Is suburbanisation of poverty a phenomenon? Or the New normal for the Private Rented Sector

 In the early 1900s over 90% of the UK population lived in Private rented accommodation with just under 10% of the population living as owner occupier.

The early 90s saw stark contrast to this with a dramatic drop to 9% of PRS occupation compared with 70% owner occupied.

Over the last 30 years the PRS has seen a steady rise, while owner occupation has somewhat plateau at 63%.

Currently just over 20% of the population (4.6m) live in private rented accommodation, but with a cost of living crisis coupled with low minimum wage and a 4^th year freeze on housing benefit are low income households being forced out of central towns and cities.

A recent report published by Urban Big data Centre found that for the ten largest cities, it is estimated that one-in-nine low-income PRS households was displaced in just eight years as a result which is 15,000 households in total.

Contrary to popular belief the Government encouraged this re-growth because they recognise the sector provides an important source housing which is greatly lacking in the social sector along with greater flexibility for those that need quick access to accommodation without long-term commitments.

After the Second World War the growth of social housing boomed and it was assumed that most low-income families would expect to find secure housing within this sector, but with the decline in social housing stock from the mid 90s onward, low-income families now faced added pressure of rising costs are now turning to the PRS for safe secure housing because the social sector is gravely lacking.

Twin forces of economic regeneration and gentrification have played the main part in the shift from affordable to non-affordable housing, with the latter seeing an influx of more affluent residents into poorer neighbourhoods with both positive and negative effects for the current low-income residents. Much conversation has been generated around whether gentrification is merely the displacing of low-income residents from inner cities, instead of helping them through regeneration of their local area, with improvements to transport links and increasing employment opportunities

Factors such as welfare reform and the commercialisation of social housing have had a hand in low-income individuals to be displaced from their traditional inner city neighbourhoods, with potentially important implications for access to employment.

But sadly, the increase in costs is not just effecting tenants, landlords are feeling the pinch too with increase in agency fees, mortgage costs and a rise in insurance coupled with a sharp growth in the costs of trades landlords have been forced to increase rents in some cases just to break even.

In addition the rental market has been flooded with former would-be first time buyer who are now themselves unable to get a mortgage surging into the rental market, being able to provide lump sum rent upfront sometimes as much as 12 months at a time, together with a rise in rents is pushing low income families further and further away from town and city centres and into more affordable rural areas, where there are fewer jobs and more demand for school places.

Over the last 4 years we have seen increasing restrictions on the subsidies available to lower income families to help pay rents.

In the years leading up to the pandemic, increases in Housing benefits levels known as the Local Housing Allowance were restricted to levels well below rental inflation rates so that poorer households were restricted to an ever decreasing section of the PRS market.

In 2012/13, 20% of listings on Zoopla were affordable for those on Housing Benefit. By 2019/20, this had fallen to just 9%

The example below is correct for live rental figures as at the week of publication of this article.

Location	Property Type	Median rent P/M	LHA rate	Difference
Liverpool	1 Bed	£725	£398	-£327
	3 Bed	£995	£523	-£472
Birmingham	1 Bed	£950	£523	-£427
	3 Bed	£1,350	£673	-£677
Oxford	1 Bed	£1,625	£773	-£852
	3 Bed	£2,250	£1,096	-£1,154
Central London	1 Bed	£2,383	£1,280	-£1,103
	3 Bed	£4,950	£1,914	-£3,036
Devon	1 Bed	£772	£423	-£349
	3 Bed	£1,477	£648	-£829

 

We can see from the above table that Local Housing Allowance is no longer covering the lowest rents, with unrealistic differences between what rents are and the LHA available to tenants The continued freeze for Housing Benefit levels, combined with the rising costs of inner-city renting, is engineering a fundamental change in the social fabric of our cities.

We need to examine the impacts this has on the welfare of poorer households as they are pushed to locations which tend to have worse public transport, and worse access to jobs and vital services.

But we also need to be asking whether this is the kind of city we wish to create – one marked by deepening spatial divisions between richer and poorer.

 

Systemising yourself out of service

We hear more and more that business, especially letting agents are creating systems and processes to cut down on the amount of admin that is involved in renting property 

But are we in danger of systemising ourselves out of service

I was speaking to an agent who is creating these systems, however his focus and end goal is to never physically see a tenant or a landlord

I was somewhat shocked at this as my belief is that working in property is actually working in customer service and you need to be a people person

This agent explained, he never does viewings, the applicants watch a detailed video walk through of the property

Holding deposit is paid by bank transfer and references conducted through an online platform.

Tenancy agreements and compliance documents are then sent via email and e-signed and the keys are released using a key safe and code at the property 

At no point does the agent see the tenant

When the tenant needs to report a repair, they do this through a dedicated maintenance reporting platform, even the trades are contacted via email and never visit the office, as there is no need for an office as no one comes to visit 

I can certainly see how this will make the rental process swifter and simpler, but are we in danger of losing the human touch altogether.

In addition, the law has quite caught up with society and issuing documents such as the deposit information leaflet via email isn’t usually recognised in court.

What do you think of this intense level of systemisation?