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Renters to have major influence on outcome of next general election

Monday 15 October 2018

New research from insurance giants, AXA Insurance shows that future elections are set to be influenced much more powerfully by the UK’s growing contingent of private renters than ever before.

While 53 per cent of private renters voted in 2017 – a noticeable jump on previous elections, that would rise further to a 69 per cent turnout if a snap election were called this year.

The annual research, based on a survey of 2000 UK tenants claims to show that there is an epidemic of financial anxiety amongst renters, which is likely to be fuelling greater political engagement.

72 per cent of private renters suffer from financial anxiety (defined as affecting their sleep, relationships or health), which exceeds the already high British average of 68 per cent.

The single biggest trigger is the inability to save for a deposit for their own home (for 59 per cent of renters). Debts, bills and insecurity of tenure all carry far less urgency, each cited by half as many tenants.

As of this August, the average amount someone renting privately can save is £102 per month; a quarter of renters say they can’t save anything. The main differentiator is gender, as female renters save a third less per month on average than men. Wales and Scotland are also hotspots for lower saving ability, as the monthly figures fall to £84 and £60 respectively.

As a result, two thirds of tenants aged under 35 say they are considering cheaper alternatives to renting, chiefly moving back in with their parents (28 per cent). Caretaking a property and moving to a non-traditional property (motor home, outhouse) and sub-letting were the other emerging solutions.

AXA claim that measures that help tenants keep more money in their own pockets are likely to have the biggest resonance at the ballot boxes in the future. Rent controls, indexed to inflation or average incomes, are the single most popular proposal for fixing Britain’s housing crisis among tenants – cited by 69 per cent of those surveyed. By contrast, raising taxes for private landlords was favoured most by just eight per cent.

However, peoples memories are short, and many of today's tenants weren't even born when they were last used in the late 80s and rent controls simply do not work according to ARLA Propertymark Chief Executive, David Cox: 

"The last time rent controls existed the private rented sector went from housing 90 per cent of the population to just seven per cent. Whenever and wherever rent controls are introduced, the quantity of available housing reduces significantly, and the conditions in privately rented properties deteriorate dramatically. Landlords, agents, and successive Governments over the last 30 years have worked hard to improve the conditions of rented properties and this is like taking two steps backwards. Rent control is not the answer – to bring rent costs down we need a concerted house building effort to increase stock in line with ever-growing demand.”

Multi-year lets
While there are no plans to reintroduce rent controls, the government has consulted on the introduction of three-year minimum tenancies. AXA found a muted response to the plan: when asked the length of tenancy agreement they would prefer, most tenants still opted for a period of one year or less (62 per cent). ARLA Propertymark's own research shows that the introduction of three-year tenancies would not be of benefit to the industry or to tenants, indeed for many tenants the draw-card of letting a property is the flexibility that a short-term let brings. 

AXA claim that the proposal is most likely to find favour with tenants who have children: but even in this group the preferred tenancy length is just two years. The five or ten-year leases as seen in Germany and other continental countries are attractive to a quarter of renting families.

One explanation for this low appetite among British renters for longer leases is that most expect to own their own home eventually, with just 12 per cent of renters saying it is not likely. For the interim, while still renting, the priority for most is very much on agility and mobility rather than being tied to one property.

Improving rental standards

AXA claim that given the high mobility among renters, the Tenants’ Fees Bill is likely to prove more popular than multi-year leases, saying that six in 10 renters say they have had to pay the types of fees to landlords and letting agents that the Bill seeks to outlaw. These are mostly fees for starting, ending or renewing a tenancy agreement. However, the true cost of banning fees will only be known once the ban comes into force. ARLA Propertymark believes, the Tenant Fees Bill will ultimately be bad for tenants, bad for landlords and bad for the wider industry, and will ultimately result in poorer properties and increased rental costs. 

The proposal to ban landlords from demanding deposits in excess of six months’ rent was only popular with a small minority of tenants surveyed, with only eight per cent saying they have ever had to pay such a large deposit.

Another question is how aware tenants are of legislation designed to help them. Research from AXA released earlier this month revealed yawning gaps in awareness amongst tenants of new legislation on energy efficiency and conditions in rental properties – despite evidence that these regulations are significantly driving up standards.

With 49 per cent of tenants saying that they believe failings in their property adversely affect their health and safety – chiefly cold hazards, damp, poor plumbing, unsafe flooring and electrics. Ensuring tenants know new rights to see things like EPCs or demand upgrades will be crucial to how they view housing policy.

Gareth Howell, Executive Managing Director, AXA Insurance said:
“We’ve recently seen a flurry of legislation aimed at the private rental market. Landlords are responding to it, as our research over the past four years shows rapid improvements in energy efficiency and some (but far from enough) raising of safety standards. Our research over the past two years shows a very low awareness among tenants of this legislation and their new rights. Few are interested in punishing landlords, but do need mechanisms for building their own assets. Tenants are set to be an increasingly powerful voice in our society, making finding innovative financial solutions a political imperative in future years.”