Where next for the private rented sector?
Think tank: Social Market Foundation
Author(s): Dr Aveek Bhattacharya; Amy Norman
March 14, 2022
This report from UK think tank the Social Market Foundation looks at the reality of the private rental sector and how it might develop.
This report seeks to understand how the private rented sector might develop in the years to come, on the basis of a nationally representative survey of 1,376 adults in rented accommodation, and modelling of possible future trajectories for the housing market. Our survey finds a clear appetite from renters for policy action – both to improve the experience of renting and to help more renters to buy. Key points from SMF survey: Policy and societal attention (rightly) focus on the minority of private renters that have particularly bad experiences. Yet this can create a misleading impression – the majority of private renters express contentment with their situation: 81% say they are happy with their current property, and 85% say they are satisfied with their landlord. The greatest source of dissatisfaction is with “being a renter”, though still only a minority (34%) say they are dissatisfied with this status. Satisfaction with private renting is particularly high among older renters: nearly three-quarters (74%) of those aged 55 and over report being satisfied, compared to 58% of those aged 35-54. Private renters particularly value not having to pay for repairs, or insurance and other costs; some also see it as a way to afford more expensive locations or to live more flexibly.
At the same time, there are clear disadvantages to renting: 56% of private renters (and 63% of 18–34-year-olds) worry that it is a financially worse option in the long run. Renters also dislike the lack of control they have over their property. Despite the political focus on security and stability, this came lower down the list of concerns in our survey. Overall, most renters are happy to be where they are for now, but most do not see it as their ideal long-term option. Over 50% (two-thirds of 18–34-year-olds, and 39% of 35–54-year-olds) expect to leave the private rented sector in the next 15 years.
SMF recommendations to the Government: Enable renters to build wealth while remaining renters – Several innovative schemes could be implemented, including ‘deposit builder ISAs’ that offer a financial return on deposits, or ‘rentership’ models that offer tenants stakes in their building. Increase the stability of tenancy agreements – A large majority of renters support a fixed minimum contract length: 69% would be in favour of setting this at 24 months. Giving renters more control over their homes – making it easier to keep pets or make reasonable alterations, such as to décor or energy efficiency. Increase the accountability of landlords – Through a ‘Good Home, Good Landlord’ kitemark scheme, developed in consultation with renters to recognise landlords that offer good, and not just decent, accommodation. Improve the standards of private rented properties – Offer tax incentives for landlords to invest in improvements that align with Good Home Good Landlord kitemark standards, including green investments.