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Rent increases are a problem in London – but not, really, for the rest of Britain

28 October 2016

12:18 PM

28 October 2016

12:18 PM

When I made my Dispatches documentary about generational inequality for Channel 4, I was struck by how many of the established facts in this debate fell apart upon scrutiny.

Yes, there are many legitimate grievances – which I covered in the film. But some of the supposed ‘nationwide’ problems are, in fact, no such thing. Take the national rent crisis, which led Ed Miliband to fight an election campaign which pitted the supposedly wicked exploitative landlords against tenants. He lost that election, in part because he had allowed himself to be sucked down rabbit hole of social media – and one of Londoncentricity. There are a great many problems facing people outside of the capital, but soaring rents is not really one of them.

As so often, London distorts the national figures – to the extent that they are no real reflection of the national situation. Strip London out, and things look very different as today’s release of private rents from the Office for National Statistics shows.

The London situation? Summed up here by a graph published earlier today by the Resolution Foundation.

This is the kind of image that led Ed Miliband to call for the kind of rent controls that have devastated the rental markets in foreign capitals. And it gave Miliband a predator vs punter narrative. But it’s an argument that would resonate best in London; not so much outside it. Below is a far less sexy but more representative graph: in most other parts of the UK, rental prices are lower, in real terms, than five years ago. By the time of the 2015 election they’d fallen quite a lot.

So renting has, in real terms, got cheaper in Scotland, Wales, the North East, and the North West. And the Midlands. In fact, strip out London, and renting has been getting cheaper overall in Great Britain. Miliband picked a pretty bad example of capitalism gone wrong.

The ONS data is an experimental series, and starts in Jan11. But go back generations and you find that housing costs – as a share of income – stopped rising in the 1980s. In total, they are up a bit over 20 years (for those in their late 20s). There has been a rise in rental costs, but one almost entirely offset by interest-rate-driven drop in the cost of owning. Here’s a recent chart from the Institute for Fiscal Studies (whose methodology is always rock solid).
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Talking about a nationwide scourge of exploitative rent-raising landlords would resonate in London. And cities like Bristol (where my Ch4 documentary was filmed). But across the country at large? Not so much. Yes, renting is tough in London and its environs. As is buying. But we can and should distinguish Londoners’ greatest headaches from those afflicting the rest of the country.


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