Magazine article The Spectator

Rentally Deficient

Magazine article The Spectator

Rentally Deficient

Article excerpt

Why buy?

HERE is the good news: at the moment it is more expensive to rent prime property on Hong Kong Island and Manhattan's Upper East Side than it is in central London. But it's the bad news that counts: renting in London costs nearly double what it does in Amsterdam, the second most expensive European city, and is more than five times the cost of renting in Berlin.

Number-crunchers at the online property site GlobalResident have worked out that renting an average three-bedroom flat in South Kensington or Mayfair now requires a minimum income of 290,000 a year. An annual salary of more than L56,500 is needed to afford the rent on a one-bedroom flat in Fulham, and a one-bed flat in somewhere like West Hampstead requires L63,000 a year.

So what's wrong with us? Basically, as anyone who has spent any time abroad knows, we are seriously out of step with the rest of the world. While in Germany, France, the United States and Australia between 35 and 45 per cent of the population live in privately rented homes (and up to 65 per cent in the major cities), we have convinced ourselves that it is normal for 69 per cent of us to own our homes while only 10 per cent rent in the private sector (17 per cent in London).

The Law Commission has this week been asked to undertake a major review of the law surrounding rented housing. It aims 'to produce a simpler, less complex framework that is better understood by everyone'. It should consider the following. Normal market forces apply elsewhere, not here. Affordable rents abroad are the result of a healthy balance between supply and demand, with a lot of property being built specifically for rent by large corporations and financial institutions. Renting in these circumstances will be cheaper than buying, guaranteeing plenty of choice and mobility. There, the word 'landlord' is a description; here it is virtually a condemnation.

With the enormous scarcity of property to rent, two bad things happen. First, people are driven into buying property too early. This pushes up house prices and restricts labour mobility - two economic albatrosses. Second, the imbalance between demand and supply creates an adversarial relationship between landlords and tenants, which ends in conflicts that all too often end up in the courts.

Just think of 'renting'. and the word 'Rachmanism' comes to mind. Although few now remember who he was or what he actually did, the name alone has fuelled warfare between landlords and tenants for 50 years. It casts a long shadow and has prevented any revival of much-needed private renting. A series of well-intentioned but wrong-headed policies, introduced to curb truly nasty excesses by some private landlords long ago, now blight the entire rental sector.

At the beginning of the 20th century, more than 80 per cent of Britons lived in private rented tenement homes, many in appalling squalor. In the 1950s and 1960s the Rent Acts were introduced to improve the lot of tenants and to protect them from sudden eviction and excessive rent rises. But they went too far, giving tenants so much security and such low rents that most landlords, feeling that the law had in effect confiscated their ownership, simply sold up instead of staying in a business that had become both stigmatised and unprofitable. Those who stayed became figures of comedy - like Rigsby in Rising Damp - or dread - like property-owners Freshwater.

By the end of the 1970s, Britain had 65 per cent owner-occupiers and only 10 per cent private renters. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.