A UK parliamentary inquiry into private renting might, just might, be an opportunity to get desperately needed reforms to the private rented sector in England which encourage supply of homes for renting and also optimal security for those renting them.
These two aims are usually seen as antithetical. It is assumed that private landlords want laws allowing them to eject tenants at the drop of a hat so that they have absolute flexibility in setting new rents or disposing of their properties at will. Meanwhile tenants are assumed to need security in terms of being able to treat their rented property as a home, to all intents and purposes their own.
The economic assumption has been that the more security tenants get, the less supply will be offered to the market.
Certainly private renting became residualised in the last decades of the 20th century while, home ownership became the ideal and social housing merely a safety net for the vulnerable. Conservative initiatives in the 1980s to create new forms of more flexible tenancies, particularly the assured shorthold tenancy, may have had some effect in increasing private renting but it looks as if tougher economic conditions are now driving an accelerating increase. Private renting started to grow in the late 1990s reaching 9% of tenures in 2001. According to the latest census this had risen to 15% by 2011. Meanwhile the number holding mortgaged property had fallen from 39% to 33%, a situation dubbed “generation rent”.
The concern is that the supply of decent private homes will not meet the growing demand (indeed, is not meeting it now if you take the word “decent” seriously), a demand driven by immigration as well as rising house prices and the mortgage drought. Some of the supply is being produced by people who can’t sell their home so rent them out. Some has come on tap thanks to the buy-for-let sector (with rented housing perhaps seen as more lucrative than declining pensions); this, almost by definition, finds properties from other sectors rather than generating new supply itself. Continue reading