Zoopla warns against rent controls becoming policy

Zoopla has cautioned against the use of rent controls – a Labour Party policy proposal – as research by the portal suggests that rents track earnings over the long run and adjust when affordability becomes stretched.

Analysis of the website’s rental listings found that at a national level, rents have ranged between 28% and 32% of average earnings since 2007.

The current proportion of earnings spent on rent is 30%, Zoopla’s analysis found.

London may rank as the most expensive region in most indices, but Zoopla’s research shows it has barely moved as a proportion of income since 2014, while the regions where rents have grown the most since 2007 are the east of England (23%) and the west midlands (20%).

In contrast rents have grown by just 1%, 5% and 9% in respectively the north-east, north-west and Yorkshire & the Humber regions since 2007.

The report said: “Talk of rent controls or the need to ‘stabilise’ rents needs to be put in the context of rental growth and affordability.

“A balance is needed between fairness for renters and stability of rental supply and the need to attract long term investment into an expanding and important housing tenure.”

Richard Donnell, research and insight director at Zoopla, said: “The private rental market is a complex and diverse tenure which has been the focus of a growing number of policy changes with further changes being proposed.

“The reality in the rental market is that landlords are ‘rent takers’, having to accept what renters in the market are able and can afford to spend.

“Just like the sales market there is no single UK rental market. Rents have not increased rapidly in all markets. Our analysis shows a wide variation in rental growth over the last decade which creates a varied picture for the affordability of renting.

“In London and southern regions of England rental affordability has become stretched and this has acted to limit the growth in rents and resulted in a modest improvement in rental affordability.

“Rental growth is set to remain subdued in the near term but the underlying demand for renting is set to remain robust largely a result of the high cost of home ownership, in terms of deposits and income required to buy.

“At a national level the proportion of earnings spent on rent has remained relatively stable over the long run.

“This is to be expected as renters can only allocate a certain amount of earnings on rental payments. This relationship between rents and earnings is an important attraction for new corporate investors entering the market and developing so-called build to rent developments.

“The supply of rented homes is an important driver of rental levels and affordability for renters.

“Continuing to attract long term, stable investment that continues to boost the supply of quality rented housing is important for the longer-term health of the private rented sector.”

Region/country

Average rent pcm 2007Q4

Average rent pcm 2018Q4

Rental value growth 2007-2018               

Rent as % of net earnings – average 2007-2018

Rent as % of net earnings

2018Q4

London

£1,057

£1,249

18%

39%

39%

East

£629

£773

23%

32%

34%

S East

£739

£870

18%

31%

33%

S West

£589

£664

13%

32%

33%

W Midlands

£493

£593

20%

29%

30%

Scotland

£486

£574

18%

28%

29%

E Midlands

£475

£555

17%

27%

30%

Wales

£448

£528

18%

28%

28%

N West

£503

£531

5%

28%

27%

N East

£450

£452

1%

27%

26%

Yorkshire & Humber

£461

£501

9%

26%

25%

Great Britain

£582

£676

16%

30%

30%

 

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3 Comments

  1. JonnyBanana43

    Free market – the only way rents can remain fluid.

    Sadiq Kahn is following his own socialist agenda.

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  2. JohnGell

    Market will always control rental value, and UK is an amalgam of many diverse local markets. It’s very interesting to see these statistics though.

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  3. Woodentop

    Labour has always stood for …… Jealousy.

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