A housing estate in Hoxton will invite tenants to pay “personalised” rents as of January next year. The financial situation of each tenant on the New Era estate, owned by Dolphin Living, will judged on a case-by-case basis.
“If we calculate that you can afford to pay more rent than you do currently, your rent will increase,” say Dolphin Living in their information pack to tenants. “However, we recognise that a large rent increase would be unfair so we will gradually increase rent… each year until you are paying your personalised rent.” Dolphin Living plan to roll out the scheme to an additional 900 properties by 2020, with the hope that it will help tenants who are unable to access social housing and find themselves increasingly priced out of the rental market.
When we first heard of the New Era project earlier this year, we were open to the fairness of the idea of means-tested rents, especially if it kept roofs over the heads of tenants who had previously been facing mass eviction. But is it a scaleable model for the private rental sector?
Richard Blanco of the National Landlords Association has criticised the experiment as ultimately unsustainable, saying: “If rent control was brought in, I think a lot of private landlords would just sell up so we’d have a reduced amount of rented properties in the capital.”
Rent control has been hailed as the answer to the difficulty that more and more people are experiencing when it comes to finding an affordable place to live, and it was seen as an encouraging precedent when Berlin became the first German city to introduce rental caps this year. However, you only need turn your gaze to Sweden to see a less rosy picture.
In Stockholm, buy-to-let is almost unheard of; the market is dominated by rental companies and tightly regulated. Rent is determined by annual negotiations between the Stockholm property agency and the tenants’ association. But Stockholm is far from a rental wonderland; while 40 per cent of the population enjoy comfortable, rent-controlled accommodation, the rest live in run-down, over-crowded properties, at the whim of a housing system which is ill-equipped to cope with such high demand.
The result is a thriving black market, according to a recent report by The Guardian. “It is almost impossible for immigrants and new arrivals to penetrate this market – it is all about who you know and how much money you have,” says Billy McCormac, head of the Fastighetsägarna property association. “Students, young people and immigrants are consequently shut out, and ethnic and social segregation is increasing… Rent controls were supposed to enable people to live in central locations, but now it is having the opposite effect.”
Is this what the future holds for the already tightly stretched rental market in the UK? As competition for properties in central London grows fiercer by the day, it is easy to see flat hunting becoming a blood sport, with social status and bribes the weapons of choice. Hardly the democratic paradigm envisioned by the dreamers at Dolphin Living.
George Spencer is CEO at Rentify.