Our Property Manager, Phil Norgan, was asked this question recently and it left him wondering how the other people would answer the same question. After all, how do you define “Affordable”?
When Phil was giving his explanation, the central subject matter was salaries. Salaries have not, in anyway, kept pace with rising housing costs, whether you’re buying or renting. As part of our campaign to find affordable rental accommodation for NHS staff, in Cornwall, we recognise that the salaries being paid do not, and will not, meet the affordability criteria set out by most referencing agencies. These criteria are there for the protection of both the landlord and the tenant, because the last thing anybody needs is a tenant who is unable to pay their rent or other associated bills.
So, how do you find affordable rental homes?
Firstly, we looked at current rental values. In Cornwall, in 2021, they have increased by an average of 11%. Therefore, we approached new, and existing, landlords with a proposal that if they reduced the rent by 10%, we would also reduce our fees. To get NHS staff housed, everybody has to give a little. This can also apply to non-NHS staff who are struggling to find somewhere to call home.
As a landlord, what would you rather have? A tenant for 6 months paying top whack or a long-term tenant, with a guaranteed income, paying a slightly reduced rent? No void periods, no set-up fees, no loss of income!
Affordable also has other connotations. For example, if someone can afford £500pcm, then the chances are they will struggle to even find a one bedroom property of any calibre. But if they considered sharing, then that opens up their marketplace to 2 or 3 bedroom homes. Of course, if you’re going to share then you want the co-signatory on the lettings agreement to be someone you trust but it does give you a much wider choice. With regards to NHS staff sharing a rental home, this makes good business sense because the chances are you will be on different shifts and, therefore, the property will feel like yours and yours alone.
During Phil’s conversation about affordability, the caller questioned the use of the term “affordable”, arguing that most people can afford the rent on a property but choose to spend their income on other things. This is a valid point, but those people tend not to be interested in the private rented sector. Anyone can demonstrate, if they wish to, that they can afford to rent a home. The vast majority will find somewhere, rent it for as long as the landlord allows or until they outgrow it. The small minority who, once in private rented accommodation choose to use that money for other things of no value will soon be moved on, Government intervention allowing.
The affordability test placed on prospective tenants is not dissimilar to that placed on borrowers looking for a mortgage. There is no point letting someone sign a 12 month tenancy agreement if they, you and the landlord know the rent is beyond their means. The affordability test also allows for hiccups during the tenancy.
Affordable rental accommodation also means liveable. Making a squalid, damp, draughty property available for rent at a cheap price serves no purpose whatsoever because (a) only desperate tenants will take it, (b) they will leave at the earliest possible moment and (c) the managing agent is duty bound to report their findings and recommendations for improvements.
Everyone deserves somewhere warm, dry and pleasant to call “home”, if they want to. By making properties available to those who need, we are demonstrating, as a society, that we care and understand. By making properties available at rental values that are affordable and sustainable, we are giving people like NHS workers the stability of a “home” which means they can get on and the important work they do.
Landlords and lettings agents get a bad rap. Market forces drive the property market. Supply and demand. However, collectively, we can do something about providing affordable rental homes for those who need it.