000. This work will be at no cost to 15 tenants, as will the buildings insurance, gas, fire and electrical safety certification, and the maintenance service that we provide. There are thousands of decent landlords across the UK. Steve Banks Newcastle upon Tyne

Kevan James

There is a myth surrounding the Housing Market, usually referred to as 'The Market'. It is spoken of as though it is a living, breathing, independent entity, beyond the control of humanity. It does as it wishes, when it wishes and how it wishes, entirely free of any influence.

The reality of course is that it is not. The housing market is an artificial construct, invented by humankind and it can be controlled by humankind. If that is, humankind wishes to. Except of course, we know that any control is very unlikely to be exercised. That is because what drives 'the market' is not, as is usually said, 'demand' (as mentioned in Elle Hunt's article for The Guardian above).

What drives the market can be summed up in one word: greed.

Just that. Greed.

Nothing else, although I will add another - exploitation.

Greed and exploitation on the part of landlords and most especially, on the part of estate agents. Not for nothing are estate agents among the least trusted individuals and companies across the UK (Lawyers are another). Estate Agents were famous for their use of words in their adverts some years ago, with descriptions always being at best, misleading and at worst, outright lies. This only changed when agents were forced to alter their ways by government intervention.

The housing market is not merely broken. It has disintegrated into millions of tiny, shattered pieces and is beyond repair. And this is even more marked with the rental sector. It is not however, only the abusive prices being demanded - it is also the relationship between tenants and landlords.

Houses and flats (or apartments if you prefer) are not 'investments', purely of themselves. Whilst any capital expenditure - including in buildings meant to be lived in - are to a degree an investment on the part of those buying them, an investment is made in order to make money. There is nothing wrong with that but there is a huge difference between making a reasonable profit, gaining a return on that investment, and exploitation. And for as long as landlords have existed, tenants have been exploited.

It is said that when one buys a house or flat for renting, it should be treated like a business. This is true, if one is to be successful at it. Whether it is one house, a dozen or hundreds, the principles are the same. If however, owning properties is a business, then as with all businesses, two things are needed above everything else. The first is a profit. Without that, no business succeeds. In recent months, energy companies have been said to be making "excess profits". Is there such a thing? Who is to say what an 'excess' profit is, as opposed a reasonable one? Big profits usually come to very successful businesses but for that to happen, for any profit to be made, every business needs the second thing referred to - customers.

If there are no customers, then there are no profits, excess or otherwise. And here's the rub; going back hundreds of years, a tenant of anything - farms, houses, whatever - has always been treated badly. Like the serfs they once were, a tenant was a disposable nothing, a lower form of life that mattered not. All were at the mercy of the mighty landlord. Look at the name - land...lord. It conjures up an image of a well-fed somebody, a somebody with money and influence. And a somebody with power. The landlord did indeed rule over his tenants. And the tenants cowered in fear. They had no ability, no means to respond to abuse by landlords. They never had money. If they did, they wouldn't be tenants.

That interpretation, that view, that attitude, still holds today in the housing rental sector. Tenants don't matter. If, as a landlord, you don't like your current tenant, simply get rid of them. Merely use a section 21 notice and chuck 'em out. A section 21 notice enables the mighty landlord to evict a tenant without giving a reason. Simple, easy and grossly abusive.

Section 21 notices are due to be banned under forthcoming legislation but this has been far too long in making it's way through parliament and it has been used with utter ruthlessness by too many landlords, despite the statement to the contrary by Steve Banks in his letter to The Guardian.

Building owners must not be allowed to 'lord' it over their supposed inferiors. That includes abusive rents as well as everything else.

If there is to be any reset, a useful starting point would be to rid ourselves of the titles Landlord and Tenant. Tenants are valuable - they are a building owner's customers and like any customers, must be looked after. Rents have to be within the ability of all customers to pay, just like any other product.

But it is not only that - people rent their homes because they are trying to save money to buy their own; they are in-between homes and need a temporary one, or they are working for a shorter-term period away from their usual home. Or they just don't have the money to buy their own. That does not make them inferior.

That being so, anybody who acquires houses or flats to rent is providing a valuable service. Its stands to reason therefore that moves to protect customers must also protect the providers of that service. One can after all, have bad customers just as one can have bad service providers.

However one phrases it or looks at it, the fact remains that for far too long, tenants have been treated appallingly badly. And a sea-change in attitude is long overdue.

© Kevan James 2022.

A future article will turn the spotlight on Estate Agents.

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