after the global financial crisis Peter A Kemp Overview Key points about the PRS in the advanced economies Private renting and GFC a case study of GB Implications for policy Key points about the PRS ID: 386658
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Slide1
Private renting after the global financial crisis
Peter A. KempSlide2
OverviewKey points about the PRS (in the advanced economies)Private renting and GFC: a case study of GBImplications for policySlide3
Key points about the PRS The PRS varies cross-nationallyThe institutional & policy & context also varies
Hence need for caution when importing policy designThe internationalisation of financial markets has affected the PRS
Hence so has the GFC
The PRS is growing in some advanced economiesSlide4
Private renting in Britain: brief overviewGrowth in private renting began before the GFCFree market rents and weak security of tenureVery high tenant mobility1 in 4 private tenants receive housing benefitPredominance of ‘sideline landlords’Tax bias in favour of owner-occupationSlide5
New housing completions (UK: 1970/71 to 2013/14)Slide6
Housing tenure in England (% households)Year
Owneroccupiers
Private
renters
Social
renters
Total
1981
57
11
32
100
1991
68
9
23
100
2001
70
10
20
100
2007
70
13
18
100
2013/14
63
19
17
100Slide7
The Buy-to-Let boom: LendingNew BTL mortgage market:New willingness to lend to landlordsInnovation in mortgage products
Easier credit conditions
Facilitated by
:
International integration of financial markets
Global savings glut
Increased
lender
competition
Low interest rate regimeSlide8
The Buy-to-Let boom: LandlordsEmergence of BTL landlords:Rising house prices
Low interest rates
Poor stock market returns
Pension concernsSlide9
The Buy-to-Let boom: TenantsRising demand for private renting:Increase in single person householdsGrowth in higher education
*Change to student funding
Immigration
(2004+)
Falling supply of social housing
*
Emergence of student housing companiesSlide10
BTL and the credit crunchBTL lending 1999 to 2013 (£bn)
Collapse & recovery of BTL lendingIncrease in BTL arrears & possessions – now falling
Shift
to low interest rates (2009+)Slide11
Private renting after the crisisAccelerated growth in private renting Rising private rents (esp. London)Cuts
in housing benefit (2011+)Increased homelessness (2010+)Slide12
After the crisis: Landlords‘Search for yield’Cash and BTL-financed landlords
Overseas property investors Emerging institutional investmentHousing associations as private landlordsSlide13
After the crisis: Tenants Changing rental market:
Increase in ‘reluctant renters’ Frustrated FTBs
Increase in social housing waiting lists
More longer term renting
Families
renting privately
More in-work povertySlide14
Policy concerns1. The majority of private tenants are satisfied. 2. But:Insecurity of tenure (families & long-term renters)
Affordability of rentsAccess barriers (low
-income
tenants)
Letting agents fees
Substandard property and management
(bottom end
of the
market)
3. The policy response: England v ScotlandSlide15
Concluding pointsGrowth of private renting likely to continuePRS has not adapted to its new rolesPolicy dilemmas:
How to address insecurity of tenure & high rents without undermining the supply of rental homes?
Tackling causes v symptoms?