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Where next for the private rented sector?

Happy couple renting hero.jpg

Most people renting their home in the private rented sector are happy with their property and landlord.

That was a key finding from an independent report from the Social Market Foundation (SMF), Where next for the private rented sector?, commissioned by Paragon Bank, examining how the private rented sector might develop in the years to come.

Based on a survey of 1,376 adults in rented accommodation and modelling of possible future trajectories for the housing market, the report finds a clear appetite from renters for policy action.

Key points from SMF report include:

  • Policy and societal attention focuses on the minority of private renters that have particularly bad experiences. Yet this can create a misleading impression – the majority of private renters express contentment with their situation: 81% say they are happy with their current property, and 85% say they are satisfied with their landlord
  • The greatest source of dissatisfaction is with “being a renter”, though still only a minority (34%) say they are dissatisfied with this status
  • Satisfaction with private renting is particularly high among older renters: nearly three-quarters (74%) of those aged 55 and over report being satisfied, compared to 58% of those aged 35-54
  • Private renters particularly value not having to pay for repairs, or insurance and other costs; some also see it as a way to afford more expensive locations or to live more flexibly
  • At the same time, there are some issues with renting:
    • 56% of private renters (and 63% of 18–34-year-olds) worry that it is a financially worse option in the long run
    • Renters also dislike the lack of control they have over their property
    • Despite the political focus on security and stability, this came lower down the list of concerns in our survey
  • Overall, most renters are happy to be where they are for now, but most do not see it as their ideal long-term option. Over 50% (two-thirds of 18–34-year-olds, and 39% of 35–54-year-olds) expect to leave the private rented sector in the next 15 years.

Download the report

SMF recommendations to the Government include:

  • Enable renters to build wealth while remaining in the private rental sector, addressing their number one concern: the financial opportunity cost of renting, which have prevented savings, for a deposit or later life needs. Several innovative schemes could be implemented, including ‘deposit builder ISAs’ that offer a financial return on deposits, or ‘rentership’ models that offer tenants stakes in their building
  • Increase the stability of tenancy agreements – A large majority of renters support a fixed minimum contract length: 69% would be in favour of setting this at 24 months
  • Giving renters more control over their homes – making it easier to keep pets or make reasonable alterations, such as to décor or energy efficiency
  • Increase the accountability of landlords – Through a ‘Good Home, Good Landlord’ kitemark scheme, developed in consultation with renters to recognise landlords that offer good, and not just decent, accommodation
  • Improve the standards of private rented properties – Offer tax incentives for landlords to invest in improvements that align with Good Home Good Landlord kitemark standards, including green investments

Paragon Bank Managing Director of Mortgages Richard Rowntree said: “The outdated and tired cliches around privately renting need to be challenged and I welcome the findings from SMF’s report.

“In our experience, the vast majority of landlords seek to provide a good quality home and enjoy a healthy relationship with their tenants; the significant investment in private rented property by landlords has helped drive up standards over the past 15 years and today homes in the sector are generally newer, larger and more energy efficient than ever before.

“We always seek ways to improve the experience of renting further and welcome the recommendations contained in the report. People from all walks of life now call the private rented sector home and we must strive to create a sector that meets everybody's needs.”

Download the report