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eleven - Housing conditions in the private rented sector within a market framework
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- By A.D.H. Crook
- Edited by Stuart Lowe, David Hughes
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- Book:
- The Private Rented Sector in a New Century
- Published by:
- Bristol University Press
- Published online:
- 20 January 2022
- Print publication:
- 04 September 2002, pp 153-176
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- Chapter
- Export citation
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Summary
Introduction
The purpose of this chapter is to examine the evidence in England about the extent to which landlords respond to market signals when spending on repairs and improvements. The majority of this housing sector is now within the deregulated sub-sector and hence it is the market that sets rents for most dwellings, not the rent officer. In the past, grants have been available from local authorities to help fund improvements and repairs. Except in very limited circumstances, this is no longer the case. The government's view is that market rents should provide the resources for landlords to undertake maintenance and to make improvements. Conditions are thus now much more dependent than in the past upon the extent to which market signals (rents and capital values) provide incentives to landlords to undertake the work that is needed and also upon their willingness and ability to act upon these. Although local authorities have powers to enforce repairs, the successful use of these powers depends upon the market generating returns and the resources for landlords to respond.
The evidence is summarised in five sections:
• the policy framework, before and after rent deregulation;
• evidence about changing conditions;
• the extent to which spending on repairs and improvements is related to landlords’ characteristics;
• the relationship between rents, capital values, investment returns, and conditions; and
• policy implications of this evidence.
Policy before and after deregulation
Until rent deregulation in 1989, post-war policy about conditions was framed within a context of rent control and regulation and the general acceptance that the private rented sector would continue to decline. The aims were to protect the health and safety of existing tenants, accepting implicitly that significant improvements would primarily result from the transfer of dwellings to other tenures.
Policy was directed towards achieving improvements through the statutory enforcement of repairs and other standards, the payment of grant aid to assist landlords with the costs of major repairs and (latterly) improvements, and with the purchase of the worst housing by local authorities and housing associations. These measures were needed because the majority of the sector was subject to rent regulation making it difficult for landlords to finance repairs and improvements.
two - Private renting in the 21st century: lessons from the last decade of the 20th century
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- By A.D.H. Crook
- Edited by Stuart Lowe, David Hughes
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- Book:
- The Private Rented Sector in a New Century
- Published by:
- Bristol University Press
- Published online:
- 20 January 2022
- Print publication:
- 04 September 2002, pp 19-30
-
- Chapter
- Export citation
-
Summary
Introduction
This chapter examines changes to the supply side of the private rented sector since rent deregulation in 1989 and speculates about likely trends in the first decade of this century. It focuses on the trend in overall supply, the extent to which there have been significant changes in ownership, and the extent to which landlords have been earning competitive investment returns.
There are six sections:
• government policy aims in relation to the supply side;
• the nature of the supply side in the two decades before deregulation;
• specific initiatives designed to increase corporate ownership and their impact;
• evidence about the way the supply side changed in the 1990s in general;
• evidence about rates of return;
• the implications of this evidence for the initial years of the new century.
Government policy aims
All main political parties now accept that the sector provides an important means of housing those who benefit from the flexibility that private renting can provide and those who do not want to tie up their savings in home ownership (Best et al, 1992). These include first time entrants to the housing market, including students and other newly formed households, as well as those who need to change their housing at short notice, such as job movers and people whose personal relationships have broken down. Flexibility can also improve the performance of the micro and macro economy by facilitating the movement of people into areas with labour shortages, and also by giving more housing choices to many young households who would otherwise have to borrow heavily to buy their own homes. If they buy instead, their high levels of indebtedness can significantly influence consumer demand when interest rates change, and hence amplify business cycles.
Recent changes in the labour market have increased the numbers of those who value this flexibility. Since the 1980s the proportion of heads of household aged under 30 who own their own homes has fallen. Greater proportions of tenants in the private rented sector are on above-average incomes than in previous decades. Although the private rented sector has always housed a wide range of households, its long-run decline up to the early 1990s was associated with the sector having an above-average proportion of households on low incomes and outside the labour market (Whitehead and Kleinman, 1986).