Rents are rising – but not as fast as everyone believes

Talk of booming rents rocketing out-of-control and beyond the reach of tenants are just not true, according to research by the British Property Federation (BPF).

In fact, in most towns and cities, rents increase at a less than retail price index inflation (RPI) and slower than social housing rents, says the report.

The data will comprise part of the BPF’s written evidence to the Department of Communities and Local Government inquiry into the private rental sector.

The BPF is urging an end to calls for rent controls as they will harm landlord investment when the housing market needs the money most.

But, the organisation, which acts as a trade body and pressure group for property people, is backing licensing for letting agents, institutional investment in private housing and supports regulation of landlords to cut out bad practice.

Poor policymaking

Ian Fletcher, Director of Policy (Real Estate) at the British Property Federation, said: “Debate on the private rented sector is too often dominated by case study, narrow evidence and prejudice, rather than the full picture and there is real danger that on the back of that we get poor policymaking.

“Policies that hurt investment in the private rented sector will not help people needing a home and just exacerbate the nation’s housing crisis. We hope the Select Committee will remember that rents reflect local housing markets and come out strongly in rejecting rent controls.

“The official statistics show that there is no scandal on rents in England, which nationally have undershot RPI inflation over the past year according to the official data, and corroborated by Shelter at 2.8% nationally. This compares with inflation in many other sectors that has been rampant, for example energy costs and some foodstuffs.

Rent hot spots

“Market rents have also grown more slowly than rental growth in the social housing sector, where rents are allowed to grow by RPI plus 0.5% a year.

“There will of course be hot spots where rents are rising above inflation, but the best way to remedy that is to build more homes. Other interventions are fraught with consequences, for example our analysis shows that linking rents to inflation would have meant average rents in two-thirds of England’s local authorities would have been higher than the market rents they were last year, sometimes adding hundreds of pounds to tenants’ annual rent.”

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