Housing migrants in private accommodation is cheaper than hotels, costing as little as £14 per night - Chris J Ratcliffe/Reuters
Private landlords are being offered five years of guaranteed rent to house asylum seekers, as part of Sir Keir Starmer’s plan to end asylum hotels. Housing migrants in private accommodation is cheaper than hotels, costing as little as £14 per night compared to around £145.
But despite the savings for taxpayers, the plan has caused outrage.
Commentators point out that by allocating thousands of rental homes to migrants, fewer homes are available to British citizens, for whom a constrained supply will push up prices even more. Average rents surged another 7.7pc to £1,332 a month, in the year to March, according to ONS data.
Angharad Trueman, of charity Propertymark, said: “While schemes like this are potentially appealing to some landlords who might be struggling with increased mortgage costs and amended regulation, as they help provide guaranteed income, they do have the potential to add further pressure to already dwindling supply levels.”
But for some landlords, the notion of five years of guaranteed rent may be too tempting to pass up. Buy-to-let investors have been increasingly squeezed by successive governments. Tax breaks have been significantly reduced, while renters’ rights have been bolstered to the detriment of property owners.
Here Telegraph Money weighs up the pros and cons of the Government’s migrant rental scheme.
Under the scheme, landlords enter into a contract with Serco, an outsourcer with many government contracts, which has housed asylum seekers in the UK since 2012.
Leases are at least five years’ long, with landlords that participate in the scheme offered guaranteed rent for the duration. Serco also covers repair and maintenance costs, as well as paying for gas and electricity certificates, and energy performance certificates (EPCs).
Serco is already responsible for housing more than 30,000 asylum seekers in an “ever-growing” portfolio of more than 7,000 properties.
The company, which effectively acts as the tenants, had invited landlords to an event in Malvern Hills, Worcestershire, to find out more about the scheme. It was particularly interested in properties in the North West, Midlands and east of England.
However, the event was cancelled after The Telegraph reported the story, and the Government said the list of local authorities Serco shared on its website was not an official Home Office list.
Why would landlords be interested in the scheme?
The Renters’ Rights Bill is set to become enshrined in law later this year, which will make renting more difficult for landlords. A ban on no-fault evictions and fixed-term tenancy agreements are among the proposed changes.
This means that some landlords may be pushed towards schemes like Serco’s, said Dan Trivedi, a property investor in Norwich, who has used Serco’s migrant housing scheme in the past.
“Landlords are being squeezed from all directions – huge interest rate costs, stamp duty levies, local and national red tape, and the Renters’ Rights Bill to top it all off – notwithstanding the huge amount of tax a landlord has to pay,” he said.
“So when a company comes along that is government-backed and can guarantee five years of rent, that is hugely attractive. There can’t be any blame culture if a landlord doesn’t look a gift horse in the mouth. Landlords have been backed into a corner, there aren’t many alternatives.”
Whether or not landlords should consider signing up to Serco’s scheme depends on the kind of housing they own, said Samantha Collett, an investor and Telegraph columnist, who has bought and sold more than 80 properties.
“If you have a property in showroom condition, in a great location that is not the kind of property you should be signing up for a scheme like this,” she advised.
“But if you have a property that is not as popular, that is not moving as quickly, that maybe you’ve had a lot of hassle with, to the point where you’ve considered selling it, it might be worth looking at Serco’s scheme. I’m disappointed in what the Government has done to make life more difficult for landlords but if you’ve been wondering whether to leave the market, this could be worth considering.
However, Ms Collett was keen to stress that Serco will not simply take on any property.
“Serco is picky about what it is looking for in terms of properties. It does due diligence, looking at a lot of factors, such as proximity to schools, and the concentration of other properties they have in the area. They don’t just take any old property on. It has to be up to a certain specification.”
Guaranteed income... but the scheme is not risk-free
While five years’ guaranteed rent for a property that a landlord may have struggled to fill may seem like a no-brainer for some, there are downsides to consider.
“It is not risk-free. You do not know who they are putting in the property,” said Ms Collett. “Your contract is with Serco, never with the people living in it.”
There are several precautions to take if you do participate in the scheme, despite the extent to which Serco manages the property, as landlords can be held liable if things go wrong.
Ms Collett adds: “Even if Serco organises the gas and electricity certificates, make sure you get a copy and the paperwork is up to date. You as the landlord are held accountable for that. You think it’s somebody else’s problem but it’s not, it’s your name on the deeds.
“A lot of councils are bringing in selective licensing for privately rented properties, so make sure those licences are in place too. Always keep a paper trail of everything.
“You absolutely need specialist home insurance, which can cost a little bit more. You’ll have to go to a broker and tell them the scheme you’re participating in.
Alternatives to Serco’s scheme
Serco’s asylum seeker housing scheme is not the only scheme which offers landlords guaranteed rent and finds tenants for them,
Ms Collett said: “There are schemes where charities take over properties for ex-convicts. I was once approached by a company that wanted to take a 12-year lease on a property that housed problematic children leaving a care home.
“A lot of these schemes exist in various guises for different sections of the population. They can do a lot of good and I have participated in some of them before as a way of giving back. People make mistakes in life and it’s a shame if we can’t give second chances.
“But sometimes homes can come back in quite poor condition. There was one arrangement where a council promised to pay me rent, repairs, everything – and then they tried to ghost me after the tenant scarpered.
She said: “Not every scheme is as generous as Serco’s, and you always need to check the small print.”
Commenting on the scheme, a Home Office spokesman said: “Serco is one of several companies contracted by the previous government six years ago to provide dispersal asylum accommodation in different regions, and this list simply appears to reflect the geographical list of local authorities covered by the Serco contracts at that time.
“We are restoring order to the asylum system and cutting costs to taxpayers by reducing the number of people we are required to accommodate through a rapid increase in asylum decision-making and the removal of more than 24,000 people with no right to be in the UK.”
