Deregulated private renting: A decade of change in Scotland

Efforts to stimulate reinvestment in the private rented sector in Britain began in the late 1980s. It suited the Conservative government to label these changes as ‘deregulation’ although they were more complex than this term implies. This article provides evidence of the impacts of the changes in Scotland. It emphasizes the need to examine the impacts on different groups within the private rented sector. In particular, deregulation tended to favour those able to pay market rents, while increased restrictions on housing benefits meant that the ability of low-income households to afford private rented accommodation was reduced. Other groups, such as those in tied accommodation or on regulated tenancies, were largely unaffetted by the changes. In response to deregulation, there has been a significant increase in the flow of lets at the upper end of the market (self-contained flats and houses) while rents for this type of accommodation have barely risen. At the lower end of the market (shared accommodation), the flow of lets has increased only marginally or not at all. Landlords also appear to have become more reluctant to house low-income tenants. The article uses a database compiled from advertisements for private rented accommodation appearing in newspapers and property guides in the period 1987 to 1996. Nick Bailey is a Research Fellow in the Department of Urban Studies at the University of Glasgow. His main research interests include: housing and urban policy, particularly housing renewal, neighbourhood regeneration and the private housing market; urban economic and social change; and local economic development policies.     

The different faces of private rented housing

The relation between public policy and the private rented sector is usually unclear. The private rented sector often suffers from public policy, although private landlords mostly enjoy fiscal advantages as well. In many European countries, private renting housing has been losing ground. Nevertheless, private rented housing fulfils a number of useful functions in the housing market: as a tenure for urban starters; for the elderly; and for a mobile, well-to-do segment of the population engaged in flexible labour markets. The main lines of seven country profiles are sketched here: (West) Germany, England, the Netherlands, Sweden, France, Canada and the United States. In his comparative contribution at the end of this special issue, Maclennan points out that the private rented sector has indeed declined in many European countries. But he also shows that in countries like the USA, Germany and Sweden the sector has had a broadly constant share since about 1980. In the future, private rented housing will remain an attractive sector, at least for those who are unable to afford owner-occupied housing and those unable to gain access to social housing. Hugo Priemus holds the chair in housing at Delft University of Technology and he is managing director of OTB Research Institute for Housing, Urban and Mobility Studies. Duncan Maclennan is McTaggart professor at the Centre for Housing Research and Urban Studies, University of Glasgow, Great Britain.     

The supply of private rented housing in Canada

Canadian housing policy objectives are generally pursued through a market framework. There is little provision of non-market housing. Thus, while Canada has a substantial private rented sector, it has only a small social rented housing sector. About a third of all dwellings belong to private landlords for market renting and only six percent are owned by public and private landlords for non-profit renting. The supply of dwellings newly constructed specifically for private market rental has fallen over the last 20 years. This fall has been compensated for in part by the supply of existing dwellings that have been transferred from other tenures. There has also been a fall in the proportion of private market rented dwellings owned by corporate landlords and an increase in the proportion owned by small-scale individual landlords, including individuals buying existing dwellings in other tenures to convert to private renting. These recent supply-side changes have been in response to three factors. First, changes to the federal tax system and direct supply incentives have reduced the attractiveness of investing in private renting for corporations but increased it for individuals. Second, the demand for private renting has fallen amongst middle- and high-income households because of demographic and tax changes. This has reduced the numbers of private renting households able to pay the rents needed to make new construction profitable. Third, other public policies have also had an impact on supply, including rent controls imposed by provincial governments and land use planning restrictions and building standards imposed by local authorities. An important feature of the Canadian private rental market is its geographical diversity, with supply-side trends varying in different provinces and urban areas in accordance with variations in demand and local policies. Tony Crook is Professor of Town & Regional Planning and Head of Department at the University of Sheffield. His main current research interest is housing policy, especially the investment decisions of private landlords and housing associations and the relationships between housing policy and land use planning. His research work has been funded by DoE, ESRC and the Joseph Rowntree Foundation. It has been widely published in books and in academic and professional journals. He is currently Chair of the Conference of Heads of Planning Schools. He is also active in the worlds of policy and practice. He is a member of the RTPI Housing and Renewal Panel, trustee of two housing associations, and an independent director of one of the new Local Housing Companies.     

Private rented housing in France

This paper reviews the evolution of the French private rented housing sector. It traces post-war policy developments, putting the specific tenure in a wide housing market context. The paper reviews France’s intricate system of personal and property—oriented housing subsidies, and assesses their demand and supply side repercussions. Discussion of the general post-war decline in private rented housing as a means of housing consumption is situated in the evolution of the national housing system, and the paper alludes to some key regional and local differentiations. The paper discusses the market contexts for attempts to revitalise the sector, concluding that broad fiscal measures are likely to have greater impact than rent decontrol. Madhu Satsangi is Lecturer in Housing Studies at the School of Planning and Housing, Edinburgh College of Art/Heriot-Watt University. Madhu has researched housing markets, voluntary and private-sector housing finance and housing management issues.     

Commercial rented housing: two sectors in the Netherlands

This contribution analyses the different developments and roles of two commercial rented sectors in the Netherlands: rented dwellings owned by individuals (private landlords) and rented dwellings owned by institutional investors. Characteristics of properties and households are specified in relation to tenure. An analysis follows of household characteristics of non-movers and movers to, from and within the commercial rented sector. Some policy issues are dealt with, which are relevant for the commercial rented sector. The commercial rented dwellings owned by persons are predominantly pre-war, small, cheap dwellings with a modest quality. They form part of the urban renewal problem. The owners are small-scale landlords, mostly not professional, who do not invest in ambitious renovation or new dwellings. For this sector the future is not very bright. For starters on the housing market and elderly people, this urban sector may have a limited function. The commercial rented dwellings owned by institutions are predominantly post-war (built after 1960), spacious, expensive dwellings with a high quality. The owners are pension funds and insurance companies which sell their properties often after 15 to 20 years when conditions are favourable. This sector has a strategic function at the upper side of the rental market where rents are decontrolled. Well-to-do households in a flexible urban labour market and elderly people are the most important target groups for this sector. This sector demonstrates how a free rental market functions and enriches the whole housing sector with relevant market signals. Hugo Priemus holds the chair in housing at Delft University of Technology, where he is also managing director of OTB Research Institute for Housing, Urban and Mobility Studies.     

Studying a Niche Market: UK Students and the Private Rented Sector

Renting privately is a minority tenure in the UK, but the sector is recognised as being essential to the smooth operation of the wider housing market. The need to target policy effectively has led to an increasing stress on the importance of understanding how local private rental markets operate. Using a number of local case study areas from throughout the country, this paper explores the nature of demand for private rented housing from students. This niche market is a substantial and growing feature of the private rented sector. The paper demonstrates that although student demand shares a number of common characteristics throughout the UK, its localised impacts can vary. Both qualitative and quantitative methods are required to gain an understanding of how student demand affects all aspects of the local housing market, and it is concluded that greater attention needs to be paid to exploring ways of understanding the dynamics of rental market development.     

The future of the private rental sector in sweden

The private rental sector in Sweden is competing on a less-regulated and less-subsidized housing market. The paper analyses the prospects of this sector. The private sector has the dual advantage of an older (more attractive and centrally located) stock and a slightly beter-off tenant profile than the municipal sector. Thus, the private sector will be less affected by the withdrawal of interest subsidies, as these were given to new stock. The rent-to-income ratio will surpass 30 per cent in all sectors of the housing market in the year 2002, according to a recent projection. The private sector suffers less from vacancies than the municipal sector. The economic situation is, however, characterized by high LTV ratios, due to a price and borrowing boom in the late 1980s. This has led to bankruptcies and a weak economic situation for many private landlords. The boom was followed by a bust in 1990–93. Both the upswing and the downturn can be explained by fundamentals such as changes in GDP, unemployment, housing subsidy and tax rules. In the present recession, the private rental sector will benefit from its large share of small dwellings, which will also be advantagenous in the longer run, in view of the demographic trend towards more small households. There is fierce competition between the private and the municipal housing sector. In the short run, the private sector will benefit from the removal of interest subsidies. The effects will be felt in the younger municipal sector. All in all, both short-run and long-run considerations point at a housing market in Sweden which will keep its dualistic character of free competition between the private and the municipal sector in the future. Bengt Turner is Professor of Economics and Chair of the Institute for Housing Research at Uppsala University. He is also chairman of the European Network for Housing Research and coordinates a working group on housing finance. His research area is housing policy, microeconomic analysis of the housing market, as well as housing finance. He has also analysed the housing situation in transitory (East European) countries. In Sweden he is actively involved in housing policy formation as an expert in Governmental commissions and as a member of a number of research boards. Tommy Berger is an economist at the Institute of Housing Research, Uppsala University. His main interest is in housing finance and taxation policy.     

Private renting in England

This paper presents an overview of the privately rented sector of the housing market in England. The first section sets out some key features of privately rented housing in England that distinguish it from many other advanced industrial nations. The second section briefly summarises the main reasons for the decline of private renting. This is followed by sections dealing with the demand for private rental housing and tenants’ rents and incomes. The paper then moves on to the supply side, focusing on the stock of privately rented dwellings, the nature of private landlordism in England, finance and rates of return. The final two sections examine rent control and security of tenure legislation and current policy debates about the future of the privately rented sector.     

Financing the non-profit rented sector in Western Europe

The degree to which the non-profit rented sector in Western Europe has had to adjust itself toward privatization is the subject of this article. Specifically, we examine how private financing in the non-profit rented sector is implemented in Western Europe. We also trace how these practices affect the way the sector performs in various countries. In the final section of this paper, we shed some light on the diversity of responses to the challenges facing the non-profit rented sector in Western Europe. This article is based on the study “Financing the non-profit rented sector in Western Europe”, published in the series Housing and Urban Policy Studies. This project was carried out by the OTB Research Institute for Policy Sciences and Technology of Delft University of Technology, in cooperation with the School of the Built Environment of the De Montfort University in Leicester (UK). This cooperation forms part of the Centre for Comparative Housing Research. Peter Boelhouwer is a senior researcher at the OTB Research Institute for Housing, Urban and Mobility Studies, Delft University of Technology. His research focus has been on general housing policy, housing finance and comparative housing research.     

Developments in the provision of housing finance in the UK

Recommended reading for providers and designers of housing. The results of the housing finance changes in the UK included a wider range of institutions involved, significant developments in the source and delivery of that finance, as well as important changes in government policy opening up social housing to the private finance market, targeting subsidy more directly at particular groups of individuals and introduction of specific supply subsidies to new private rented sector. The considerable unease with certain outcomes is dealt with.     

Housing development and policy change: what has changed in Turkey in the last decade in the owner-occupied and rented sectors?

Since 2002, The Justice and Development Party has been governing in Turkey. From their first period to the current, major changes have been observed in the Turkish housing system, regarding both owner occupied and rented sectors. First one is the introduction of Mortgage Law in 2007. As already a home-owner society with a 64.16 % share in urban areas (2003), home ownership ratios can be argued to increase in coming periods. Second modification in owner occupied sector was significant policy change in Housing Development Administration (HDA) of Turkey. With a “housing mobilization” project, almost 500,000 new dwellings were built by HDA all over the country in 10 years. This has been a record in HDA’s history. Remarkable changes occurred in the rented sector as well. Originally, Turkey has been characterized with absence of public renting and considerable proportion of private rented stock especially in the big cities. Governments did not develop social rented housing and pro-owner laws have been followed. Renters could face eviction under certain situations determined by the Law on Property Rents, however these were subject to misuse by homeowners. As a third major change, a new Code of Obligations was introduced superseding Law on Property Rents. In this paper, recent changes in both rented and owner occupied sectors of the Turkish housing system are analyzed with reference to mortgage law, HDA’s new policies and changes in private renting legislation. In doing so, several key figures like buildings produced, inflation rate and physical attributes of private renting are provided.     

Meeting housing needs through the market: An assessment of housing policies and the supply/demand balance in France and Great Britain

In both Britain and France, for the last 15 years or so, housing policy has become more market‐orientated. This paper examines what this has meant for the balance between supply and demand and for progress in meeting housing needs. Current projections for how housing needs and the demand/supply balance will develop in the 1990s are also analysed. For each country, the determinants of housing demand, both demographic and economic, and the supply position in both the private and public sectors, are examined. Several common issues are identified: the existence of unmet housing needs, problems of indebtedness, the limits to the expansion of owner occupation, problems of social housing finance, and concerns about the decline of the private rented sector. There are also important differences between the two countries: housing output remains at a higher level in France than in Britain; deregulation of housing finance has gone further in Britain than in France; and in France there remains a greater recognition by government that housing is a national responsibility. But in both countries, the ‘marketisation’ of housing policy has meant that housing outcomes have become more dependent on factors external to the housing system.     

Private and social rented housing in Europe: Distinctions,comparisons and resource allocation 1

The difficulties of clearly distinguishing private and social rented housing in a western European context are set out. The issues are illustrated by information for Germany and France. It is argued that comparative housing tenure data can be misleading and that distinctions in terms of ownership are of less significance for resource allocation than the specifics of the relationship between the state and the housing market. The significant production, distribution, pricing, subsidy and profit issues as they relate to rented housing are identified. The policy implications of an approach which is resource allocation rather than tenure orientated is outlined.     

Housing expenditure and housing policy in the West European rental sector

This contribution depicts therecent development of the housing expenditure quotefor various income groups in the social and privaterented sector in six West European countries. Thedevelopment reflects the similar policy efforts inthese countries, not only to reduce the regulatoryand subsidizing role of government but also topromote market mechanisms within the housing system.The analysis shows a recent rise in the gross aswell as the net rent quote in both rental sectors ofthe six countries. The one exception is the privaterented sector in Belgium. Despite the application ofhousing allowances, the lower-income groups have hadthe biggest increase in net rent quote. In addition,all six countries have recently seen an increase inthe concentration of low-income groups in the socialrented sector, where their presence was alreadystrong. If this trend persists, it will affect theposition of the social rented sector, the sociallandlords, but especially the low-income groups inboth the private and the social rented sector.     

The private rental sector: Problems,prospects and policy

Abstract

Despite the neglect in research and policy for rental housing, there is a developing awareness of the problems of the private rental sector and the need for policy intervention. The paper suggests that the development of policies must proceed with caution; there are many areas where our knowledge of the problems and processes of the private rental market are insufficient for policy development.     

Rental housing in Central and Eastern Europe as no man's land

The central question addressed in this paper is whether both thesocial and private rented sectors in Central and Eastern Europeancountries are based on robust institutions or constitute a no man'sland. The latter case is a position a landlord tries to avoid andpublic authorities try to abandon by promoting home-ownership.As we argue in this paper, during the transformation of economic and housing policy in Central and Eastern Europe,the perception of the social rental sector as a no man's landis not far from the truth. The same applies for private renting,which has the reputation of being an extension of the owner-occupiedsector. A truly professional private rented sector is still lackingin Central and Eastern Europe. National and local governments try to get rid of rented dwellings by promoting owner-occupation.If they want to prevent the rented sectors from remaining orbecoming a no man's land, they have to create regulations andinstitutions like those in West European countries to supportboth social and commercial rented housing.     

Happy Returns: The Individual Investor as a Source of New Capital for Rented Housing in a Time of Changing Social Welfare Structures

Recent changes in the ideology of welfare have led to reductions in the scope for some individuals to play their desired part in funding the social welfare system through taxation. At the same time, there is a widely held view in the housing world that over the next 20 years the supply of rented homes is going to be too low to meet rising demand. Prospects for significantly increased public investment in new rented housing look slight. Private finance is now seen by government as the preferred source of capital funds for the creation of extra housing, not only in the private rented sector but also in the housing association sector, and perhaps in future in the local authority sector. However, the financial institutions-the most often quoted source of private finance currently appear reluctant to take on this role, at least in the privately rented sector. Presently, little attention is being given to the individual, as opposed to the institutional, investor. This paper-based on evidence gathered in a national survey of individual shareholders in companies listed on the London Stock Exchange-explores the possibility of individuals becoming more involved in investing capital in rented housing, both private and public. It suggests that there is some interest in such investment among current shareholders who have considerable assets. More specifically, it argues that there is a group of ethical investors who would be willing to invest in rented housing, some of whom may be willing to accept a lower rate of return on rented housing than on competing investments. Together these groups (and other 'socially disenfranchised' citizens) may offer a source of considerable capital to complement that which institutional investors may provide. If such capital is to be forthcoming, policies are required which address their requirements. A number of suggestions are put forward.     

Social housing in Spain: what role does the private rented market play?

The global economic and financial crisis has hit the Spanish economy hard, creating an unstable framework for employment and growth. Since 2007, housing markets have been deeply affected by the crisis. The private rented market has exhibited two specific consequences: on the one hand, the bursting of the real estate bubble has inhibited profit gains in the homeownership sector, providing better incentives to operate in the rented market. On the other hand, huge social conflict has emerged in relation to the lack of proper shelter for certain households which can be seen in the increase in evictions and in homelessness. We want to focus on the latter: since Spain lacks a critical mass of social housing, low-income households have been attracted by the private rented sector, particularly during expansion periods, as quite often there is no available (and affordable) alternative. In periods of economic recession, the substantial pressure that rents put on the financial situation of these households might even cause them to move out of their homes. The hypothesis we will test in this paper is that private rented markets fill several aspects of the role of social housing provision in Spain reinforcing the negative effects the lack of social housing creates in the country, highly visible during recession periods.     

Social housing—past,present and future

Over the past decade in Western Europe there has been a growth of unmet low‐income housing needs. There are now as many as 3–5 million homeless people in the EC countries and many more who are paying more than they can afford for poor quality accommodation (Quilliot, 1992, p. 12). In the 1970s it seemed as if the acute post‐war shortages of low‐income housing had finally been overcome and mass programmes of social rented housing had played a key role in bringing this about. In addition, rising prosperity had opened up private market housing opportunities for broad sections of the population. However, the profound economic, social and political changes since the mid‐1970s have destroyed this optimistic scenario. Now we face, on the one hand, the re‐emergence of a large scale problem of housing availability and affordability and, on the other hand, the reluctance or inability of most governments and societies to respond to this problem. In particular, no government now seems likely to support large scale programmes of social rented housing construction to help meet the rising tide of low‐income housing needs. Indeed, large parts of the existing stock of social rented housing are beset with social, economic and physical problems. Also, in some countries, Great Britain and Germany for example, the size of this sector is rapidly diminishing as privatisation takes place. The purpose of this policy review is first to place the current circumstances of social rented housing in a longer‐term historical perspective, and second to compare the current situation of social rented housing in several Western European countries. Finally, the review will reflect on the prospects for social rented housing.