There has been a lot written and said about ‘Generation Rent’, the young workers who, until perhaps 10 years ago, would have automatically assumed that they would become home owners but now feel priced out of the market, by large deposits, insecure work and the desire to live in better accommodation than they can afford (without the dreary and time-consuming process of moving up the property ladder).
The private sector has been blamed in part for this, the idea being that they are buying property in competition with first time buyers. This, of course, ignores the true facts of the matter, which are that most landlords buy properties on sale for many months and in need of massive renovation works which makes them unsuitable for the first time buyer. The private sector though is the easy target for blame, enduring the general perception of offering the most expensive and least secure accommodation. The social tenancy, on the other hand, is seen as the tenure favoured by tenants, with its’ right to a life-time tenancy and the right to buy.
Whether this ascendancy will continue in the future, in view of 2 planned Government initiatives, is questionable. Addressing the issue of aspiring home-owners, it is intended that right-to-buy will be extended to housing association tenancies. There is no reason to doubt that this will have the same devastating effect on the availability of housing association properties as it has with local authority housing. Whilst this would appear to imply a commitment to social tenants, it is in fact a commitment to home-ownership.
The second step planned shows this very clearly. It is the suggestion that Life-time tenancies should be abolished. Plans under discussion are that a (probable) 5-year fixed term tenancy be offered to tenants, at the expiry of which tenants will be expected to vacate or buy the property. So rather than a tenancy for life, a tenancy in extremis only. This would mean home-ownership will rise (if properties are sold); properties would become available regularly allowing better planning of waiting-lists (in many areas, the chances currently of being re-housed from the waiting list are remote) and the huge discounts currently payable under right-to-buy will no longer be available, as there would be no long tenancy to allow properties to be purchased with up to 60% discounts.
What are the implications for the private sector? The desirability of the social sector should diminish with the reduced security, though it may be some time before the private sector gains the respect it deserves. There is also likely to be demand for properties priced at the lower-end of the market, should landlords seek to sell; there could be a higher demand for the better quality private rented properties. And higher demand means increased rents.
Landlords need not fear these changes, they could benefit those landlords ready to meet the demands of the changing market for rented properties and at the very least, provide evidence of the continuing need for a healthy private rented sector.