A blend of issues, including reduced investment in social housing, changes to the benefits system and buy-to-let landlords leaving the market have been highlighted in new research by Dr Julie Rugg from the University of York.
In Property Supply to the Lower End of the English Private Rented Sector, questions are posed about how sustainable the less expensive part of the sector is, with older landlords making an exit and the building of social housing dwindling.
The study, led by the University of York’s Centre for Housing Policy and funded by the Nationwide Foundation, also reveals that there are now locations where increases in housing benefit rates, combined with low house prices are having unintended consequences. In these places, landlords can achieve better returns by letting to benefit recipients compared with letting on the open market.
The study finds, however, that the vast majority of lower-income letting takes place outside these housing benefit dominant markets. In these places, it was more likely to find that landlords were unhappy about long delays with initial payments of housing benefit and problems with managing Universal Credit, particularly where tenants fell into arrears. As a consequence, there are concerns that the number of landlords willing to let to benefit recipients in these locations is diminishing.
Lead author of the project, Dr Julie Rugg said: “This research has really helped us understand how landlords at the lower end of the market pay for and manage their property. It’s a real concern that many good, professional landlords are no longer letting to housing benefit claimants because of the way that Universal Credit is administered.
“Letting property looks altogether different to landlords now: it looks like a much risker proposition, delivering a lower level of return and with a lot more hassle. As one landlord said to me: ‘stocks and shares may not deliver the same level of return, but they don’t phone me on a Sunday morning because the boiler’s bust’.”
Bridget Young, programme manager for Transforming the Private Rented Sector at the Nationwide Foundation said: “Today’s report paints a detailed and complex picture, but ultimately it tells us that we can’t accept that the private rented sector will continue to be able to deliver housing to renters on low incomes.
“At the Nationwide Foundation we’re committed to ensuring that everyone has access to a decent home that they can afford. This report highlights how precarious the situation is for private renters and how changes in the sector are likely to make that worse, rather than better.”