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Preparing for a New Era in Renting

Thursday, 17th July, 2014

For the first time, there are now more people living in the UK's private-rented sector than in social housing. As leading providers of rented homes, private landlords face both new opportunities and new risks.

The success of today's private-rented sector (PRS) can be tracked back to the launch of the first buy-to-let mortgages in 1996 and to the Housing Acts of 1988 and 1996, which abolished rent controls, made eviction easier, and introduced assured shorthold tenancies in England and Wales. The Housing (Scotland) Act 1988 brought in similar changes, including short assured tenancies.

Combined with the lowest rates, a growing population, and social and demographic changes, these reforms have led to a revolution in Britain's housing market. From a low of just 7% in 1991, 18% of all households are now private renters, compared to 17% who are social renters, with the remainder owner occupiers. Market watchers forecast that by 2020, 20% of all households will be living in the PRS. 

It is not only landlords who have benefited from the development of a larger and more professional sector. By depressing rates of return, the rent controls of the past prevented investment in new stock. Rent controls were largely responsible for the poor condition that many rented properties were in by the end of the 1980s. Following the abolition of rent controls, landlords have been more prepared to invest in upgrading their portfolio to the highest standards. According to the latest Housing Survey, there has been a "marked decrease" in the proportion of private-rented sector homes which are non-decent, from 47% in 2006 to 33% in 2013.

The dramatic growth of the PRS has also put it firmly in the political spotlight. In recent years, governments of all political persuasions, from Westminster to Holyrood, have increased the regulatory requirements on private landlords. The Housing Act of 2004 introduced tenancy deposit protection, energy performance certificates, licensing for HMOs and the Housing Health and Safety Rating System in England and Wales. Since 2006, all private landlords in Scotland have had to register with their Local Authority. 




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