Almost daily media updates add to the growing sense that the cost-of-living crisis is becoming a national emergency, with reporting mostly highlighting spiralling energy costs and the impact of soaring inflation on necessities.
Less widely reported, yet recognised by those in the private rented sector (PRS), is the fact that we are now facing a growing PRS supply crunch.
For a body such as Dolphin Living, whose primary purpose is to provide discounted rental homes to socially and economically important key workers, this presents us with a double challenge. The challenge is how best to shield our tenants from increasing housing-related living costs, while seeking to provide more homes to those unable to access social housing, yet whom, due to rapid rent rises, cannot afford, or even find, a private rented home.
The main drivers of the cost-of-living crisis are well documented and are already starting to have a negative impact on living standards. But what is yet to fully emerge is the impact of shortages of new housing, combined with growing post-pandemic demand and inflationary pressure on the rental market.
Ultimately, this will contribute to another key factor driving inflation: a shortage of workers in all sectors of the economy. The shortage of affordable housing for essential workers in economically strong locations is already affecting the ability of both businesses and public services to attract and retain the workers they need to function.
In a city such as London, with its high housing costs, it has always been a challenge to recruit and retain employees in the broad cohort of workers we define as ‘keeping the city alive’, such as those in the hospitality sector, nurses, teachers, refuse workers, theatre managers and even recent graduates and young professionals starting their careers. Recent data reveals 40% fewer homes are available to rent in London than a year ago. There may be debate as to the reasons for this fall in the number of homes, but the fact remains that supply is reducing at a time when demand is rising.
Recent news indicates it is not only the more affordable end of the market that faces these challenges. For a generation brought up with the freedom of choice of where and what products, services and experiences they buy, rent inflation exacerbates the frustration felt by many in the economically key 25-45 age bracket, whether seeking a home they can afford to rent or buy.
It is these workers whose housing need has been ignored by recent governments. This growing sector of society desperately needs housing at an affordable price reflective of the cost-of-living crisis. A significant number of these people, and many others on modest incomes, are essential workers upon whom we all depend and who, our research shows, bring financial and social benefits to the place they live in.
Recognition of the need of these workers is not enough without solutions. Bold action is required by the new government. Part of the solution has to be a commitment to expand the supply of dedicated intermediate rent homes to not only ameliorate the impact of the cost-of-living crisis, but also to support a healthy economy in the longer term.
Olivia Harris is chief executive of Dolphin Living