We need a healthy PRS

We welcome the announcement from Angela Rayner that £500m will ‘top-up’ the affordable homes programme, enabling councils and Housing Associations to fund the building of more social homes. However, there needs to be greater recognition that building alone will not solve the housing crisis in the short and medium term.

In urban environments where space is at a premium and costs are high, we need increased funding for Local Housing Allowance (LHA) rates and measures to keep good landlords in the Private Rented Sector.

London Boroughs collectively spend £114m a month on temporary accommodation (TA) for the 65,000 households who are experiencing homelessness. That figure is increasing month on month and building new homes will not solve this any time soon.

In April ’24 the last Conservative Government increased Local Housing Allowance (LHA) to return it to the level it should have been – covering the lowest 30% of an areas rental market. It was both immediately frozen, and immediately outpaced by rent inflation. In London 5% of homes advertised for rent are now affordable on LHA rates – 7 months after the increase.

At the end of the last parliament the Renter’s Reform Bill died as the election was called, and it’s now been resurrected as the Renter’s Rights Bill, which is all but identical. We completely support the bill and agree that the PRS needs to have greater protections for renters and landlords; however, it comes at a time when smaller landlords, who are more likely to rent to households at the lower end of the market (i.e using LHA), are leaving the sector. The drain began because of the economics, the fiscal environment, the post Truss mortgage rates on buy-to-lets, the maturing of a lot of buy-to-let products, but continues as it looks more difficult and costly to be an ’accidental’ landlord – those who may have inherited property and wanted to use it for income. The PRS sector is shrinking as a result.

It’s not just costly to be a small landlord, but it feels increasingly hostile – as borne out by recent London Councils, Trust for London and Savills research.

Yes, we need to build, let’s get homes for everyone that needs them, but that’s a multi-year, multi-parliament project, even with expedited planning, and grant allocation, and building we are years away from making a significant dent on the waiting lists let alone the 117,450 households currently experiencing homelessness and living in TA in the UK. And it relies on a construction industry that is ready to step up to the challenge.