The rapid growth of the private rented sector (PRS) is changing the face of the housing market in the UK, but remains largely below the radar of major housing policy initiatives. Indeed, according to Nigel Sprigings, Urban Studies, University of Glasgow, it is often assumed that private rental ‘adds to housing supply’ when in fact it simply acquires existing stock leading to reductions in home ownership.
But what is the true extent of the sector and how can we track it better? As early as 2005, undertaking work for local authorities in England, the rate and scale of growth was clearly far higher than official estimates. This was visible ‘on the street’ with concentrations of To Let signs, through interviews with developers who regularly reported 40% to 60% of new developments being sold to landlords, and through the sheer scale of Buy-to-Let (BTL) lending, even though only half of landlords report using this funding source for their acquisitions. At a national level, data from the early 2000s shows BTL lending exceeding new housing supply, meaning that the PRS has been eroding home ownership for over a decade.
However, even when commissioned by local authorities to undertake research for them on their local housing markets, it was never possible to pool all the data sources to create a complete picture. In England, there is the added disadvantage that there is no compulsory landlords register. Merging landlord accreditation data with Housing Benefit (now LHA) and Council Tax and taking the census as a baseline would have been a good start but was never possible. But it was apparent that the scale of change was surprisingly large compared to official estimates.
In Scotland, the size of the PRS should be available from the compulsory register established in 2004. However it is clear that, for a variety of reasons, coverage through the register is incomplete. Official estimates are also usually based on revisions of the census data and the census can be inaccurate because it is a self-completion survey. Surprisingly, not all tenants are sure who their landlord is: when undertaking a study in Stoke on Trent in 2005, the 2001 census showed around 2,000 fewer council tenants than the council was collecting rent from, an error range of 10% at the time.
Where it has been possible in Scotland to combine data sources and to ‘map’ evidence of the
PRS onto housing stock, it seems that the PRS can be twice the official estimates. Interestingly, the extent of encroachment into RTB stock is also significant with three study areas showing over 40% of PRS LHA claims arising from ex-RTB stock. effective combining of data consistently shows underestimating.
Given the rigour with which official data is gathered through recognised sampling methods, it is not clear why the actual figure should be so much higher than these estimates. There are two possible explanations. Firstly, small surveys (which the SHCS s restricted to) are usually ‘structured’ in some way to ensure representativeness. It may be that the structure of these surveys no longer reflects the current position of the PRS, which has made significant inroads into new developments and mid market home ownership locations. Additionally, the patterning of the PRS, when it is fully mapped shows clear concentrations even within streets and stock types.
This last point may reflect the anecdotal evidence of a PRS where there is little intensive management of stock coupled with aggressive acquisition strategies and ample funding through a variety of sources. Whatever the cause, there is a need to explore the reasons for the local level clustering of the PRS that is obvious from the mapping and analysis.
Housing policymakers need to have a clear idea of the scale of, and changing relationship between, tenures in order to develop appropriate housing policies to meet future needs. The balance between tenures, their costs (socially and to households), and the nature of change over time affecting the way the stock meets housing needs is still far from clear.
Further detailed work is necessary to ensure adequate housing plans are developed for Scotland and its future households.
Two studies that provide information drawn on here are:
