Paragon recently published a report highlighting how investment in privately rented homes has contributed to a substantial improvement in the standard of property in the sector. Our Mortgages Managing Director, Richard Rowntree, discusses how we can help drive these improvements further in his latest column in The Intermediary.

The Government’s English Housing Survey reveals how the decade from 2008 to 2018 saw the proportion of private rented sector (PRS) properties classed as non-decent fall from 44% to 23%, outperforming all other housing tenures. Overlaying this data with UK Finance figures revealing a 61% rise in the value of outstanding buy-to-let mortgage balances to £280 billion between 2013 and 2021, supports the idea that buy-to-let finance is an important element in driving up the quality of rented property.

Further analysis of data reveals how this positive change has been driven by two main factors.

Firstly, we see that the proportion of PRS homes classed as decent increased by 83% from 1.8 million in 2008 to 3.3 million by 2021, highlighting how the proportion of properties that don’t meet the required standard has been watered down by a boost in the number of quality homes.

Secondly, the majority of landlords, eight in 10, undertake renovation or refurbishment works to enhance each property they acquire.  

The result of this investment is a PRS that benefits from homes that are safer, larger and newer to provide more tenants with comfortable living environments. Importantly, given the need to reduce our negative environmental impact, buy-to-let properties are also now more energy efficient than they were a decade ago.

Since 2011, the number of PRS properties with energy performance certificate (EPC) ratings of A - C  has swelled by 1.2million to 1.9 million, outperforming the owner-occupied sector, according to Government data.

Alongside these official numbers, our own research undertaken for our UK Tenant Report challenges the ‘reluctant renter’ notion. A survey of over 2000 tenants found that 79% like the property they live in, 71% believe their landlord fixes issues promptly and 78% say that the property they live in feels like home despite not owning it.

With lots seemingly supporting the idea that buy-to-let is a force for good in driving up property standards, why are landlords and privately rented homes so synonymous with poor quality housing?

I think we need to start by acknowledging that there is still work to do to rid the sector of the substandard properties that remain. Until we do this, we will still see the relatively rare cases of poor practice used as examples to illustrate how the entire sector is failing tenants.

This is because our viewpoint is often influenced by the media we consume, and our human nature means we’re drawn to headlines and shocking images shared on social media that outrage us. Scandal will almost always outsell stories reassuring us that everything is just fine so it’s unlikely that we’ll read about all of the good work of buy-to-let investors anytime soon.

While it isn’t the responsibility of the media to fly the flag for the PRS, the picture painted by inaccurate articles is a cause for concern due to the impact it can have on public and political opinion.  

This can be seen in the vilification of the PRS, and openly anti-landlord language used by politicians in sitting and shadow governments. And while I imagine the majority of landlords have developed thick skin, such sentiment is an issue because it extends beyond rhetoric and permeates policy.

It is now widely accepted that the shift from tenure-neutral Government policy seen since midway through the last decade has made much-needed investment in privately rented homes less attractive. This view is supported by UK Finance figures showing a decline in the number of BTL mortgages outstanding since 2016.

This is a scenario that may be welcomed by those that view renting as inherently bad but record levels of tenant demand, compounded by a sustained shortfall of affordable housing, continues to make renting more expensive. Simple supply and demand dynamics suggest that we need more rented homes, not less.

Of course, renters deserve quality as well as quantity and we fully support proposals, such as a Decent Homes Standard and landlord ombudsman, to deliver this. Buy-to-let finance can play a part too if lenders refuse to fund homes that aren’t fit for habitation.

Housing policy that recognises that renting can meet the needs of our diverse population is unlikely to win votes amongst a public conditioned to see a homeownership as aspirational, but it is necessary if we’re to solve what has been labelled a housing crisis during the terms of successive governments. 

Alongside other interested parties, we will strive to inform such policy, providing balance in what is often a polarised argument where villainous buy-to-let landlords go head-to-head with honest want-to-be homeowners.