Helen Martin: Rent zones putting pressure on landlords
PRIVATE landlords are being demonised in Scotland, particularly in Edinburgh, as a result of the housing shortage increasing the price of buying or renting a home.
The accusation that comes with the proposed introduction of RPZ controls (Rent Pressure Zones), is that landlords are over-charging, pushing up prices and should be limited because tenants deserve a better deal.
Hands up . . . I’m a registered landlord. The new controls wouldn’t bother me at all because they permit rent rises which match the annual rise of inflation plus one per cent. In two years I haven’t upped the rent by a single penny!
What does disturb me is the offensive attitude towards landlords, many of whom are ordinary people trying to spin out their savings and pensions, which otherwise would dwindle to nothing in today’s economy.
Renting out a flat is not a licence to print money. First the landlord has to buy the flat – at Edinburgh prices. For most that means charging a rent that at least covers the cost of the mortgage. On our two flats we have spent between £7000 and £10,000 refurbing each to create a nice home with all required safety measures built in, and fully furnishing it along with all the necessary kitchen utensils and appliances. . . another thousand.
Next comes building and landlord insurance, plus the cost of registering with the council. Tests must be carried out regularly for gas, electricity and the safety of every electrical item. Write off another £400 to £500 on all that.
A good letting agent who understands the intricacies of deposit systems, reference checks, inventories, responding quickly to tenant concerns, notice periods and all the other considerations, costs at least ten per cent of the rental each month.
Add in void periods, new tenancy costs and general maintenance bills and the notion of greedy, profiteering landlords raking in a fortune becomes laughable. But there does have to be reasonable income, or why bother?
There is, believe it or not, ‘job satisfaction’ in being able to provide a home for people who can’t afford to buy their own. However, private landlords can only afford to do that at market rates, otherwise they would go bust.
So back to the housing shortage, created by a number of things from Thatcher’s right-to-buy scheme selling social housing cheaply, leaving councils with depleted housing stocks, and the recession, to Britain’s low wage economy.
‘Affordable’ housing? What does that mean in a country where someone working a full 38 to 40-hour week, can still be dependent on government benefits subsidising employers who don’t pay enough for their staff to live on?
As for social housing, that is not merely ‘affordable’., it’s subsidised, the rents kept lower than market value. And market value itself? As we all know, a one-bedroom flat of 6.5 by 5.5 metres in Edinburgh can cost around £110k depending on location. In some areas in the north of England or Wales it could be £40k or less, and in London £500k or more.
Market value has more to do with geography than size or even condition.
Alienate or scare off private landlords and that means someone else will have to step in and take over, offering Utopian cheaper rents at a commercial loss.
And who, pray, will do that?