Showing posts with label UK. Show all posts
Showing posts with label UK. Show all posts

Saturday, 16 June 2012

Need for regulating the private renting sector

Housing is the essential most need for humans. In UK, with the ongoing trend of economic downturn, this basic necessity is literally now turning into a luxury with the private landlords trying to charge much more to the tenants than usual.

Unusual growth of the private renting sector has made lives hard for the tenants. More often, issues regarding safety and security of tenancy are neglected by the private landlords. There are many cases to prove this fact. One of such recent case in the sector was investigated by Guardian's journalist; Amelia Gentleman who helped unearthed the corruption occurring in the sector.

Guardian's journalist exposed how many of the vulnerable and low income earning's tenants are asked to pay exorbitant rents for merely a shed with a toilet. Examples of such practices are rampant and widespread.  This makes it a total visible case of corruption in the private rending sector, of how heinously, the private landlords are cashing on the situation of lower supply and higher demand of housing in UK.

With the further deteriorating economic condition in London and South East, the minimum wages of the low income workers are seen falling below their real wages, making them so vulnerable at the hands of private landlords.

This phenomenon serves as the latest example of how capitalists rule the society and how they exploit, till date the needy and destitute.
Other problems faced by private tenants are that of high energy costs, absence of security of tenure and landlords' reluctance to repair to improve the property.

If this trend is to continue more, then this will only lead to an addition in the already increased demand, thereby increasing the rents, and those, in utter need, most of the time the poor, get pushed aside and denied of their right to live in securely and safely.

This problem needs to be solved for housing is a basic need for poor as well as wealthy in a nation and to provide a secured roof to its citizens is the foremost duty of the state. Keeping the fact in mind, there is a dire need for regulating the private rented sector.

Regulation of private renting sector needs to be made in the form of holding licenses for private landlords a compulsion. A compulsion should be made for all the private landlords, in fact all the landlords, to hold the license, and only that shall act as a basis for trading. Besides, the license, they should also be guaranteeing on adhering to certain standards required and letting a property that is genuine.

The task of this can be given to professional property management companies, who shall also see that the regulation is followed and implemented on, regularly.

All in all, there is an utter need to regulate the private rented sector, before it expands exponentially at this chaotic speed and exploits the poor further.

How to deal with Rental Crisis

A report from Halifax stated that in most parts of UK, people are preferring to buy a house on mortgage rather than renting.  The simple reason being, interest rate for mortgage loan is much lesser than the monthly rate of rent.

The reason of this unusual trend is based on the infrequent yet fast growth of the mortgage market in UK.  The banks in UK are providing mortgage finance at the lowest interest rate. However, there are reports that sate about the changing of this trend soon, where the rate of rent would decrease and lending rates for mortgage loans will increase.  To support that, a report from "The Resolution Foundation's Essential Guide to Squeezed Britain" stated that despite of the fact that mortgage rates are much lower than the rate of rent, still, the monthly mortgage payment consumes more than 25% of monthly incomes of quarter of UK's middle and lower-middle class families.

The solution to this ever increasing rent crisis is the proposed policy of rent control. The real problem faced by the renting market in UK is that the there is a lack of supply , so proposing a rent control would only lead to a further lack in supply.  Hence, there needs to be some other options to deal with the problem.

One of the suggested solutions lies in by making investments in purpose built rental accommodations by pension funds and insurance companies.  This would help meet the needs of ordinary people of UK.  But investors won't invest in rental accommodations if they rental caps are proposed.

That aside, the other solution lies in public –private partnership in terms of investment. This will help bring new rental schemes.

These are some of the possible solutions to deal with the UK rent crisis, in absence of the option of "rent controls".  Since rent controls will have a negative effect on supply, it would be wise if not implemented, and since supply of homes cannot be increased that quickly, the stated solutions, at present are feasible way to deal with the problem.