Generation rent: but why is it so easy to evict?

Over the last 15 years, the number of people who rent their home from a landlord has almost doubled to 8.5m people, and nearly a third of renters are families with children.

Since 2001, the proportion of homes rented privately has rocketed by 69 per cent.

According to Shelter, one in five families in England now rents privately, yet tenancy contracts of just six or 12 months are the norm.

The key questions: tenants' rights when rents keep rising

Volatile rental market

Government research shows that renting families are nine times as likely to have moved in the last year than families who own their homes.

The study found that 35 per cent of renting families worry about their landlord ending their contract before they are ready to move out.

Two thirds (66 per cent) say they would like the option of staying in their home long-term, but the current average stay in a rented home is just 20 months.

Shelter is calling for the introduction of a new renting contract to give greater stability to the growing numbers of people who rent their homes from a private landlord.

The housing charity is calling for a new kind of tenancy – called the stable rental contract – to become the norm across the rental market in England. The contract would give renters more stability to put down roots, and landlords more certainty of a good return on their investment.

Not enough stability

Campbell Robb, chief executive of Shelter, said: “With a generation priced out of home ownership, renting is the only choice for growing numbers of people.

“But with the possibility of eviction with just two months’ notice, and constant worries about when the next rent rise will hit, the current rental market isn’t giving people – particularly families – the stability they need to put down roots.

“The stable rental contract offers renters the stability of a five-year tenancy and gives landlords more confidence in a steady income, all within the existing legal framework.

“Turning rented houses into homes should be a priority for everyone who cares about the wellbeing of families in this country, and government must now show the political will to make renting better for millions of people desperate for a stable home they can rely on.”

Assured shorthold Tenancies

During the post-war period and until 1988, renting in England was heavily regulated. Rents were capped by law and renters had indefinite security of tenure.

Private renting declined over this period. Meanwhile, home ownership rose steadily, boosted further in the 1980s by the introduction of right to buy.

In this period, letting out property did not meet the needs of many investors looking for returns on rental income and capital growth.

Private rented homes were in dwindling supply, so competition among prospective renters was often tough.

But people with secure tenancies had homes for life at rent levels they could afford.

The 1988 housing act introduced assured shorthold tenancies (AST), which allowed landlords to set rents at market level, raise them annually, and offer short, fixed-term contracts. The 1996 housing act subsequently made ASTs the default tenancy offered to private renters.

ASTs offered investors greater liquidity, and reassured lenders that lending for private renting was no longer a risky business.

This reassurance laid the ground for the creation of buy-to-let mortgage products in 1997, making it easier for small-scale investors to buy homes specifically with the purpose of letting them out.

Longer leases

Landlords are still able to offer people assured tenancies – the more secure tenancy which is an alternative to the AST – but few do in practice.

Jon Neale, director of residential research at Jones Lang LaSalle, said: “Our research demonstrates that it is perfectly feasible for private landlords to offer longer, stable leases. Indeed, their returns may actually be higher if they offer tenants longer terms.

“The market should be able to offer tenants a wider choice of ways in which to structure their tenancy. Just as buyers are offered a range of mortgage products, as the rental sector grows and evolves it could offer its customers a similar level of choice.”

“It is important to emphasise that this research does not consider changes to the current regulatory environment. It implies that offering this choice is good business sense for landlords.”

‘Supply and demand’

But Chainbow Chairman Roger Southam told Channel 4 News that the any change in rental laws should also protect landlords from bad renters.

Mr Southam said: “The rental market operates the same as any other market place. It is about supply and demand and economics.

“The landlord needs to achieve a return on their property assets. This is achieved purely by receiving rental income. If a renter fails to pay, then it severely affects the landlords financial stability.”

“As in all things, there are good landlords and renters and there are bad. It is entirely wrong for a landlord to be unreasonable in any way but equally it is wrong for a renter to be anti-social or not pay or carry out illegal or immoral acts.

“The private rental market is a set of scales with the landlord and renter at opposite ends. If anything swings the balance one way or the other, it means you have an affect on the other side.

“If you remove the landlords rights and abilities to evict a renter then it will not appeal to people to rent out property. There needs equilibrium for each side so those bad ones can be weeded out and the good ones can get on with each other living their lives.”

Channel 4 News looks at how the current rental laws compares to our European neighbours:

Germany

In Germany only 39 per cent of the population own the homes that they live in compared with about 60 per cent in Britain. Rental contracts last indefinitely.

Initial rents are set by the market, but there are penalties for landlords who set rents 20 per cent above the market average. Tenants can give three months' notice to leave at any time.

The reluctance of banks or housing associations to provide mortgages, and rents controlled by local government, are among the main reasons for the Germans' preference for renting.

France

Only just over 50 per cent of French people live in their own properties. In Paris, the figure is less than one in three. Rental contracts last three years.

Initial rents set by the market. Rents can be increased by a national rent index. Tenants can give three months' notice to leave at any time.

Landlords can evict tenants for non-payment of rent.

Spain

Rental contracts last five years. Initial rents are set by the market and can be increased in line with the consumer price index.

Tenants can give one month's notice to leave at annual intervals.

Landlords can evict tenants for non-payment of rent, antisocial behaviour or "immoral" use of the premises.

Italy

In Italy the average Italian lives with his parents until the age of around 30. Around 70 per cent of Italians own their own homes.

Italy has a strong rental market. Rental properties are mostly privately owned, but include properties owned by companies and public housing owned by local councils.

Rental contracts last three years, with a two-year renewal option, although the initial period can be increased to five years with no renewal option.

For advice on changes to housing benefits, Shelter has helpful information and advice on how you may be affected here: england.shelter.org.uk/get_advice.

Government advice for tenants who rent privately can also be found here: gov.uk/private-renting.

For more information on the housing market more broadly, check out Home Truths, a report by the National Housing Federation here.