The challenges of the Private Rented Sector
in meeting housing need:
Paddy Gray, and Ursula Mc Anulty
University of Ulster
ulster.ac.uk
Changing Perceptions of PRS
• Changing perceptions and attitudes towards the private rented sector,
• Very much like in GB where it is regarded as less of a residualised sector
and more of a mainstream housing option.
• There has been a sizeable increase in the overall proportion of households
living in the private rented sector.
• Mainly due to difficulties accessing the owner occupied sector and
contracting levels of social housing
• The sector is becoming diverse, as it is home not just to low income
households or wealthier apartment dwellers, but to more families, young
people and children across a range of incomes.
Renting is Changing and is now becoming the
new norm
• Growing proportion of the stock right across the UK. In NI now greater
proportion of overall stock that social housing sector = 17% (125k)
• Size of sector even larger if vacant PRS properties included: 142,000
(19.2%)
• High vacancy rate in the sector – 17,500 dwellings (12.3% compared to
5.9% in stock as a whole)
• But vacancy rate has since 2006 (almost 15%), reflecting ongoing
demand
• Across the UK it is expected to account for more than a third by 2032
Growth of PRS in N Ireland
Renting is Changing and is now becoming the new
norm
• Increased difficulties in accessing social housing and owner
occupation
• Satisfaction levels are very high (88% in NI)
• Provides many benefits: open access, flexibility, greater chance of
living in desired area of choice, choice of property type
• Younger people more likely to go there: Generation Rent
• More likely to attract those who may have been social housing
tenants (60,000 HB cases)
• Those who can’t access owner occupation (decreasing in proportion
of stock)
Security of tenure v short term renting
What is bad for landlords and tenants?
Shelter Focus Groups Sept 2012
‘Its like you are walking on eggshells. If you break a drawer in your
kitchen you think… how much is that going to cost me?’
‘I managed to squeeze a dog in, but the landlord wanted £75 per
month extra to have a dog’
‘you cant put nothing on the walls, he said. But we have.. because it
looks nice.’
What do landlords want?
• To protect their investment and avoid difficulties with tenants
• Longer term tenancies and steady income streams through rental.
• Particularly those who have entered the market close to the price
crash in 2007 and who rely on this to pay loans.
• Many are letting out small numbers of properties on a part time
basis and they want their experience to be as simple and as hassle
free as possible
• Most serious concerns that they have are finding good tenants, the
size of letting agents fees and damage by tenants.
• Research has shown that majority of landlords are good but many
are amateur
How do private renters see it?
• In general 88% satisfied or very satisfied
• Higher proportion of 25-60 year olds living there since 2006
• Worries about increased rents above a certain rate by agents or
landlords.
• Some landlords may not increase for 3 years then bring it up to
market rates which can be a shock. Social housing increases year on
year so they know to expect this.
• Stability v lack of certainty
• Agent fees are increasingly a worry. This can be on top of a deposit
and rent in advance
What are the barriers for more stable renting
Annual Gross Household Income (%) (2006 & 2012)
Age of Household Reference Person (%) (2006 & 2012
Tenure of previous home (2006 and 2012) (%)
Length of time in current and previous accommodation
(2006 and 2012)
Total amount paid in advance for current
accommodation
(2006 and 2012)
Weekly rent of current accommodation (2012) (£) (%)
Weekly rent of current and previous accommodation
(2006 and 2012) (£) (%)
Amount of shortfall respondent has to pay (2012) (£)
(%)
Satisfaction with services provided by the landlord
(2006 and 2012) (%)
Satisfaction with repairs and maintenance
(2006 and 2012) (%)
ulster.ac.uk
Intend on staying in their current property for the next
5 years (2006 and 2012) (%)
Intend to stay in the PRS for the next 5 years (2006 and
2012) (%)
PRS: A Time Bomb Waiting to Explode?
• UU research: over a third of landlords (38%) had loan to value ratios of
over 76% and a quarter had interest only mortgages. Negative equity?
• Headwinds like interest rates rising, welfare reforms, reverting from
interest only to repayment, special deals running out?
• Research by Sheffield Hallem University for the DWP - by the end of 2013
44% of Landlords had been affected by arrears as a result of changes to the
levels of Local Housing Allowance (LHA).
• 38% (high LTVs) amounts to 47,654 properties (HCS)
• If even half of these were to disinvest, or were repossessed, we could have
a situation of over 20,000 households being threatened with
homelessness.
PRS: A Time Bomb Waiting to Explode?
• Question - what will happen to tenants living with the uncertainty of losing
their home if the landlord goes bust and banks repossess the home.
• It is unlikely that banks will continue to rent the property but will go for a
quick sale to recoup part of their loss selling the property at auction at well
below market value.
• If tenant becomes homeless but where do they go? It is unlikely they will
be able to afford to buy if they have already been struggling to pay their
rent.
• If awarded homeless status by NIHE they may have to move to an
unfamiliar area without the community network they have built up in their
existing location.
PRS: A Time Bomb Waiting to Explode?
The challenges PRS has in meeting housing need