By Sam Ord
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Greedy landlords cash-in on crisis with huge rent rises

This article is over 1 years, 4 months old
Landlords use their rising buy-to-let mortgage costs as an excuse to ramp up rents
Issue 2827
A street full of flats with "to let" signs attached to the fencing of each

Landlords are trying to cover their costs and more by raising rents well above the rate of inflation. Picture: Lars Plougmann/Flickr

While the media are fixated on how rising interest rates will hit those with mortgages, they pay scant attention to the 4.4 million households that rent privately. Those people now face a crisis as rents spiral upwards at an incredible rate.

The problem begins with landlords trying to make their tenants pay for the increasing cost of borrowing.

Housing charity Shelter says that almost 1.1 million private renters had their rent increased in the last month alone. One in three of them are now spending at least half of their household income on rent. Of the 3.5 million private tenants that had their rent increased over the last year, more than 800,000 saw it rise by more than £100 a month, and nearly 200,000 were hit with a rise of more than £300 a month.  Some 2.5 million renters are now either behind or constantly struggling to pay their rent—that’s up by 45 -percent since April

Most landlords finance their property empires with buy-to-let mortgages or other forms of lending. They are now trying to recover their rising costs, and more besides, by upping rents at a phenomenal rate. Even the minority of landlords that use their own capital to buy houses for rent are joining in as the market goes into a frenzy.

Megan, a renter from south London, knows what it is like to be on the receiving end of demands for ever higher rent. “I have lived here for just over two years with my tenancy contract ending in August,” she told Socialist Worker. “Between the three of us, we originally paid £2,200 a month. But the agency sent us an email saying the rent would rise £175.”

The rental agency managing her house said the rise was “because of Covid”. “That’s bollocks,” she said. “We continued paying rent throughout that time and we know our landlord owns several houses.” And it’s not just London where rents are going skyward.

The number of advertised rental properties across Britain has fallen dramatically in the past three years, and that’s also helped to push up prices. In Bradford, West Yorkshire, in 2019, there were 688 new rental listings at an average rent of £557 per month. But in September 2022, there were half as many listings, and rents were 26 percent higher.

And while the skylines of Britain’s cities are littered with new, multi-storey flats, few if any are available for rent at prices that workers on an average wage can afford to buy. It’s building for the rich. That’s why we need a new programme of council house building on a massive scale.

A crisis in council housing too

The government is planning to cap council and housing association rent rises at between 3 and 7 percent next year. The move replaces the normal formula for increases in most social housing rents, which is inflation plus 1 percent. The lower rises will still leave millions of tenants struggling to find extra money for rent at the same time as fuel and food bills have shot up, and wages fallen in real terms.

And, because the government is not offering to make up the money that councils and housing associations will lose, they too will be under massive pressure. The biggest housing association in London has already said that if the cap goes ahead, it will have to scrap vital repairs and plans to build more homes.

Rents should be frozen, not capped and the government should make up for losses sustained by social landlords.

Waive the rules

Planning rules insist that developers include a percentage of “affordable housing” in all new developments. But it seems that the richer you are, the less the rules apply. The Hinduja brothers are developing the old War Office in Whitehall to become 85 luxury flats and a five star hotel. Westminster’s Labour council agreed to waive the rules on social housing after agents said building an affordable element would “not be economically feasible”.

Rising rents are driving a new wave of homelessness

Homelessness charity Crisis estimates that some 227,000 people in Britain are homeless. That includes those people trapped in hostels, hotels, shelters and temporary accommodation as well as rough sleepers. Now, with rents rising fast, an even larger homelessness crisis could unfold.

Mike works with rough sleepers in east London. He told Socialist Worker, “I’m picking up on an increasing number of rough sleepers. And it’s going to increase further because of the cost of living and rents rising.”

Homelessness isn’t a crisis reserved for the unemployed. The number of people in work and approaching local councils to declare themselves homeless is rising sharply. Almost one in five households identified as homeless in parts of the Tees Valley, in the north east of England, last summer were in work, according to the ministry of housing, communities and local government.

Mike said, “Because of austerity and cuts, a lot of the services that were available for rough sleepers ten or 15 years ago simply don’t exist any more.” The housing charity Shelter is reporting that demand for its online services has never been higher—rising by some 200 percent this past summer. “A big issue is that a lot of rough sleepers are in the same position as everyone else when trying to find temporary accommodation—they often don’t get priority,” says Mike.

Crisis reported that between April 2020 and March 2021, 11,018 people were rough sleeping. Yet London alone has a total of 87,731 vacant homes.

Mike is a pseudonym

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