Last month The Joseph Rowntree Foundation (JRF) called for fundamental reforms to the private rented sector (PRS) to open the market to those locked out of home ownership and social housing.

Successive governments have promised to solve the housing crisis by building more houses, but the JRF report suggests that who owns the 25 million homes available now, and who they are available to, is as important as new construction.

Landlords are likely considering their future in the sector due to planned reforms to the PRS to improve tenants’ rights alongside existing tax changes and obligations on landlords to meet higher energy efficiency standards and the report says the government should see this as an opportunity to implement policies which see homes change hands from landlords to tenants.

JRF says this would help budding homeowners previously unable to access the market find affordable, secure homes and give them the chance to build wealth.

The Foundation put forward ambitious but, they say, practical measures to achieve this:

• Setting a strategy for reducing the size of the PRS by rebalancing the position of first-time buyers and landlords in the mortgage market and discouraging property speculation.
• Supporting any reduction in the size of the PRS with policies that expand the supply of social housing and support households into homeownership.
• Supporting renters to buy the home they live in, including through a Right to Buy for private renters.
• Creating mechanisms to allow landlords to receive funding to retrofit their home to high environmental standards, in return for leasing it to a housing provider to provide to tenants at lower than market rents.
• Expanding the routes available to renters to build sustainable wealth by addressing the barriers to part-rent part-buy models such as Shared Ownership.
• Ensuring that the transition to a smaller PRS is managed equitably, with a particular regard for renters on lower incomes.

“The housing market is not working. In recent decades we have seen the rapid growth of the private rented sector alongside the decline in the proportion of households in social housing or owner occupation. Consequently, millions of people are stuck paying unaffordable rents, worried about being evicted by their landlord and have little opportunity to save.

“Right to Buy and the expansion of the private rented sector following the global financial crisis have already shown that rapid shifts in the distribution of homes are possible. Reforming the private rented sector by shifting the distribution of homes within it should be the gateway to further, fundamental reform of the housing market. Reforms of this type would ensure the housing market supports those looking for somewhere to call home over those seeking assets to invest in.”

But not everyone agrees with the Foundation.

DJ Alexander Ltd, the largest estate and letting agents in Scotland says suggesting that Government should intervene to provide private renters with a right to buy the property they live in is an example of pie in the sky economics.

They believe that proposals such as this do nothing to help people get on the property ladder and are more likely to exacerbate housing shortages rather than relieve them.

David Alexander, chief executive of DJ Alexander Ltd, explained:

“This Joseph Rowntree Foundation report suggests the government should be “supporting renters to buy the home they live in, including through a Right to Buy for private renters”. The report also calls for the Government to intervene in the mortgage market and discourage lenders from providing funds to landlords and property investors.”

“This makes no sense at all.

“Why would Government subsidise renters to purchase the property they live in? If you did this, then everyone who wasn’t a renter should also be supported to buy their home. You can’t subsidise one part of the market and not the rest.”

“Aside from being hugely inflationary it also fails to understand that a lot of people are happy to be in the private rented sector. The private rented sector is an essential element of the housing market and any proposals to reduce its scale should be looked at with caution.

“It is estimated that around 40% of private sector tenants are from outside the UK. They are here to work for a few years and then return to their home countries and the private rented sector provides suitable homes for them to live in while they are here.

“These people cannot access social housing and they have no desire to buy a property so removing the option of private renting from this group makes no sense if we are to create an expanding, thriving economy.”

“The other key mistake in the logic of this JRF report is that they misunderstand the role of landlords. These are people who own properties which they rent to tenants. They are not obliged to provide this service but do so as an investment. They can just as easily withdraw from the market and invest their money elsewhere.”

“A tenant buying a property from a landlord doesn’t need government intervention as it can already happen, it just requires a willing landlord and for the tenant to pay the market value.

“The JRF seem to be assuming that market conditions don’t exist in property but exist in all other aspects of life.

“The solution is relatively simple. If more social and private housing is built and supply exceeds demand, then prices will fall, and property will become more affordable. If this doesn’t happen, then we will continue to experience rising prices and housing shortages.

“Artificial interventions such as the one suggested in this report will do nothing to alleviate current housing difficulties.”