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The private rental housing market plays an important and growing role in the advanced economies. Providing accommodation for a wider range of households than before the global financial crisis, rental housing is also a key asset class for private individuals and companies, while the rise of Airbnb lettings has pushed up rents and reduced the number of homes available to residents.
This edited collection by leading experts in the field analyses recent changes in the private rental market, using case studies from the UK, Europe, Australia and the USA, and assesses the initial impacts of the COVID-19 pandemic.
In recent years, researchers have begun to move away from a static, cross-sectional analysis of poverty to examine income dynamics, including routes into and out of poverty. The aim of this article is to provide an overview of what is known from quantitative research on routes out of income poverty. It shows that there is a diversity of routes out of poverty, with some routes being more important for some types of household than for others. The research supports the Labour government’s argument that work is the surest route out of poverty. But it also shows that it is not a guaranteed one, as some people who move into work remain poor. And nor is it a route that is equally applicable to all households. For pensioners and the more severely disabled people, for instance, increases in benefit income are likely to be the most effective escape routes from poverty.
This chapter explores developments in private renting in the advanced economies since the turn of the century. In many advanced economies, the private rental housing sector has either grown, changed in fundamental respects or both. The timing, pace and extent of these developments have varied between countries, but most have experienced some or all of the following: increasing financialisation of rental housing; decline in homeownership and rise in private renting; an increase in landlordism among better-off households and growth in ‘portfolio landlords’; an influx of international property investors; growth of large-scale corporate landlords, including pension funds and residential property companies; emergence of purpose-built student accommodation blocks as a new international investment asset class; the rise of PropTech online letting and management firms; loss of rental homes to the short-stay accommodation market in city centres and tourist localities via online platforms such as Airbnb; and a rental affordability crisis among low and moderate income households. In some jurisdictions, reforms have been implemented to introduce or tighten rent regulation. Taken together, these and related developments reflect profound changes in the ways in which private rental housing is financed, produced, owned, consumed, and perceived in the early 21st century.
Since the turn of the century, private renting in many advanced economies have been affected by trends and events that have caused transformative change in the nature and role of private rental housing. These trajectories of change have occurred on both the demand and the supply side of the private rental sector; and have been facilitated or affected by the growing financialisation of housing. This recalibration is partial rather than wholesale because much remains unchanged. The chapters in this book underscore the pivotal impact that the global financial crisis (GFC) has had on this recalibration of private renting, either as a catalyst of change or reinforcing changes that began beforehand. The GFC created a ‘critical juncture’ that, to a greater or less extent across the nine countries, helped shift private renting onto a new ‘developmental path’. But the transformation was also the outcome of slow-moving trends that preceded the GFC. The COVID-19 pandemic and subsequent lockdowns created the second major economic shock of the early 21st century. It had a substantial, short-run impact on private renting; but it seems unlikely to substantially alter the trajectories of change examined in this book.
This chapter outlines the recent developments in social security policy. The analysis starts with a review of key themes in welfare reform since 1997. It is argued that New Labour has considerably reformed the social security system, which was driven by the need to adapt to societal changes and economic policy concerns. It also examines the recent developments, which include the ones related to welfare to work, Incapacity Benefit, policies for lone parents, and pension reform. The chapter furthermore considers the emerging trends that can be translated into primary long-term reforms if Labour returns to office in 2005.
Most of the advanced welfare states are committed to ensuring that housing is affordable to ordinary citizens. Shelter is not only a necessity, but for most households it is also the largest single item in their budget. For low-income households in particular, the ratio of housing expenditure to income can be high. In fact, most of the advanced welfare states provide, in one form or another, assistance with housing expenditure. Although the aims and instruments employed vary from one country to another, a common concern is to ensure that ordinary people can afford to occupy decent housing at a price within their means.1
The policy instruments that governments employ to ensure this basic goal vary between countries and over time (Doling, 1997). Governments can seek to provide assistance on the supply side, that is, to builders, landlords and financiers. Typically, supply-side assistance is geared towards lowering the price or rent that households have to pay for their housing. This may be achieved through the provision of direct subsidies to builders or landlords, such as low interest loans or capital grants, which are often referred to as ‘bricks-and-mortar’ subsidies (Oxley, 1987). It may also be achieved by indirect subsidies such as tax relief to private landlords. Whether by these direct or indirect means, supply-side subsidies to providers make it possible for them to charge less than the market price or the economic cost of the dwelling. It may also take the form of price regulation, such as rent controls, that limit the amount that landlords or other suppliers of accommodation may charge to consumers (Robinson, 1979).
Great Britain has provided income-related assistance with housing costs since the 1930s, but it is only since the 1970s that it has assumed central importance within housing policy. It has also become a major component of social security expenditure in recent decades. At present, housing allowances in Britain take two major forms. The first is a scheme called Housing Benefit, which provides help for low-income tenants. The second is known as Income Support for Mortgage Interest and is available to home buyers who are in receipt of social assistance. Housing Benefit is by far the most important of these two schemes in terms of expenditure and the number of recipients.
During the last two decades, Housing Benefit has become the central component of government support in housing. It has also been instrumental in facilitating a major transformation in rented housing provision (Stephens, 2005). Yet it has also had a highly troubled history over the same period, with numerous problems, including both structural deficiencies and administrative difficulties. There have been several major reforms of Housing Benefit since the early 1980s and another reform is currently being piloted prior to being rolled out nationally. Tensions between housing and social security objectives have contributed to these problems (Kemp, 1994).
This chapter examines income-related housing allowances in Great Britain and focuses largely, but not exclusively, on the largest of these, Housing Benefit. The next section briefly outlines the housing market and social security policy context. Subsequent sections discuss the origins and development of Housing Benefit, the design of the current scheme, and its role and impact.
This book has examined the context, role, design and impacts of income-related housing allowances in a variety of countries. Chapters Two to Ten looked at nine advanced welfare states, while Chapter Eleven explored the experience of the Czech Republic and made comparisons with several other transition economies. This final chapter draws upon the preceding chapters to reflect upon the role of housing allowances in the advanced welfare states. The first section describes the broad welfare regime and housing market context of the ten main countries covered in the book. The second section compares important features of income-related assistance with housing expenditures across these countries. The third section examines key reform pressures and debates about housing allowances and the fourth section focuses on ‘housing vouchers’ as a possible future for income-related assistance with housing expenditures. The final section presents some conclusions.
Although housing allowances have become an important policy instrument in many of the advanced welfare states, they are embedded within different national contexts. Table 12.1 summarises some key features of the social protection systems in each country covered by this book. Nine of the 10 countries were included in Esping-Andersen’s typology of welfare regimes (the exception being the Czech Republic). Australia, New Zealand, Canada, the US and Great Britain were described by him as liberal welfare regimes, characterised by a low level of benefits, reliance on means testing and a relative emphasis on private social provision.1 France and Germany were classified as conservative welfare states, characterised by heavy reliance on status-maintaining social insurance schemes with relatively generous, earnings-related benefit levels and an emphasis on the ‘male breadwinner family model’.
It would be rather surprising if the Labour government of Prime Minister Blair were not pursing policies that were significantly different from those being pursued by the last Labour government. The Labour Party was out of office for 18 years and there were important social and economic developments in the intervening period. To some extent, policies have to change with the times, no matter who is in government. However, times have changed, not least because of the actions of the Conservative governments while Labour was in opposition.
During the decade following the 1979 General Election, the Conservative governments of Mrs Thatcher transformed the political economy and the public culture in Britain (Marquand, 1998a). Whereas some areas of the welfare state demonstrated considerable resilience in the face of what Marquand has aptly described as ‘the Thatcher Blitzkrieg’, housing experienced major change. Housing provision and, even more, housing policy and debates were substantially transformed under the Conservatives. Any government coming back to power after 18 years in opposition, whether it was New or Old Labour, would have to ensure that its agenda responded to such fundamental changes.
Mrs Thatcher’s first government rushed in to legislate for changes in housing policy that it knew it wanted to implement. New Labour instead opted for a series of Comprehensive Spending Reviews (CSRs), including one for housing, which inevitably delayed the point at which major new changes would be introduced. The outcomes of the CSRs are only now becoming apparent and many important issues have yet to be decided. As a result, this chapter can only provide a provisional survey of housing policy under New Labour.
