27 Sep 2012
We need to talk solutions as well as problems with renting
We’ve had a warm reaction to our proposals for better renting over the last week. It’s a real testament to policy makers’ and the industry’s acknowledgement of the world we live in – one in which millions of people on ordinary incomes cannot get the stability from their home that they need to plan for the future.
There is now increasing agreement that something must be done – that the political, social and economic consequences of leaving so many people without the certainty of a stable home are too great to ignore.
People will have different views about how to bring about more stable renting (see Property 118′s GOOD Landlord campaign), but the point is that the debate has now started – its focus must now be on solutions. It’s far too common in policy circles for different people and organisations to agree that there’s a problem, but fail to make progress when it comes to identifying solutions. Discussion can too easily slip into ‘why it won’t work’ but never quite reaching ‘how can we make it work?’
Our report spent a lot of time identifying the barriers that would need to be overcome in order to bring about better renting, as well as the positive drivers for change. While the Stable Rental Contract is legally possible now, and could be designed to give a good amount of flexibility to landlords and renters, some cultural and structural barriers will rightly hold some landlords back from feeling confident offering the new tenancy right away.
So after exploring the ‘why it won’t work’ in detail (Chapter 4 in particular) we set out what needs to happen to make it to work. It’s all in the report, but the significant challenges to overcome are:
- Buy to let lenders often restrict their landlord borrowers from offering longer tenancies. They do this because, anecdotally, there’s a belief that longer tenancies mean there’s a greater risk of landlords getting into arrears and getting repossessed – something nobody wants to see. But there’s little available evidence about what actually threatens landlords’ mortgages – and we need to understand this, if we are to change lenders’ restrictions on their landlords. On the other hand, it’s important to remember that only half of rented properties are financed with a buy to let mortgage.
- If landlords offered longer tenancies they would have to rely on the courts to deal with difficult tenants, but anecdotally landlords do not have confidence in the speed and effectiveness of court processes. We need to get a better understanding of why some landlords worry about this, and look at solutions for improving their confidence.
These are substantial challenges, but not insurmountable. We set out initial suggestions for the steps that Shelter, Government and the industry need to take, and we will be working with partners over the coming months to find workable solutions to these challenges.
Whatever your take, I’m sure you’ll agree that we have to move from discussing problems and start working towards a better deal for renters and landlords.