Cost of Rent Day is a brand new initiative from the Institute (ASI). It is the day
on which renters in England stop paying rent and start putting
their earnings into their own pocket. This year, the ASI has
estimated that every penny that, on average, renters in London
earned before tax for working before and including 26th May went
to their landlord- from 27th May they are finally earning for
themselves.
The ASI has created this measure in order to translate the
severity of the housing and rental crisis into simple terms that
can be easily understood by all audiences. It provides a useful
measure to hold politicians to account and track changes over
time.
As the ASI outlines, the root problem is the lack of supply.
Since the 70s, England's construction of new homes has lagged
behind population growth. In other words, new demand has
outstripped supply.
Directly punishing all landlords or introducing policies such as
rent controls will only make the situation worse for renters.
Instead, politicians must focus on creating the right incentives
for developers and landlords, and on increasing supply.
The ASI has previously outlined a number of solutions, which it
calls on the government to consider. These include using compulsory purchase orders
to buy, and develop on metropolitan green belt land, and give
local residents a share of the profit, releasing all green belt
land within a ten minute's walk of a railway station for
development, and extending ‘full
expensing' to brownfield sites.
, Chairman of the Institute, said:
“Renting in London has become eye-wateringly expensive and our
latest analysis exposes the scale of the crisis, particularly in
inner London.
This should not come as a surprise. Our housing market is by no
means free - it's shackled by regulations that empower NIMBYs at
the expense of future homeowners.
Many of the policies which are being widely touted as solutions,
including the Renters Rights Bill, will only make things worse.
Instead of engaging in more central planning and regulation, we
must liberalise our planning system. A growing housing supply is
the only sustainable way to cut renting costs.
London Cost of Rent Day is another damning indictment of
Britain's sclerotic economy. The UK has so much potential but,
until we fix our broken planning regime, we cannot hope to
reverse our ongoing decline.”
-ENDS-
METHODOLOGY:
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To calculate the Cost of Rent Day, the proportion of income of
private renting households equivalent to private rent was
translated into a proportion of days of the year, which
provides the final cost of rent day figure.
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To balance for leap years and support better inter-year
comparisons, a year is treated as being 365.25 days long.
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Using otherwise unrounded inputs, this calculation implied
125 days of the year are spent on rent. The 126th day of the
year is May 6th.
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This is a deliberately simple calculation and as outlined
above and below, will not capture the nuances of individual
circumstances. However, it enables a simple, transparent, and
intuitive calculation - this is preferable to more complex
alternatives we developed.
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Regional analysis is based on ONS data and segments England
into: East, East Midlands, London, North East, North West,
South East, South West, West Midlands, Yorkshire and The
Humber, and Wales.
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London Cost of Rent Day was segmented into each of the 32
Local Authorities.
You can read the full report here.
