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Business News: To cap it all...
Brighton Accommodation agency director Dan Lyons this week discusses the possibility of rent caps in Brighton and Hove
At a recent council meeting, the idea of a rent cap was raised by councillors with a view to making it more affordable to live in Brighton and Hove, and this week a document signed by more than 2,000 people calling for fairer rents and five year tenancies was submitted to the local council.
With some tenants spending up to two thirds of their wages on rent, this is obviously a concern, but I think a certain amount of perspective is needed to look at this productively. The private rental sector is a free market, allowing those who choose to invest in it. The basic necessity of any investor is to make a profit, if you take away the ability to make this profit, those investors will put their money elsewhere. We need to look at where we live, our wonderful city, Brighton. The price to purchase a buy-to-let property is astronomical, around £150k to £180k for a small flat, throw in agency fees, safety certificates, insurances, HMO licences if applicable and other associated costs, and you have a fair outlay just to own one, without the boiler blowing
up or other maintenance issues.
Government statistics prove that even with increasing rents, the average yield that investors are getting has remained static, this is driven by the fact that the average price of a typical buy-to-let property has grown marginally faster than that of average rents. Take London, the most similar city to Brighton for rental and property prices. The office of national statistics shows that in the eight years between 2005 and 2013, London rents increased by no more than 11.4%. Inflation over this period was 30.5%.
During the previous rent cap, there was barely a private rental sector, but since this was lifted the sector has risen – by 2013 to 16.5% of all households, due to the real demand for rented properties.
It’s a harsh fact but living in a great city is expensive – it always has been, and always will be. Everything is more expensive in Brighton compared to other similar-sized cities, but the rents are in proportion to the property prices.
When I married and had a family a few years ago, I decided that I did not want to spend all my money on Brighton prices, and so moved to Seaford, and for the same price as a two bedroom flat in Brighton, I bought a four bedroom house with drive and garden. I have a half hour commute to Brighton every day, but I paid a lot less for a lot more than if I had stayed in Brighton. This was my decision based on what I was earning, and what I wanted to spend on my day to day living. Slowly, government taxes have extinguished the notion of spare cash with massive increases in the cost of beer, council tax, petrol and food. These are the real issues if, as stated above from the government figures, landlords are earning a similar profit to 15 years ago.
Perhaps, rather than lobbying for investors in the rental sector to make a smaller profit than in previous years, the government should be putting more effort into the help-to-buy schemes, higher minimum wages, lower council taxes and tax relief to the lowest earners.
These, I feel, would help all concerned to have a better standard of living in Brighton.
Brighton Accommodation Agency,
Lettings: 74 Lewes Road, Brighton, BN2 3HZ