The private rented sector: its contribution and potential

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The private rented sector its contribution and
potential

• Dr Julie Rugg
• Centre for Housing Policy
• University of York

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• Review outcome a clearer picture of private
  renting
• Difficulties attached to the formulation of
  policy
• Implications for local authorities

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Review principles

• Mindful of misinformation and stereotyping
• Attention to definition
• Question evidence bases and where possible
  provide fresh data/analysis

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Buy-to-let mortgages

• In 2007, 46 per cent buy to let mortgages were
  remortgages
• No exact data on increase in landlord numbers
• Increase in proportion of landlords giving
  investment as their motive for letting

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The roles of renting in housing biographies 1

• The image of a youthful, mobile, better
  educated sector hides substantial tenant
  diversity
• The PRS plays an essential role in
  oiling the housing market and easing
  transitions from tenure to tenure

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The roles of renting in housing biographies 2

• 21 per cent of private renters are new
  households, wanting to live independently or
  moving in with a partner
• 16 per cent of private renters are full-time
  students
• 9 per cent were renting from employers
• 22 per cent of private renters who moved in the
  last three years did so for work-related reasons
• 35 per cent of moves from owner occupation to
  private rental were a consequence of relationship
  breakdown
• 40 per cent of renters had been at their current
  address for a year or less 63 per cent of those
  were in full-time employment, and another 13 per
  cent of those were full-time students
• Just over a fifth of private renters had been in
  their current address for five or more years

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Niche markets

• Young professionals
• Students
• People in receipt of LHA/HB
• Slum rental
• Tied housing
• High-income renters
• Immigrants
• Asylum seekers
• People in temporary accommodation
• Regulated tenancies

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Understanding the private rented sector

• Diverse sub-markets
• Sub-markets not mutually exclusive
• Spatial variation
• Expansion in one part of the market may mean
  contraction in another part

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London patterns of private renting
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London PRS diversity in rental demand
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Rental market classifications

• Number and type of dominant rental markets
• Degree of spatial concentration of particular
  type of sub-market
• Supply-side characteristics property type and
  condition mix of landlord types
• Labour market trends seasonal employment,
  long-term unemployment, industrial decline
• Size of the open-market PRS and extent of tied
  lettings, institutional student market
• Proportion of private rented stock at different
  rent levels
• Size of social housing sector and relative
  affordability of owner occupation

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PRS policy one size fits all?

• Substantial market variation
• Unintended consequences become commonplace
• Tenant needs/wants vary substantially
• Variation in landlord motivations create
  difficulties in devising incentives

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Issues for local authorities professionalising
rental housing management

• Lack of reliable evidence on mismanagement
• Spreading the policing workload
• Role of accreditation
• National licensing landlords
• Tenancy relations officers co-ordination role?

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Issues for local authorities improving
property quality

• Poorer property condition in the PRS
• Extension of regulatory regime
• Policing property quality managing agents
• Competition at the bottom of the PRS

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Issues for local authorities sustainable
tenancies

• Churn in sector represents short-term uses for
  private renting
• BUT there is a need for greater policy support
  for tenancies particularly tenants in receipt
  of LHA

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Issues for local authorities homelessness
prevention and discharging homelessness duty

• Ever-expanding supply?
• Vulnerable households why do tenancies fail?
• Market rents
• An equivalent housing offer?

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Issues for local authorities managing problem
private renting

• Student housing is it a housing issue?
• Slum rental excessive churn and tenancy
  sustainability
• The challenge of PRS management

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Selected recommendations

• Working within and between local authorities
• Social lettings agencies
• Light-touch licensing

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A credit crunched PRS

• Rents going up, rents going down? Insufficient
  information
• Repossession rates
• Landlords wanting to buy but unable to secure
  mortgages
• Some reluctant landlords
• Increasing unemployment amongst PRS tenants and
  uncertainty in the LHA market
• Possible contraction in the migrant labour market
• Sector flexibility an innate strength