RICS has teamed up with homelessness charity Crisis to call for a state-endorsed deposit guarantor scheme for vulnerable tenants.
The organisation’s latest housing market report, covering February, found that around one-third of surveyors working on behalf of landlords believe that access to private rented properties had fallen among people on housing benefits.
Recent caps to housing benefits were cited by 29% of respondents as a key reason why those on lower incomes were being pushed out of the rental market.
Those on lower incomes are set to face further financial difficulties with rents expected by respondents to the survey to increase by in excess of 20% over the next five years. In contrast, surveyors forecast house prices would increase by around 18% over the same period.
More than half of surveyors said private landlords would be prepared to rent their properties to homeless people or those on housing benefits if the government introduced some form of state-endorsed deposit guarantor scheme.
The demands come as Oxford City Council has already said it would guarantee rent to landlords letting property to tenants on Universal Credit. The rent guarantee scheme aims to address concerns that landlords have become more reluctant to lend to those taking housing benefit since the payments started going direct to tenants. The local authority also said it would check each tenant’s ability to pay and would cover damages to the property.
Sean Tompkins, chief executive of RICS, said: “We see this as a matter of public interest. The housing market is falling increasingly out of step with the majority of household incomes. In the current climate, it can be hard enough for young professionals to make ends meet.
“But for those on benefits, the pressures may be insurmountable. Worryingly, our figures show that as a result of a combination of economic pressures, more and more vulnerable tenants are being pushed out of the private rented sector.
“However, if government were to put in place additional support measures through the introduction of help to rent schemes, the door to the rental market may once again be opened for Britain’s most vulnerable.”
John Sparkes, chief executive of Crisis, said: “This survey highlights the uphill battle many homeless people face when trying to enter the private rented sector.
“Renting is often the only way out of homelessness, but the vast majority of landlords now consider it too risky to rent to homeless people. This is a desperate situation to be in: to be ready to move on and start rebuilding your life, only to encounter financial barriers and closed doors.
“With growing numbers of people stuck in this homelessness trap, we need to find ways to reassure landlords whilst supporting homeless people to find a place to live.”
Today’s RICS report says that new buyer enquiries seem to have gradually lost steam over the past few months, ending February on a flat reading.
The outlook for transactions was more optimistic with a net balance of 37% of surveyors expecting more activity in the next 12 months, while 24% said they had seen a rise rather than a fall in prices over the past three months.
The north-west was seen to have performed particularly well with a net balance of 64% reporting rising prices.
In the lettings market, tenant demand rose for the third consecutive month as 15% more respondents noted an increase rather than a fall.
Crisis CEO John Sparkes nails it. “…too risky to rent to homeless people”. Gov need to understand that most private landlords have good intentions and and, critically, are risk averse. They can’t afford the hit of a rogue tenant.
By making life hard for landlords and reducing viability, supply will be squeezed. Great news for landlords who stay in, because rents will go up. But when supply is reduced and rents increase, it is those on the margins that will drop off the bottom. Not just those on benefits (God help them!), but the JAMS, the nurses and teachers in high value areas, the new-start businesses…
New build to rent stock is lovely, but in supply terms is as yet almost irrelevant. A sideshow. And it’s expensive. It will not help the HB/JAM tenants for many years yet.
Back to the point though. Sparkes is right. The PRS is a collective of individuals. Their individual risk appetite and ability to absorb the occasional rogue tenant is totally different to the institutional landlord who can amortise that risk across a large portfolio. As opposed to experiencing wipe-out if their tenant goes bad. Understand that single point and the whole approach by Government to the BTL sector falls apart. The BTL sector may be massive (bigger than the entire U.K. commercial property portfolio) but it has the decision making behaviours of a risk-averse SME.
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As with most of these hair harebrained schemes the reality will be somewhat different to the theory. A Tenant must have accountability for their conduct in a tenancy and this may well reduce that. From my experience a warning sign for any Landlord.
The sooner governments take some proper social responsibility,rather than passing the buck to the private sector, then the sooner those in greatest need will get a real and sustainable future. I wont be holding my breath.
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silly idea, the Schemes are weighted to a tenant and in our local area only inexperienced landlords/agents use them. Any time you give somebody some thing for nothing it has no value. Realitycheck97 summed it up perfectly, we have all been bitten and nobody wants to take a risk.
Oh and by the way who is insuring and providing mortgages for all these houses rented to DSS referrals; last time I checked no main stream insurer is interested, most landlords, don’t even realise they are invalidating their policy terms by renting to DSS referral.
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