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Collaboration on energy efficiency can tackle the crisis in the UK’s private rented sector, says Iryna Pylypchuk​​, Director of Research and Market Information at INREV.

Earlier this month, the RICS Residential Survey for May once again confirmed continuing expectations for rental price increases, alongside an imbalance between tenant demand and available supply. But when people can no longer afford to live in their homes and houses are not fit for purpose, do we need much more evidence to accept that the UK is facing a housing crisis?

Despite supply gaps being identified across the full spectrum of housing in the UK, for several years the private rented sector (PRS) has been badly affected. This has been caused by lagging housing policy that has failed to adequately react to significant shifts in socio-demographics.

Delays in family formation, rising divorce rates, and an increasingly mobile population have led to sharp demand increases for affordable, centrally located housing units or co-living solutions not only for sale but also for medium- to long-term tenure. And this demand has only been compounded as house price growth and high interest rates in the UK have constrained owner-occupation, particularly among younger or single households, and more recently broadening to middle-income households.

These factors, on top of population growth and rapid urbanisation have fundamentally changed demand for housing across location, tenure, and quantity. This is by no means a problem unique to the UK. Our recent research also highlighted a clear opportunity – and need – for institutional capital to positively contribute to the ongoing housing crisis across Europe. The excess housing demand on the continent requires the rapid acceleration of housing supply across all segments, especially the affordable intermediary PRS.

However, the free market in the UK means that it also has no form of rental regulation and weaker security of tenure – greatly exacerbating existing challenges. For instance, the National Housing Federation (NHF) estimates that approximately eight million have some form of housing need in the UK, and of these, 3.6 million require social or affordable housing.

Bridging affordability and sustainability  

Alongside supply imbalances in the rental market, there are ongoing questions about what should be considered ‘affordable’ rent. In the UK, this is broadly defined as homes let at least 20% below local market rents or let at rates set between market rents and social rents.

However, this unfortunately remains unaffordable to many in

The full article is available here. This article was published at ESG Investor.