A quarter of private rented homes “not decent”, says new government report

More than a quarter of homes in the private rented sector (PRS) fall below decent home standards, according to an influential government housing report released today.

The English Housing Survey says that 47% of PRS properties did not conform to the decent homes standard in 2006 with the figure now standing at 27%. The vast majority of the PRS is owned by single landlords.

Build-to-rent developers – professional landlords backed by institutional capital – want the government to encourage more homes specifically for rent in a bid to drive up standards.

Moda, the London and Harrogate based build-to-rent developer, has the largest pipeline of UK-wide projects with more than £2bn of investments from Manchester, Liverpool and Leeds, to Birmingham, Glasgow, Edinburgh and now Brighton.

“It’s shocking and unacceptable that in this day and age a quarter of renters are at risk. The crucial point of build-to-rent is that whole buildings – rather than single units – are rented, which means investors can prioritise service, safety and security through professional management teams,” said Johnny Caddick, managing director at Moda.

“Better quality homes, combined with longer and more secure tenancies, are the only way to challenge the negative connotations surrounding renting and offer a genuine alternative to an increasingly diverse array of renters,” said Gavin Barry, chief executive of Prosperity Capital Partners, a build-to-rent investor.

Build-to-rent homes are, by definition, new builds but are different from regular apartment blocks thanks to generous amenity areas and shared spaces which are designed to make renting more appealing.

Relative to other tenure types, the current amateur-owned PRS performs far worse than the social rented sector which has 13% non-decent homes, and owner occupiers, which stand at 20%.

“Even through the proportion of non decent PRS homes has decreased, the absolute number has stayed very similar so that implies that the improvement has been because of newer properties,” said Oscar Brooks, Moda’s acquisitions director.

Data shows there has been a shift in demography of those in the PRS from a younger base in 1996-97, to an older one in 2016-17. In 1996-97, 35-63 year olds made up 33.7% but now they make up 47.6% – a rise of more than a third.

“The report suggests that renting has become more attractive to older professionals,” said Moda’s Johnny Caddick. “This is only going to grow as more build-to-rent comes into the market and as more people downsize or get divorced. People are living longer and many would rather spend their retirement in cities.”

“In 1996-97 only 15% of renters were families with children – a figure now up to 24.3%. However, the intention of the vast majority of renters is still to purchase their own home, which is especially true of young people. Of current renters this percentage only dips below 50% for those who are 45+ years old.”

“We don’t believe renting should just be about millennials – it needs to be about everyone. That’s why we’re committed to offering three-year tenancies to make it easier to have a family and rent. I’m passionate about changing attitudes to renting. If we, as a sector can improve, more people will change their minds about renting”, adds Moda’s Johnny Caddick.

Johnny Caddick added:

“The English Housing Survey data further emphasises the need for build-to-rent developers to continue driving up standards in the private rented sector, with only 27% of homes conforming to the Decent Homes Standard, down from 47% in 2006. By increasing the amount of professionally managed, high-quality rental homes throughout the UK, the burgeoning built-to-rent sector can play a vital role in improving standards across the board.”

Under the standard, council or housing association homes must:

Homes fail the Decent Home Standard if they don’t meet all four criteria.