Renting crisis: How the ‘wild west’ of the private sector is pricing people out
By ITV News content producer Sophie Barnett
Private renters are being forced into bidding wars as rents spiral and demand outstrips supply.
Prospective tenants are being "held to ransom" by landlords, campaigners warn, adding that the renting sector is "broken" and in need of urgent reform.
ITV News has been told several stories of people desperately forking out hundreds of pounds on deposits to secure a flat only to be 'gazumped' by a higher-bidder weeks before their move-in date.
Others have spoken of living in fear of an eviction notice landing on their doorstep.
The private rental sector is the fastest growing, and arguably most important, area of the UK housing market, doubling in size over the last 20 years. It now makes up 4.6 million or 19% of households.
Portia Msimang, project coordinator of Renters’ Rights London, which campaigns for more rights for tenants, said there is a "power imbalance" in the sector.
“People are being held to ransom by landlords, who themselves are living really well. It’s not normal behaviour - what do they think of their fellow human beings?”
She said the message that demand has outstripped supply is “not good enough”, and says everyone has an equal need to affordable, safe housing.
“It means landlords can offer their surplus properties to the highest bidder,” she said.
“It’s not inevitable, it’s what they choose to do, and that’s what needs to be reined in."
The private sector is like the 'wild west', says Shelter
Shocking stories have emerged of people being ‘gazumped’, having to fork out huge deposits and even being evicted and replaced with higher-paying tenants.
One person living in Manchester told ITV News she was informed that five months rent up front would be the minimum expected.
She recalled arriving at a property and being asked to make a "bid" before she had even entered.
Another, who was looking to rent in London, told ITV News she paid a holding deposit and agreed a rental price the day before Christmas Eve, only for the landlord to try to increase the rent two weeks before she was due to move in.
Meanwhile, charity Shelter is currently supporting a father who is the full-time carer of his disabled daughter. He has had his rent increased twice in a year, so he’s now building up rent arrears and is worried about being served an eviction notice.
He fears that if he is evicted he and his daughter will end up homeless and he’s not going to be able to afford to rent in the local area.
Charlie Trew, head of policy at Shelter, said the private sector is like the "wild west" - with many tenants not even knowing who their landlord is.
Along with an end to section 21 "no-fault" evictions, he is pushing for a landlord register as he says it would enable tenants to make sure the property is in a safe condition before they rent it.
So why are rents rising?
There is a mass exodus of landlords reducing supply, plummeting affordability of properties and a "power-imbalance" with many tenants living in fear of eviction.
According to the latest figures by the Office for National Statistics (ONS), private rent prices increased by 4.4% in the last year, up from 4.2% in December 2022.
Demand pressures have been made worse by soaring house prices that are keeping the prospects of homeownership out of reach for many young people, and forcing them to stay renting for longer.
Renting used to be a place where it was just young people starting out, but now it’s many older people who are going to be “stuck renting for their entire life”, according to Mr Trew.
He said the issue of rising rents and ugly practices all stem from one fundamental problem - our “completely broken housing system”.
He said: “We’ve failed to build enough genuinely affordable social housing, where rents are tied to local incomes, and that’s left people increasingly reliant on a private rented sector where you can be kicked out if you complain about poor conditions, and where you can be kicked out if the landlord just wants to raise their rent.”
Renters are being 'forced out' of London by soaring prices
He said the shortage of stock, and the increased demand, means there are many more people bidding for the same type of properties, particularly in London.
This means for those landlords that do want to cash in they can drum up a bit of extra money by evicting tenants and raising prices.
Mr Trew also said landlords are able to set “arbitrary” barriers for people who are seeking private housing.
“They’re essentially saying no to letting to people on housing benefits, or asking for big deposits to bar people and cut down the number of people applying,” he said.
In London, private rental prices increased by 4.3% in the year up to January 2023, up from 4% in December 2022, ONS figures show.
This is forcing renters out of London, with research by Hamptons showing that renters are leaving the capital at the highest rate in a decade.
Meanwhile, new data from Citizens Advice shows that private renters are paying 43% more on rent than those in social housing.
What's the picture for the rest of England and the UK?
Within England, the East Midlands saw the highest annual percentage change in private rental prices in the 12 months to January 2023 (5.0%), while the West Midlands saw the lowest (3.9%).
Private rental prices in Wales increased by 3.9% in the 12 months to January 2023. This is up from an increase of 3.5% in December 2022, and is the highest annual percentage change since since figures began in January 2010.
Meanwhile, a similar trend was recorded in both Scotland and Northern Ireland.
Ms Msimang said she believes landlords are “hoarding supply” and claims that many of them think their income should be “insulated against any exogenous shock”.
“Landlords think that they are somehow entitled to accrue the same level of profit, month in month out, forever,” she claimed.
“It’s not a business at all if that’s the case as there’s a risk inherent in every business. We know landlords are risk averse but they shouldn’t be 100% insulated."
However, Chris Norris, director of policy for the National Residential Landlords Association said this is not the case.
He said the vast majority of landlords get into the sector for the right reason and they have “no divine right” to make a profit.
“Of course, they want to make a profit but they also want to provide quality housing,” he explained.
Why are 30% of landlords looking to sell?
If landlords - 80% of whom Mr Norris said are investing in property to provide for retirement - are forced to operate at a loss, he said they’ll go out of business.
“It might sound a bit dramatic but about two-thirds of landlords have mortgages on their properties, if their rent is less than their mortgage it’ll only be three or four months before that property is repossessed."
Landlords sold 35,000 more properties than they bought across 2022, according to Hamptons analysis of data from Countrywide.
It comes as the jump in mortgage costs and tax changes make buy to let an increasingly unappealing proposition - hence the falling number of landlords.
Mr Norris said the government needs to change its tone of the policy towards investment, as many landlords are looking at leaving the sector - which will even further reduce the supply of private rented properties.
Are landlords 'hoarding' supply?
He said their polling shows that about a third, 30% of landlords, intend to sell at least some property next year, and only 9% intend to buy.
"This can do nothing else but make the problem worse," said Mr Norris.
“We’ve seen a lot of interventions in the last five or six years which has made it more and more difficult to break even in the private rented market.
“It’s fine to decide as a government you don’t want private landlords, if you’ve got a backup plan - if in 2015 they said we are going to tax landlords more aggressively, which they did, but at the same time they put all that tax into building social housing and that will balance out - but they didn’t do that.
“They taxed landlords much more aggressively, drained more landlords out of the market, arguably getting less tax income than they would have been, and they’re leaving people without enough properties to rent from.”
Mr Norris believes there is a “genuine mismatch” between the housing supply and the demand for it, despite claims that landlords are “hoarding" supply.
He said dwindling supply was to blame for rising rents.
“There hasn’t been the social housing built, there hasn’t been the affordable property built to buy, so an awful lot more people are renting privately. And for some, they don’t have the consumer power that they need because there isn’t the choice there.
“I think that’s what allows some of those rogue, those criminal, those irresponsible landlords that do exist, to take advantage of people.
"If you don’t feel that you are able to walk out and have a good prospect of finding somewhere else that you’d be able to afford to rent then, of course, you’re going to feel pressured."
What needs to be done?
Renters’ Rights London is calling for some form of control or rent cap in the private sector, as previously supported by Mayor of London Sadiq Khan.
In November last year Mr Khan called on the government to introduce a two-year private sector rent freeze in the capital.
He said the last year had seen the biggest increase in private sector rents in London “since records began” and that the city had a “real problem” in relation to the 2.6 million people who rent privately.
In Scotland, the government announced a total rent freeze and ban on evictions last September. The scheme has been extended to September this year, but from April it will begin to allow rent increases of up to 3% and evictions in extreme circumstances.
However, Felicity Buchan, the housing minister and MP for Kensington, told MPs in the Commons last month that rent controls would not help tenants or landlords to deal with the cost of living crisis.
The minister was responding to Nadia Whittome, the Labour MP for Nottingham East, who said: “In September last year, a survey by the tenants’ union ACORN found that 48% of private renters had received a rent hike from their landlord since January 2021. Some increases were as high as 67%.
“In a cost of living crisis, that is fuelling poverty and homelessness. Will the Government act now to freeze rents, allowing vital breathing room while more permanent solutions to tackle spiralling housing costs are devised?”
Ms Buchan also informed the House that there was no date yet for the publication of the Renters’ Reform Bill.
Ms Msimang said that if the national government is unwilling to seize the initiative and introduce rent caps, then they should devolve the necessary powers to local governments.
“There are different situations in parts of the country, but certainly in London the relationship between rent and income is almost abusive,” she added.
However, Mr Trew said any cap is “powerless” without the end to section 21.
Michael Gove, the secretary of state for levelling up, housing and communities, is facing growing calls to finally ban section 21 no-fault evictions, used by landlords seeking to raise rents, which the government has been pledging to do so since April 2019.
Ministers also face demands to pay more in housing benefit to cover rising costs, and introduce a rent freeze.
Mr Trew said renters have been promised an end to section 21 “time and time again” in “manifesto after manifesto”.
For years private landlords have been able to evict tenants through section 21.
“It cannot come soon enough for all of those renters who are struggling right now, especially with the cost of living crisis,” he said.
“So many people are living in terror of that eviction notice landing on their doorstep. And that has a huge impact on people’s mental health, their physical health, it uproots whole families and their kids can be forced to go out of school because they can’t afford that area anymore.”
Could the Renters' Reform Bill transform the sector?
Both Mr Trew and Ms Msimang, like many others, are pushing for The Renters' Reform Bill - a proposed piece of legislation that Shelter says has the potential to transform renting for good.
The main proposals in the bill are to scrap section 21, and create a register of landlords.
It would also introduce a private rented ombudsman to help enforce renters’ rights, make it illegal for landlords and agents to refuse to rent properties to people who receive benefits and give local authorities more power to enforce and protect renters' rights.
The government has been promising these changes since 2019.
A Department for Levelling Up, Housing and Communities (DLUHC) spokesperson said: “We are absolutely committed to delivering a fairer deal for renters. We will bring forward a Renters Reform Bill in this Parliament, abolishing ‘no fault evictions’ so tenants can have greater security in their homes.
“We are providing families with significant support over this year and next – worth on average £3,500 per household – as well as uprating benefits and the state pension by 10% in April.”
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