Manchester Landlords Provide Over 48,000 Homes Since 1980 but what are the challenges surrounding Buy-To-Let properties?

As Manchester continues to grapple with housing challenges, collaborative efforts between policymakers in local and central Government, developers, Manchester landlords, and tenants are essential to creating a housing landscape that is fair and accessible to all.

And, while landlords in the private rental sector (PRS) have received increasing levels of criticism in recent years, evidence shows that the housing market would be a whole lot worse without them.

In fact, buy-to-let landlords have provided 48,157 homes to residents of Manchester since the early 1980s. If Manchester Council was to build the same number of additional properties, it would cost their entire budget for the next 8 to 10 years – £6.115m – assuming the building would take place on pre-owned land.

Despite this huge positive, though, questions remain surrounding the ethicality of the PRS and the treatment of tenants. Let’s start at the beginning.

What caused the current housing crisis?

To comprehend Manchester’s current housing challenges, we must trace the key events that shaped its housing market. The mass construction of council housing during the 1950s and 60s, followed by the selloff of many council houses in the 1980s and the 1990s’ interest rates of up to 15% are blamed by many for altering market dynamics forever.

Another catalyst was risky lending practices in the UK and USA in the early 2000s. UK banks started introducing 100% mortgages and even riskier lending practices, built on the back of ‘derivative swaps’ between all the world's banks (they would sell the debts (i.e., mortgages) between each other to make money).

When the money markets then started getting cold feet in 2007 because the banks didn’t know if their derivatives had a small or large number of high-risk sub-prime mortgages, the banks went into self-preservation mode and stopped lending to each other.

This then had a ripple effect on the UK's housing market; banks in the UK had much smaller funds to lend out, so they stopped lending to high-risk UK borrowers (i.e., 95% first-time buyers), whilst at the same time they increased lending to lower-risk landlords with buy-to-let mortgages with a 25% deposit and a stable income. In essence, more power was given to those who were financially secure.

Millennials and the Buy-to-Let Controversy

Fast-forward to today, and the millennial generation – born between the mid-1980s and late 1990s – has been particularly affected by the continued surge of their predecessors’ buy-to-let investments.

Decades of inflation and all-round cost of living rises have left thousands of tenants across the country, not just Manchester, struggling to save any of their monthly income towards deposits for their own property. Something that older landlords have been criticised for not understanding.

The Baby Boomer Generation, who make up the vast majority of UK landlords, experienced unparalleled economic growth and prosperity during the 1970s and 1980s, benefiting from improved education, government subsidies, changing property prices, and technological advancements.

Critics argue that this success has led to a generational economic imbalance, leaving the generations that followed struggling with soaring rents and burdensome mortgage rates, and in a position that ‘Baby Boomers’ never were.

Fact of the matter is, though, that the same economic changes that are hitting wannabe first-time homeowners hard also apply to landlords, with costs of maintaining and repairing properties increasing alongside the government legislation for all properties to meet certain standards. Unless inflation and the cost of living is brought under control, rental prices will continue to rise.

All this conjures up many questions such as:

• Is the buy-to-let practice immoral or in fact necessary?
• Should, as recently voiced, landlords be restricted to one rental property each?
• What would our housing landscape be like without rented accommodation?
• Of the 69,403 Manchester households that are in private rented accommodation, how many of those have little or no option other than to rent, so where would they be if there was no private rented sector?

What can be done to improve the market?

It’s clear to me that we need to find a middle ground between suitable income for landlords and rental prices for tenants. Tenant power has slowly risen in recent years, with more and more being done to prevent unfair unexplained evictions from landlords looking to make a higher profit, as well as unfound restriction of pet ownership in RPS properties.

The proposed Rental Reform Bill would hand more power to tenants, and the government have already stated at all RPS properties must meet an EPC rating of C or above from 2028. If these areas continue to addressed, tenant satisfaction will start to increase and pressure on landlords may subdue somewhat, although it will likely never go away completely.

In response to the growing housing demand, property investors have stepped up, acquiring run-down properties and repurposing them into habitable homes. This has provided a partial solution to the shortage of available housing, particularly for those who rely on rental properties provided by landlords and property developers.

There has also been an uptake in property developments across Manchester, most prominently energy-efficient new-build homes designed to provide owners with a sleek, modern living while simultaneously reducing monthly utility bills as much as possible.

The bottom line is that, as the population of Manchester grows, there needs to be more properties being built for everyone to have a decent roof over their head. Finally, Manchester tenants should expect a more regulated rental market (which they have achieved over the last few years), with greater security for tenants, where they can rely on good decent Manchester landlords providing high standards for their safe and modernised home.

Final Thoughts

Manchester's housing market has undergone substantial changes over the years, with the rise of private renting and the proliferation of buy-to-let investments playing a pivotal role. The generational economic imbalance and ethical concerns associated with the Manchester buy-to-let market have sparked passionate debates about the responsibility of different generations and the moral implications of housing as an investment.

To alleviate Manchester’s housing crisis, a multifaceted approach is necessary. Fairer regulations for Manchester landlords, enhanced tenant protections, and incentivising property development could contribute to a more balanced housing market. Exploring innovative models from European countries, where renting is more prevalent, could provide insights into creating a system that ensures decent and affordable housing.

 

These are my thoughts - tell me yours!