High rents 'holding back Britain's economic recovery'
High private rents are holding back Britain’s economic recovery, a policy maker at Shelter has argued.
Peter Jefferys, who has also worked for the Labour party, said that there is evidence that high rent is forcing tenants to cut back their spending on consumer goods and services, with increasing numbers relying on high-cost credit.
He says the gap between rents and wages has been growing, particularly in London: “Coupled with falling household incomes, that means that rents are eating up even more disposable income.”
He goes on: “Given that there are 8.5m renters in England (and one in four Londoners), and that in the capital renters pay on average between 42% and 46% of their wage in rent, there is a strong case that a lot of potential consumer spending is being lost.”
However, Jefferys says that high rents are not finding their way into the economy via landlords.
He points out: “The majority of landlords are individuals or couples renting out just one of two homes. Many of those landlords are using the rents to pay off their mortgages and make a small yield. A huge amount of money paid in rent is not recirculating into the economy, but rather it is financing mortgage debt.”
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