Is it fair to raise rents?
Despite changing Governments, and another round of new faces in Number 10, the cost of living crisis continues to grip the UK. On top of the already pervasive concern around rising energy bills and inflation, mortgaged home owners now face an increase on their housing costs too. Two-year mortgage rates just rose to an estimated 6.53%, the highest since 2008. The Conservative party would not have to dig deep to find the political risks this poses to them; according to IPSOS estimates, in 2019, 43% of home-owners with a mortgage voted for the Conservative Party compared to just a third who voted for Labour. My colleague Scott recently demonstrated the particular risk to some of the slim Conservative majorities in the South posed by a turn against the Conservatives among those with mortgages.
But the risk of these increasing costs does not stop with mortgage owners. Renters are facing a heavy level of strain, and if landlords with mortgages start to pass down their rising costs to renters this will become more extreme, which could have its own political consequences. Already, renters face the same pressures as owner occupiers on energy bills, but have minimal control over the energy efficiency of their homes. Not to mention, the demand for rental properties in key areas like London is growing rapidly; latest figures suggest that there are 7 people looking to rent property in London for every 1 property available. With demand like this, landlords would be in a strong position to increase the amount of rent they charge. The DPS currently estimates rents are up 8.68% in Q3 compared to this time last year.
We set out to understand public opinion about how landlords can fairly respond to their increased cost pressures. Naturally, it’s not something that most of the public thinks about very often; renters only make up around 35% of the UK public. In our polling, we find renters are already strapped; only 25% describe themselves as relatively or very comfortable financially, compared to 54% of those who own outright. Almost half (47%) of ABC1 respondents consider themselves financially comfortable, but this drops to just over a third (34%) of ABC1 renters. The financial burden of rent has wide impacts. Over half of renters (54%) feel that no matter how hard they work they will not be able to buy a house, and 61% of the UK agrees that it is not possible to buy a house without some help from your family.
Whether or not proposed rental increases are to cover mortgage increases or general cost increases is important when it comes to how fair they are seen to be. Nearly half of the public feels that landlords raising rents to cover their rising costs would be unfair given the cost pressures renters face (47%); this rises to 70% of private renters. However, when instead the question is about whether it is fair for landlords to raise rents to cover their mortgages, 48% think it would be fair. There are clear political splits on this; over half of Conservative 2019 voters think raising rents to cover costs would be fair (52%), while over half of Labour 2019 voters think it would be unfair (58%).
However, our research also reveals that there is scope for changing opinion on this issue. We asked whether people tend to think of renting out property as an investment which should be risky and potentially lead to negative returns, or a service in which it would be unfair for landlords to find themselves unable to make money for providing. An outright majority (59%) view renting out property as an investment, and interestingly this cuts across demographic groups, with 56% of 2019 Conservatives, 64% of Labour, 67% of private renters and 61% of outright owners.
It is easy to see the damage that rising rents could have on private renters who are already struggling with their costs, and there is a popular case to be made for reform in the rental sector. We find 72% agree that there should be controls on how much rent landlords can charge, and 56% of the public would support controls on the amount landlords can charge in rent even if it means they sometimes make a loss. Obviously a big part of the block for political parties taking bold action on rents is that young people’s votes are viewed as locked-in for Labour at best, or not numerous enough to matter at worst. But with the rate of 16-24yos in privately rented accommodation growing from 46% to 72% since 2003, and 25-34yos from 21% to 37%, at some point this group will be too big to politically ignore.
