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Sociology
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.
Private renting in Australia increased markedly during the 2000s with demand fuelled by middle-income households unable to purchase housing in an era of rapidly escalating house prices, as well as high levels of migration in a growing economy. Rents became increasingly concentrated at mid-market levels, presenting acute problems for those on low incomes. Small-scale landlords drove the increase in supply but there were also signs of more purposive and financially driven activity including multi-property landlords and a nascent build-to-rent sector. The trend towards management of private rental properties by real estate agencies continued with widespread development and application of digital technology presenting both efficiencies and inequities. Reforms to residential tenancies legislation in Australia’s lightly regulated market were vigorously contested. The COVID-19 pandemic saw hitherto unthinkable government interventions in the private rental market through temporary state/territory laws to introduce eviction moratoria and suspension of rental increases, measures which were subsequently removed. Notwithstanding these emergency interventions, COVID-19 highlighted the existing power imbalance between landlord/agents and tenants as well as path dependence and a laissez-faire attitude to the operation of rental markets. The broader implications of increased private renting on Australia’s homeownership society, including asset-based retirement policies, are yet to be addressed.
The Irish housing system has undergone tremendous change over recent decades. In addition to the turmoil of the property boom and bust associated with the global financial crisis, it has also witnessed a long-term decline of homeownership and social housing, a growing share of households in private rental accommodation, almost a decade of record rent inflation, and a chronic homelessness crisis. This chapter conceptualises these changes in terms of the transition from a ‘homeownership society’ to a ‘post-homeownership society’ (Ronald and Kadi, 2017), a transition which has transformed the housing system into a key driver of inequality. By taking the global financial crisis as an inflection point, the chapter examines changing patterns of housing investment, demand and policy. Indeed, in recent years an unprecedented volume of new policy has been introduced, including rent regulation, enhanced security of tenure and strengthened enforcement. These policy reforms have met with mixed success, and the challenges of affordability and security, in particular, remain. An examination of the Irish case is instructive in understanding the structural changes associated with the transition to post-homeownership, the issues associated with this transition and the challenges in terms of how policy can respond.
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.
The key features of the Norwegian housing system are a large homeowner sector; high real house price increases in recent years; a private rental sector dominated by small-scale investors; and a residual social rental sector. Even though Norway has a generous welfare benefit system, the housing sector is relatively market-oriented and housing policy is modest in terms of benefits and social housing provision. Favourable taxation, a long period of historically low interest rates, and a rental sector not considered a good alternative, have maintained a high demand for homeownership, along with high and rising house prices, and very high household debt. However, homeownership among young adults and low-income households has fallen, with a consequent increase in the private rental sector. Small-scale private landlords dominate the rental market and have increased in recent years. The rental sector is characterised by lower quality housing, short-term contracts, market-based rents and an increasing affordability problem for tenants.
The Spanish housing system historically has been characterised by an imbalance in tenure in favour of homeownership and a social housing stock that is either residual or completely neglected. Currently, the private rented sector represents the most interesting alternative for alleviating the lack of affordable housing available in the country. Simultaneously, tenants living in rented accommodation are experiencing excessive housing burden costs. Policy intervention is required to palliate the negative effects of this situation based on the right to the city and the right to housing principles.
In international discussions, Denmark’s private rented sector is noted mainly for the complexity of the rent-control system, where different systems apply depending on the age and built form of the dwelling. Arguably, though, the private rented sector is now the most interesting of Danish housing tenures, as in recent years the sector has become a political battleground. Politicians have adopted measures to try to deter certain overseas investors whose activities, they say, have pushed up private rents in cities. Similar debates are taking place in other countries and the Danish experience may offer some lessons, though similar forces can have very different effects in different places. As always with housing, context is all.
Private rental housing in England has undergone significant transformation since the turn of the century. The number of households living in the sector has doubled, and the tenant mix has changed. The proportions of households that are middle-aged and/or have children has substantially increased, while the share that is young adults has fallen. On average, tenants are staying at their current address, and living in the private rental sector, for longer than in the recent past. While small-scale buy-to-let landlords still dominate the ownership of private rental housing, increasing numbers of company landlords have entered the market. There is also an emerging build-to-rent subsector, funded by institutional investors, as well as substantial growth in the number of privately owned, purpose-built student accommodation blocks. Rental affordability is an increasing public concern, especially in London and the South-East of England. These changes have led to a more contested policy debate and the introduction to tax increases to reduce landlord returns and thereby stem the loss of owner-occupied homes to the private rental market. The changing nature of private renting (and the COVID-19 experience) has increased the pressure on the government to improve security of tenure and improve standards of provision.
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.
This chapter analyses whether the turnaround in market share of the Dutch private rental sector, from 10 per cent in 2009 to almost 13 per cent in 2021, can be interpreted as a new role of this tenure following the global urban rental affordability crisis. Based on a literature review, the chapter finds that the Dutch government facilitated the growth of the stock with a de-controlled rent and by making the control of rent prices more market conforming. At the same time, the government introduced regulations that made social renting and homeownership less accessible. As a result, when in the aftermath of the global financial crisis the shortage of housing in comparison to the rising numbers of households rose, affordability and accessibility problems reached the top of the political agenda during the national elections of 2021. In response, the government that came into office in 2022 launched a number of plans to stimulate reducing the housing shortage in a ten-year period. These plans also included re-regulating rent prices for middle-priced rental housing. These plans, as well as the quickly rising inflation in combination with the societal challenges of energy, climate and sustainability, question a continued revival of private renting.
