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.”
The full article is here:
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Comments
If rents are funding mortgage debt who gave the mortgage in the first place and who screwed up the world economy?
Yup - it was the banks so it is going back into their coffers to plug the gap they gave themselves in their delinquent actions of over-lending and screwing up the worls economy.
How about following Iceland where they let the banks go bankrupt and they now have a thriving economy, the out of work crew emigrated and they now have record low unemployment. Now there's a plan!
The banks and the government have themselves to blame methinks.
High rents are 'holding back Britain's economic recovery'
and there I was thinking it was the Banks and incompetent politicians!
Now Peter Jefferys is obviously trying to make a name for himself, whilst making unchecked and invalid claims : Jefferys says that high rents are not finding their way into the economy via landlords. How the hell does he know. Not all Landlords are living in the Bahamas, they are more than likely new Landlords having been forced to rent out their house to pay their mortgage and move to a cheaper property because the banks are still managing to charge high interest rates for loans and mortgages despite the base rate being .5%. and at the same time not lending on new property unless you have 25% deposit and agree to pay around 5% interest. Meanwhile the government look on and let people like Jefferys deflect the blame away from the real culprits.
Since it appears Shelter wish to become a political force it is time for them to lose their charitable status. Then they could buy houses, flats and show the rest of us how it SHOULD be done. I note that the author of the piece worked for the Co-operative Party and the Labour Party as well as on climate change policy in the civil service. THAT says it all really.
Oh my God, how did we miss this, it was staring us in the face all along. Lets evict all tenants today and rebuild the country in a week.
How strange economists that can not understand that rents are high because demand is high and supply is short!
Is it possible to round up everyone who has had their economic thinking influenced by Gordon Brown and stick them in a desert with a single glass of water between them? The only one to come out alive would be the one who understands economics.
I am fairly sure that Shelter must have invested in a random shite generator, we keep getting treated to these stories which are all very wordy but simply distract from the reality of what has gone on and is going on.
Tony Blair and Gordon Brown effectively bankrupted the country but masked the fact with massive consumer spending paid for by cheap and unsustainable credit for all.
If rents were at un-demand pushed levels the very vast majority of renters would still not be able to make ends meet. they have a millstone of unsecured debt around their neck that an addiction to holidays, alchohol and consumer goods is simply adding too.
I wonder why Mr jefferys has picked on the rental industry? fact that the 8.5million renters spend £3,570,000,000/ annum on mobile phones with just 3 large corporations and £17,850,000,000 on fuel of which £10,710,000,000 goes straight to HMG probably also accounts for a large chunk of tenants' disposable income.