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The key takeaway message is that the Private Rented Sector remains an essential tenure across England.
The headline report of the English Housing Survey 2016-17 has been released today (25th January 2018), and this provides some key insights into how the private rented sector is changing.
Size of the Private Rented Sector
While the owner-occupier sector remains the largest tenure across England, the private rented sector (PRS) remains larger than the social rented sector. The PRS is also now the most prevalent tenure in London, with 30% of households now privately renting. In contrast, 25% of households owned their property outright, and 22% bought their home with a mortgage.
This is a divergence with households outside of London, where outright ownership was most prevalent (36% of households), followed by buying with a mortgage (30%) and then private renting (19%).
These findings show the changing housing landscape for households across the country, but suggest that a one-size fits all approach to policy-making for the private rented sector is undesirable. While experiences of renting in the capital may receive wide-spread media coverage, with high demand for properties, creating national policies based on these experiences may negatively impact other PRS markets across the country.
Length of Tenure
The latest English Housing Survey is reporting that the average length of tenure in the private rented sector has remained unchanged from the previous years, and stands at 3.9 years. However, in contrast, social renters and owner-occupiers had reported they had lived in their property for longer. This is not surprising given the flexibility the private rented sector provides, and the number of different markets that the PRS encompasses. For example, the Student market, where it is expected there will be a shorter amount of time spent in properties, or where professionals are moving to a new city and looking for a short-term home.
One interesting finding is that 51% of tenants reported they had been in their privately rented home for over five years. This demonstrates that the majority of private tenants can secure a long-term home if they so desire. Therefore, policy suggestions for mandatory long-term contracts for all tenants would be inappropriate, rather, removing barriers that prevent longer-term tenancies for those who desire them would be desirable. Such as encouragement for lenders and insurers to change their policies on restricting the length of ASTs, tax-relief for longer term tenancies, and a new housing-court with a reformed section 8 process.
Just over two thirds (68%) of households in the private rented sector had a householder aged under 45 years. While households aged 25-34 are more likely to be renting privately than buying their own home, there has also been a considerable increase in the proportion of 35-44 years olds in the private rented sector. Making it the second most prevalent tenure behind owner occupation. Concurrently, the number of households with dependent children in the private rented sector has increased by about 966,00 between 2005-07 and 2016-17.
These findings show that the private rented sector is not just a source of homes for young people but people of all ages, and increasingly important for families.
In regards to employment, three quarters (74%) of private renters were working, with 63% in full-time employment and 11% in part-time employment. At the same time, 9% of private renters were retired, 6% were in full-time education, and 4% were unemployed.
The increasing importance of the sector in housing the ageing population is becoming more apparent with now 9% of renters being retired. This is an important policy issue that needs due consideration, this trend is likely to keep rising and landlords in the future may be asked to install adaptations to properties to accommodate the needs of the tenant, or this may spark greater development of purpose built retirement accommodation that has adaptations.
Rent arrears were found to be more prevalent in the social rented sector over the private rented sector. In 2016-17, 25% of social renters were currently in arrears or had been in the last 12 months (around 682,000 households), whereas, 9% of private renters were either in arrears or had been in the last 12 months (Around 392,000 households). This has remained relatively unchanged since 2011-12.
These inital findings from the headline report of the English Housing Survey show that the private rented sector is hugely important for millions of households across England, and is becoming increasingly the home for 35-44 year olds. This report highlights that the majority of tenants recieve good quality homes for the long-term. Policy-makers should keep in mind the positives of the sector as well as the negatives, to ensure that unintended consequences of policies do not reduce investment into this much needed source of homes.