An independent report by the Social Market Foundation, commissioned by Paragon Bank, found that – contrary to some narratives suggest renting is an inherently unhappy experience – a majority of people who rent from a private landlord are content with what they get for their money.
The SMF report, Where next for the private rented sector?, found that 81% of renters said they are happy with their current property, and 85% said they are satisfied with their landlord.
The greatest source of dissatisfaction among tenants is with “being a renter”, though only a minority of renters (34%) said they are dissatisfied with this status. The SMF said that this suggests that where people are unhappy in the private rented sector it is not about their living circumstances, but about the fact of having to rent rather than own a home.
The SMF said despite tenants’ current views of renting, major trends in housing over the coming years mean that several policy changes are needed to ensure the rented sector continues to work well for tenants.
Only half of renters expect to leave the private rented sector in the next 15 years, suggesting that significant numbers will remain renters for long periods.
The SMF’s key recommendation is to enable renters to build wealth while remaining in the private rental sector, addressing their number one concern: the financial opportunity cost of renting, which have prevented savings, for a deposit or later life needs.
Several innovative schemes could be implemented, including ‘deposit builder ISAs’ that offer a financial return on deposits, or ‘rentership’ models that offer tenants stakes in their building.
Other SMF recommendations to the Government include:
- Increase the stability of tenancy agreements – A large majority of renters support a fixed minimum contract length: 69% would be in favour of setting this at 24 months.
- Giving renters more control over their homes – making it easier to keep pets or make reasonable alterations, such as to décor or energy efficiency.
- Increase the accountability of landlords – Through a ‘Good Home, Good Landlord’ kitemark scheme, developed in consultation with renters to recognise landlords that offer good, and not just decent, accommodation.
- Improve the standards of private rented properties – Offer tax incentives for landlords to invest in improvements that align with Good Home Good Landlord kitemark standards, including green investments.
Paragon Bank Managing Director of Mortgages Richard Rowntree said: “The outdated and tired cliches around privately renting need to be challenged and I welcome the findings from SMF’s report.
“In our experience, the vast majority of landlords seek to provide a good quality home and enjoy a healthy relationship with their tenants; the significant investment in private rented property by landlords has helped drive up standards over the past 15 years and today homes in the sector are generally newer, larger and more energy efficient than ever before.
“We always seek ways to improve the experience of renting further and welcome the recommendations contained in the report. People from all walks of life now call the private rented sector home and we must strive to create a sector that meets everybody’s needs.”
Aveek Bhattacharya, SMF Economist, and one of the report authors, said: “Dominant cultural narratives about the private rented sector paint a misleading picture. In contrast to the horror stories that get wide circulation, the majority of renters are satisfied with their living conditions and have decent relationships with their landlords. It is absolutely right that the Government should seek to help the minority with poor standard accommodation and unprofessional landlords. At the same time, it needs to think harder about what it can offer the typical renter – who is largely happy with their circumstances today, but has doubts about whether they want to keep renting long-term.
“Giving renters more control over their homes – allowing them to keep pets or decorate would help. So would incentivizing landlords to make improvements to properties to make them good, and not just decent. But perhaps the biggest challenge is developing policies that can persuade renters that they are not missing out financial security and stability if they don’t own their home.”
