Regulating the Privately Rented Housing Sector

Evidence into Practice

Jill Stewart, Russell Moffatt, Jill Stewart, Russell Moffatt

• Publisher: Routledge
• Year: 2022
• ISBN:
  9781000592641
• Edition: 1
• Topic: Medicine
• Subtopic: Public Health, Administration & Care

This book explores theory and practice in the complex policy area of privately rented housing in England, with a particular focus on environmental and public health. Bringing together a range of both academic and practicing experts in the field, it responds to the rapid growth and changing nature of the sector and considers the range of options available to local authorities in ensuring more effective regulation strategies.

This book:

• 
  
  

• Creates a key, up-to-date professional resource for housing regulation based on road-tested academic course material.

• 
  
  

• Breaks down strategies and practices to an implementational level.

• 
  
  

• Provides impetus to leaders, practitioners, and students to both deliver and reflect on improved regulation.

• 
  
  

• Explores responses to various stakeholder needs through the lens of protecting and supporting tenants.

This book will interest professionals working in public health, housing, and local authorities, as well as environmental health and housing academia. Students across environmental health, social work, nursing, and other disciplines will also find this appealing.

1 Introduction to understanding the private rented sector

Julie Rugg

DOI: 10.1201/9781003246534-2

Introduction

The private rented sector (PRS) is a highly complex part of the housing market, containing numerous niche markets and a range of suppliers and demand groups, leading to considerable diversity at a local level. At least five major government departments frame major regulations for the PRS, but there is limited co-ordination on policy objectives.

According to the Survey of English Housing, the PRS accommodated 4.4 million households in 2019/20. Strong growth in the years immediately following the global financial crisis has plateaued, and over the last five years the sector has contracted slightly (see Table 1.1). Overall, it appears that the number of newly created households seeking accommodation in the PRS is falling.¹ In part, this contraction reflects a reduction of numbers in some demand groups including economic migrants and growing numbers of households accessing home ownership.

Table 1.1 Trends in tenure: households

	Households (,000s)			Households (%)
	Owner occupation	Social renting	Private renting	Owner occupation	Social renting	Private renting
2015/16	14,330	3,918	4,528	62.9	17.2	19.9
2016/17	14,444	3,947	4,692	62.6	17.1	20.3
2017/18	14,784	3,958	4,530	63.5	17.0	19.5
2018/19	15,018	3,963	4,552	63.8	16.8	19.3
2019/20	15,362	3,978	4,438	64.6	16.7	18.7
	+ 1,032	+60	−90
Source: English Housing Survey, Table FT1101 (SI01): Trends in tenure.

Supply of privately rented property

In England, landlordism is often likened to a ‘cottage industry’. The nature of the housing market and its regulatory framework means that it is relatively easy to purchase property and let it to someone else. Many landlords are individuals with small portfolios, where letting property is not a principal source of income. A regularly updated English Private Landlord Survey offers information on the characteristics of landlords and letting agents, their portfolios, source of finance and letting preferences (MHCLG, 2018). Recent qualitative research indicates that smaller landlords can be categorised using a four-part classification:

• Accidental or incidental landlords let inherited or ‘spare’ property following relationship formation or temporary movement to take up a work opportunity. Property ownership includes just one or two properties. Letting might take place in the short or medium term until decisions are made about sale.
• Investment landlords are in paid employment but also purchase property to let to augment income or as a means of saving money, often for use in retirement or to help children onto the property ladder. Investment landlords often draw on their own housing equity and make use of buyto-let mortgage finance. Letting property is regarded as a long-term activity for this group.
• Portfolio landlords, whose sole income comes from letting property, will also be using buy-to-let finance and make use of commercial loans. Some may have inherited a portfolio, and multi-generation letting is not uncommon: it can be a ‘family business’. There is a strong association between portfolio landlordism and a background in property trades.
• Business landlords are high-net-worth individuals, where letting property is one of a number of business interests and who directly employ other individuals to manage the lettings.

(Rugg and Wallace, 2021)

Over time, the proportion of landlords with larger holdings has increased: the Private Landlord Survey 2018 found that 16.7 per cent of landlords had five or more properties; in 2010, this proportion was 4.9 per cent.² However, it remains the case that 52 per cent of households are letting from a landlord with four or fewer properties, and 48 per cent are letting from a landlord with five or more properties (MHCLG, 2019: 10).

Other organisations and institutions also let property in the private rental market. Housing associations and local authorities are increasingly looking to let property at market rates and using assured shorthold tenancies to secure rental profits to support their social objectives. Crook and Kemp (2019) calculated that the largest housing associations were increasing their holdings of property let at market rents; by 2015, ten housing associations had 500+ market rental properties (Crook and Kemp, 2019). Many local authorities have set up housing companies which in part rely on the letting of property at market rates (Morphet and Clifford, 2019), although the scale of this contribution to PRS stock is unclear.

In addition, the private rented sector also includes a ‘build to rent’ (BTR) element. Industry definition of BTR indicates a number of core components:

Typically, it involves an institution, such as a pension fund, investing in providing private rented sector homes. Unlike with traditional, individually let private rented homes, Build to Rent developments are managed as a whole, providing communal facilities and social activities to everyone living in the development, through technology platforms and/or staff available on site.³

The intention is for the property to remain in the rented sector, although ownership might change hands on the global property market. The British Property Federation indicated that in June 2018 20,863 units had been completed (Rugg and Rhodes, 2018: 39); by Q2 2021 this figure had increased to more than 62,274.⁴ BTR attracts substantial overseas investment. Initially, funding focussed on higher-density city-centre dwellings aimed at ‘young professionals’, but in recent years the market has started to expand into the creation of suburban, rent-only estates for families.⁵

Landlords might make use of letting agents to arrange a letting or to take over management of a property in its entirety. The Private Landlord Survey 2018 indicated that just under half of surveyed landlords used a letting agent, although just one in ten used an agent for both letting and management services. Landlords were most likely to use an agent to arrange letting the property and then manage the tenancy themselves (MHCLG, 2019: 20ff). As an element of the PRS, letting agents are highly diverse and include large-scale national chains, franchises, smaller independent regional or local businesses and businesses operating entirely online. Some landlords also informally manage property on behalf of friends or relatives. Recent legislation has increased the level of regulation aimed at letting agents: from 2014, letting agents were required to sign up to one of two designated redress schemes; and the Tenant Fees Act 2019 limited the fees that can be charged to tenants.

Demand groups

The PRS has traditionally served multiple housing needs in a more readily accessible fashion than either home ownership or social housing. It is often useful to view housing consumption as taking place dynamically across the life course (Beer and Faulkner, 2011). Demand for more flexible tenures often happens during transitions: the move out of the parental home, household formation and periods of temporary work or study. Key demand groups for rental property therefore include students; younger couples making their first home together; households transitioning from one owner-occupied property to another; and economic migrants (Rugg and Rhodes, 2018; Perry, 2012). Ten per cent of all PRS households comprise lone individuals sharing with other lone individuals: in owner occupation and social housing, this household type is less than 2 per cent.⁶ Houses in multiple occupation (HMOs) are almost always privately rented.

However, the private rented sector is now often meeting demand from groups that might previously have been able to secure property in social housing, including families with young children and households on lower incomes. It is increasingly the case that couples are starting their families whilst living in the PRS. Analysis of the Family Resources Survey indicates a marked growth since 2008/9 in the proportion of privately renting couples with de...

Table of contents

• Cover
• Half Title
• Series
• Title
• Copyright
• Dedication
• Contents
• Contributors
• Acknowledgements
• Introduction
• 1 Introduction to understanding the private rented sector
• 2 The private rented sector and the meaning of home
• 3 Perspectives on the regulatory framework and intervention
• 4 Partnerships of prevention: beyond regulation
• 5 Practical problems before the courts and tribunals
• 6 The shadow private rented sector examined
• 7 Making more effective intervention choices
• 8 The Housing Health and Safety Rating System (HHSRS): a practitioner’s perspective
• 9 Regulating houses in multiple occupation (HMOs)
• 10 Housing Act 2004 property licensing schemes
• 11 Advanced regulatory skills and practical evidence gathering
• 12 Embedding research on public health and housing into practice
• 13 Developing effective PRS regulatory strategies
• Conclusions
• Index