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Under the skin of the letting market

Here we share news and views on both the local letting market in & around Oxfordshire and all planned and recent legislation.


We’ve read the English Housing Survey so that you don’t have to


The Government has just released the English Housing Survey (EHS) 2011-2012.

Why is this interesting?

Because the EHS data is taken as an ‘official’ picture of the UK’s housing and it becomes the source data for policy, debates, white papers, etc.

So we have rolled up our sleeves and dived into the report so you don’t have to….

The EHS does a survey of 13,829 households and then extrapolates the findings to make assumptions about housing stock in all of England and Wales.

Here are some of the key findings:

*Trends in tenure*

In 2011-2012 there were 22 million households in private accommodation, 3.8 million (17%) of which were in the Private Rental Sector (PRS). This is at its highest level since the early 1990s, matching the number of households in the Social Rented Sector. According to the recent Commons Select Committee, Tim Brown from the Centre for Comparative Housing Research, De Montfort University, predicts that this proportion will rise to 20-25% by 2025.

Demographics

The survey indicates key demographics of those renting in the PRS and owner-occupied households:

  • 58% of homeowners were over the age of 65, with 10% under the age of 35
  • ½ of all private renters were under the age of 35

Anecdotally, these findings are not representative of our tenants. The results from our Tenant Survey of 600 respondents in September 2012 showed that although the average age of our tenants skewed towards the younger age brackets, we did not find such a 50/50 split. Rather we found that 42% were below 30 years old and 75% were below 40 years old. Approximately 9% were over 50 years old and a further 3% were over 60 years old. This is not surprising seeing that the average age of the first time buyer is 35 and the average deposit required is £27,500 (Telegraph, Sep 2012). Read more of the results from our survey here.

*Rents*

The survey looked at the types of tenancies and average weekly rents across housing tenures.

Types of tenancies:

  • 87% of PRS were ‘market renters’ and hold AST tenancy agreements
  • 8% of PRS were ‘non-market renters’ who pay rent
  • 5% of PRS were ‘non-market renters’ who don’t pay rent (family owned, live with friends etc)

 

Rents:

  • The average weekly rent is almost double in the PRS compared to social sector (£164 compared to £83)
  • The average weekly rent for the PRS has increased since 2010, but this change is not significant. This is interesting as much media comment is along the lines of “rents are rising too fast and are becoming unaffordable” yet the EHS does not support that.
  • To illustrate, in 2012 our average rent rose 3.4% while inflation was 3.1%. This tallies with historic rent trends going back to the mid 90s where rent increases and inflation tended to go hand in hand and not by accident.

*Length of tenancy*

The survey showed that 32% of tenancies within the PRS lasted for less than 1 year. Furthermore, 2/3 of tenancies were less than 3 years and only 9% lasted 10+ years. This goes against the argument to introduce European style tenancies of 5+ years.

This also echoes the findings from our survey which indicated that 80% of our tenants wanted tenancies between 6 and 18 months, with only 6% wanting a tenancy to last 3+ years. It could be argued that this 6% is normally more representative of families in the PRS, highlighting the difficulties to buy in the current market. To find out a way of responding to this by ‘renting what you can’t buy’, click here.

*New households*

381,000 new households were formed in 2011-2012, 68% of which were in the PRS. This is perhaps the most dramatic statistic. We know that some of these households are ‘reluctant landlords’ who cannot sell their homes and some are investors who are fed up with the returns on their savings investments. To read more about our services for the latter, click here.

*Overcrowding/under-occupation*

Levels of overcrowding and under-occupation are measured using the ‘bedroom standard’ – the number of bedrooms needed to avoid undesirable sharing and the number of bedrooms needed for the size of the household.

Rates of overcrowding in the PRS were 6% and the rates of under-occupation were 16%. We see this now in Oxford as the new House in Multiple Occupation (HMO) regulations are reducing the number of HMOs available by:

  • Refusing to give HMO licences to more homes in East Oxford
  • Deterring landlords in the rest of Oxford who do not want to pay for the licence and/or the remedial work to satisfy the HMO requirements

The result? Properties with 4 or more bedrooms are being let to couples or families and so some bedrooms are ‘under-occupied’. This is a real shame – we need all of the bedrooms filled to make the best use of our stock. Find out more about HMOs here.

*Energy efficiency*

The idea of a greener home is very much in the public consciousness at the moment, in particular with the launch of the new ‘energy efficiency’ Green Deal.

The EHS shows that Social Rental homes were more energy efficient than those in the PRS. For example, the social sector had more dwellings in higher Energy Efficiency Rating bands (A-C) compared to only 17% of the PRS.

Although it could be argued that the Green Deal is giving landlords (and tenants) the opportunity to make their home more ‘green’, the notion still remains that there is little incentive for the landord to do so as the financial gains do not match the financial cost. Read more about how the Green Deal works and what’s involved here.