07:28 Friday 17th May 2013
Bigger Breakfast Show
BBC Radio Cambridgeshire
PAUL STAINTON: Interest rates are at historic lows at the moment of course, have been for quite a while. But figures out today show the cost of rent has increased in England and Wales in every region for the first time in eighteen months. The average rent is £736 a month. Adam Kirtley’s here from our Business Unit. Morning Adam.
ADAM KIRTLEY: Morning Paul.
PAUL STAINTON: That’s painful, isn’t it? If you’re having to rent that’s a heck of a lot of cash.
ADAM KIRTLEY: It is. And if you live in London its’ even worse at £1110 a month. That’s a 7.6% rise over the year. Now rents have always been quite expensive in some parts of the country, cheaper in others. But until today, for the last 18 months, there has always been somewhere where you see rents go down, especially in some of the harder up areas. But now it would appear the pressure is so great on housing that everywhere in England and Wales rents are going up. And they’re pretty much all going up by more than inflation, which of course in these straightened times is not good.
PAUL STAINTON: No. Why are they going up? What’s going on? Is it just greedy landlords?
ADAM KIRTLEY: Well it’s landlords that can command the rents, because there’s such a demand for rented property. Now part of that is a lack of rented property around. There’s not enough houses to rent and therefore that shoves the price up with supply and demand. But in a healthier market, the economy would be better, banks would be more willing to lend for mortgages, and therefore more people would be actually choosing the option of buying their home. But that’s not an option for very many people who have to rent. They need huge deposits, they can’t raise the finances et cetera. So I think it’s a shortage of rental property, and also a difficulty with many people who would like to buy being able to buy.
PAUL STAINTON: Of course in other countries in Europe renting is the norm, whereas here I suppose it’s not, is it?
ADAM KIRTLEY: No. And the rental model in ..
PAUL STAINTON: We’re all striving to buy all the time.
ADAM KIRTLEY: We are. And Englishman’s home is his castle and all of that. The difference between Europe and us is that in Europe institutions build houses and then rent them out. so pension funds and other institutions, they will have a massive housing stock of really good quality homes to rent. We don’t have that model here, and indeed I think the Government would like to encourage that model here, so that actually you sign up .. you know, you rent a house in Cambridge, or even in Soham or in Peterborough or wherever you are, you rent it from a big reputable institution, over the long term. You can be there for years.
PAUL STAINTON: Yes. Fifteen, twenty years. (Here) as soon as you get in you’ve got to move out again in six months.
ADAM KIRTLEY: Exactly, whereas the quality of the private rented sector, of course there’s some excellent stuff, but a lot of it is pretty sub-standard. Whereas of course social housing here is not bad, but there’s hardly as much being built there as well. Although the Government is very keen to point out that there’s a one billion pound build to rent fund in place, and also a ten billion pound fund to grow the number of homes, both in the rented sector privately and affordable homes sector. Councils are freed up now to build more council houses and all of that. So it is a situation the Government hopes will ease, because it is .. you know .. you can’t have wages going up by 0.8% and even in some of the more humble areas rents are going up by sort of 4% a year. It’s not sustainable.
PAUL STAINTON: No. No. We need to build to get the rents down effectively.
ADAM KIRTLEY: Put simply, whether it’s building for rent or building to buy, we need to build.