Rise of the good landlords: Inside the movement to make the private rental sector tackle homelessness

Private landlords get a bad rap but the reality is that the explosion of popularity in the sector over the last two decades, and the more recent homelessness crisis, means they are an essential part of the UK housing market.

The upcoming Renters’ Rights Bill has sparked talk of a landlord exodus and, while the exit of rogue landlords will be welcomed, the private rented sector needs to retain responsible landlords to house people unable to get a social home and priced out of homeownership.

Enter the social purpose private rental sector. It’s a movement to make the private rented sector more well-equipped to tackle homelessness.

World Habitat and Homes for Good founder Susan Aktemel are driving efforts to scale up the social purpose private rented sector.

Homes For Good has been proving it is possible to operate profitably by letting good-quality homes at affordable rents to people on low incomes in Glasgow and the west of Scotland since 2014.

The social enterprise letting agency raised £20 million in social investment to create its portfolio, including £3m from Big Issue’s social investment arm Big Issue Invest.

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That has been used to buy properties, renovate them and then rent them out to people who struggle to keep pace with record-high market rents.

“We’ve created a quality offering within the lower end of the private rented sector for people on benefits,” said Aktemel, whose idea won a World Habitat Awards prize in 2022. 

“The private rented sector has always been a home for people on benefits for decades but, certainly in the last 10 years or so, it’s been synonymous with poor quality. What I did with Homes for Good, or the idea I came up with in 2012, was to go in at the bottom of the market and basically make the private rented sector work for people who otherwise would probably be in housing association properties but were sitting on waiting lists.” 

Aktemel’s idea has proven to be a “catalyst”.

Now Homes for Good has teamed up with homelessness charity Crisis to open Good Place Lettings in London.

The new venture, which opened for business in March, operates on a similar model to Homes for Good, albeit without the renovation aspect at least for now.

But how does the model work in London where rents are, by some margin, far in excess of anywhere else in the UK and, crucially, out of reach for people receiving benefits?

Last October, London Councils reported that only 5% of private rental properties in the English capital were viable for families on housing benefit affected by the local housing allowance rate (LHA).

Since then, Labour opted to freeze local housing allowance in April, meaning the gap between benefits and private rents has only widened.

Ben Rayner, director of Good Place Lettings, spent a decade working in the City for one of the largest agents in London before making the switch to the social enterprise.

He told Big Issue that Good Place Lettings operates a “blended portfolio” with a mix of market rate properties and rented homes as close to the LHA rate as possible.

“I would describe Good Place Lettings as a competitor to your normal high street agent in the sense that we still market any properties that your Foxtons, your Dexters, your KFH, any of these national agencies will have on board,” said Rayner.

“But the disrupting side to us is that the main goal is to rent to people who’ve experienced homelessness or are on low incomes by leaning on the willingness of landlords who are able to reduce the rents of properties down to a level either at local housing rates or, ideally, below LHA.

“The difference between us and your high street agent is that we have a tenancy support officer and the ability within that role is not only for us to house someone, but actually help them sustain the tenancy and integrate the community and really see them thrive, get back into work if they are in a position to do so.”

As well as supporting the tenant, Good Place Lettings also works with landlords to convince them to be flexible on rent, appealing to the value of having a long-term secure tenant and doing a bit of good in the process.

“I think we explain the benefits of what a small difference in the rent to them would mean to somebody else,” said Rayner. 

“Using just me as an example. I’m fortunate enough to have a good family around me and I had a career that I was coming to London for but I was very much on an entry level salary when I first started. I was spending at least 50% of my wage on rent,” said Rayner.

“If I’d had a landlord who turned around and said, ‘Look, you know what, we’ll drop the rent by £100. Let’s give you a chance.’ I’d have probably stayed there forever.”

It’s not something that every London landlord would be able to afford, Rayner admitted.

Dropping rent to the levels that a tenant affected by LHA could afford is not tenable for a landlord with a buy-to-let mortgage in most cases.

Rayner described Labour’s decision to freeze LHA levels below the 30th percentile of properties as “very unfair and sad”.

Increasing rates would mean “we’d be able to help so many more people”, said Rayner.

He added: “It’s really frustrating and really sad because that would kickstart us to be able to help so many more people who need it.”

The Good Place Lettings boss did suggest one solution to convincing landlords to support people who have experienced homelessness.

He called for landlords who rent out their properties at LHA rates to be exempt from section 24 rules introduced under former chancellor George Osborne.

The rules prevent landlords from deducting mortgage interest and other financial costs against their rental income for tax purposes.

“If we were in a position where they passed a bill that said anyone who was renting at LHA or below fell outside of this tax requirement, that’s a huge hurdle overcome,” said Rayner. 

Appealing to the good landlords

The movement to work with good landlords goes wider than Homes for Good and Good Place Lettings.

Giroscope in Hull operates a similar model while Prince William saw a version first-hand in Sheffield recently as part of his Homewards initiative.

Sheffield’s Innovative Housing Project is unlocking homes provided by the private rented sector to support families through reshaping engagement with private landlords.

The residents will have access to wraparound support while a services navigator, employed by Homewards Sheffield coalition member SOAR, will provide support services, including help to get into work.

Meanwhile, Greater Manchester mayor Andy Burnham recently revealed his Good Landlord Charter now covered half of Greater Manchester’s rented homes.

More than 100 social and private landlords have signed up to the charter, which launched in April this year in a bid to set up a new standard for renting and supporting landlords to go above and beyond minimum national standards.

Burnham said: “We’re making it clear that renting out sub-standard properties, which damage the health of our residents, will no longer be tolerated. This city-region is getting serious about driving up housing standards and delivering on the promise of a good home for everyone. 

“We know there are many good landlords out there and the charter will give them the recognition they deserve.”

Now Aktemel and World Habitat want the Westminster government to embrace the social purpose private rental sector.

Louise Winterburn, World Habitat deputy chief executive, called for ministers to meet with providers to take the “scalable alternative to crisis accommodation to the next level.

“Councils are now spending over £2 billion a year on temporary accommodation, money that could instead support long-term, stable housing,” said Winterburn.

“Our latest report, The Private Rented Sector: A Vehicle for Affordable Housing, shines a light on how overlooked partnerships between social purpose landlords, councils, charities and social enterprises are already delivering affordable, stable homes in the private rented sector for people who are at risk of homelessness or have experienced homelessness. These models work. But without urgent government recognition and support, they risk vanishing just when they’re most needed.”

Aktemel said an increase to housing benefit levels and access to sub-market finance would ultimately be crucial for the social purpose private rented sector to scale up as a solution to homelessness. 

“What we are trying to say is: ‘Look, the private rented sector is a solution that we need,’” the Homes For Good founder said.

“At the moment we don’t have the luxury of half a million or a million more social homes overnight that will take up everything they should so I think that World Habitat are now getting behind this and it is a much more powerful voice than any of us as individual organisations might have.”

It remains to be seen whether the Renters’ Rights Bill will see landlords quit the sector in droves. But, at a time when homelessness is at a record high, the time is now for the good landlords to stand up.

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