Introduction:
During a recent Prime Minister’s Questions (PMQs) session on 5 July, Angela Rayner MP, the deputy leader of the Labour Party, made a claim that caused quite a stir. According to her, most people living in rented accommodation had homes that were purchased through a buy-to-let mortgage. This statement was later echoed by Rachel Reeves, Labour’s shadow chancellor, on Twitter. However, upon closer examination, it becomes clear that the claim is not entirely accurate. In this blog post, we will delve into the data and provide a more nuanced understanding of the situation.
The Accuracy of the Claim:
It is important to note that Angela Rayner’s claim holds true only for the private rented sector and not for overall rentals. Property experts suggest that the buy-to-let sector is actually in decline. However, this decline is being offset by the construction of properties specifically designed for rental purposes in the private sector. It is essential for all MPs, including shadow ministers, to correct false or misleading claims promptly, given their role as public representatives.
The Recommendations for Corrections in Parliament:
Last month, the Procedure Committee put forth recommendations regarding the corrections system in Parliament. One notable suggestion was to extend the corrections process, which currently only applies to ministers, to all MPs. Full Fact, an independent fact-checking organization, supports this recommendation. If implemented, it would allow MPs to arrange for corrections to be made to the parliamentary record when false or misleading claims are made, filling the current procedural gap.
Reliable Data Sources:
To obtain accurate data on whether landlords have mortgages or not, the English Private Landlord Survey is the most reliable source. The latest edition of the survey was conducted in 2021 and provides valuable insights into the rental market.
Understanding the Data:
According to the survey data, the private rented sector in England accounted for just over 4.4 million households in 2020/21, representing around one in five households in the country. Among landlords surveyed, over half (57%) were buy-to-let landlords with existing mortgages, which constituted 61% of privately rented tenancies. Meanwhile, around 38% of landlords had no debt or borrowing, and smaller proportions had commercial loans (3%) or loans from family or friends (2%).
Implications of the Data:
Based on these figures, approximately 2.7 million out of the 4.4 million privately rented homes are owned through buy-to-let mortgages. However, it is important to consider that there are additional rented homes beyond the private sector. Data from the Regulator of Social Housing reveals that 4.4 million homes are being rented from both private and local authority registered providers. This means that, in total, roughly 8.8 million households live in rented accommodation, of which 2.7 million (31%) are owned by buy-to-let landlords.
The Decline in the Buy-to-Let Sector:
Concerns have recently emerged regarding rising mortgage interest rates and their potential impact on landlords with existing buy-to-let mortgages. However, Aneisha Beveridge, Head of Research at Hamptons Estate Agents, has observed that there is no evidence to suggest that more landlords have sold their properties this year. Nevertheless, fewer landlords are purchasing buy-to-let properties, contributing to the expected shrinkage of the sector in 2023.
The Rise of Build-to-Rent Properties:
In contrast to traditional buy-to-let properties in the private rented sector, build-to-rent properties are large developments of flats specifically designed for renting. These properties are typically owned and managed by companies rather than individual landlords. It is worth noting that the number of institutional investors buying into schemes like Build to Rent has increased, which has helped bridge the supply gap created by the decline in traditional buy-to-let properties.
Conclusion:
Angela Rayner MP’s claim about most people living in rented accommodation owning homes purchased through buy-to-let mortgages, although technically incorrect, highlights the importance of accurate information in public discourse. MPs, including shadow ministers, should be proactive in correcting false or misleading claims. Reliable data sources such as the English Private Landlord Survey provide a clearer picture of the rental market. It is crucial to understand the nuances of the data and consider the broader context to foster informed discussions about housing and rental policies.