Deregulating Housing for Renters

(Photo by iStock/marchmeena29) 

Rocketing inflation and rising interest rates in the United Kingdom have caused landlords to raise rents, sending UK rental prices to a 16-year high. Compounding this financial barrier to affordable housing, the UK government has frozen financial assistance—in the form of housing benefit to low-income residents—for the past three years. According to 2023 research by the homelessness charity Crisis and financial-services provider Lloyds Banking Group, only 4 percent of properties are affordable for people who receive a housing benefit. Furthermore, 1.8 million low-income renters live in unsafe conditions.

The report’s findings motivated Crisis and Lloyds to collaborate on an effort to make renting easier, more secure, and more affordable for low-income and unhoused people. In partnership with Scotland’s first social-enterprise lettings (rental) agency, Homes for Good, they have launched an agency to end homelessness by increasing the supply of quality, affordable housing. To achieve their mission, the agency will abstain from applying the standard stringent requirements—providing multiple months of rent in advance, reference requirements, or guarantors—to prospective tenants. Furthermore, it promises not to evict tenants if they cannot afford rent.

“Our new lettings agency will mean we can help people experiencing homelessness directly into safe, settled homes, the essential foundation they need to rebuild their lives,” says Crisis chief executive Matt Downie.

The agency was established as a community-interest company (CIC), meaning it will operate as a for-profit business, but all profit it earns through rentals will be reinvested in an asset-locked entity that supports a specific community—in this case, people experiencing or at risk of homelessness.

The new agency—yet to be named—will open operations in London early this year and then will slowly expand to other cities in the United Kingdom. Lloyds intends to raise more than £2 million ($2.48 million) to financially underwrite the agency’s launch. It will also financially support Crisis’ Changing Lives Grants Programme, which gives grants to people experiencing homelessness to use either for education or to start their own small business.

“As financial leaders in the social-housing sector, we have a responsibility to use our capabilities, scale, and relationships to help bring about positive change,” Lloyds Banking Group chief executive Charlie Nunn says. He adds that the agency’s partners have “called on [the government] for one million more homes for [affordable] rent by 2033 … to help everyone access a safe and lasting home.”

The partners plan is to buy and rent properties based on Homes for Good’s business model to maintain a steady supply of affordable housing. Homes for Good’s model rents nearly 60 percent of its properties at affordable rates, and the remaining 40 percent is rented at market rates.

Because it hasn’t had the capacity to satisfy demand, Homes for Good welcomes this partnership. “Managing demand and tenant expectations is very difficult,” explains Homes for Good founder and executive director Susan Aktemel. “We have received up to 300 enquiries per available property in the last 12 months, so we have a high volume of frustrated and unhappy people we are trying to help.”

London’s highly competitive housing market will be “the agency’s biggest challenge to increasing affordable housing supply,” says Crisis head of housing supply strategy Kate Farrell.

“We face an immense challenge,” Nunn says in a nod to the market’s limited supply. “But we know that answers can be found through financial innovation, partnerships, and fresh thinking.”

Read more stories by Emma Woollacott.