Paddy Gray: Change is needed in the private rented sector

Paddy Gray Professor of Housing, Ulster University will be chairing Housing Rights upcoming conference Fit for the Future? Private Renting Conference 2015. Below, Paddy outlines why now, more than ever, change is needed in the private rented sector.

The private rented sector has undoubtedly become a dominant force in the Northern Ireland housing market in recent years, enjoying considerable growth in contrast to social housing and owner occupation. In 1991, the private rented sector in Northern Ireland, had only 28,600 (5%) dwellings but by 2001 this had grown to 49,400. By 2006 there had been a further substantial increase in the sector to 80,900 mainly due to an investor led housing boom that resulted in a substantial increase in both supply and demand and by 2011 the sector had overtaken the social housing sector in terms of the proportion of the overall housing stock increasing to 125,400 dwellings. If vacant properties, which were privately rented when last occupied, are included, almost a fifth of the housing stock (19%; 144,500) is now in the private rented sector according to the NI Housing Executive (a higher proportion than in England Wales or Scotland).

Why the increase in the private rented sector?

The main factors that have contributed to this increase were the emergence of buy-to-let investors, demand from groups that would have traditionally accessed home ownership, inward migration and the importance of housing benefit. Policy initiatives that have sought to regulate and promote the private rented sector as a housing solution for low income households who would have previously accessed social housing have also played a part. After a decade in which house prices rose at a much greater rate than incomes, followed by a decline in the number of mortgages available after the property crash in 2007, owning bricks and mortar is no longer a viable option for everyone.

Rising waiting lists for social housing and affordability issues for first time buyers as a result of the ongoing caution by lenders, together with changing labour markets, has ensured that the private rented sector will continue to play an increasingly important role in Northern Ireland’s housing market, and indeed is increasingly meeting the needs of those who might otherwise have been seeking social housing.

Lack of knowledge for both landlords and tenants

Many landlords who have entered the sector in recent years have done so without an understanding of the law surrounding tenancies and the responsibilities that are required of them. Tenants are also unsure of their responsibilities and the law surrounding their own rights. Recent research carried out by Gray and Mc Anulty for the NIHE found that just under a third of landlords were unaware of recent legislation and over two thirds did not use a letting agent and managed properties themselves. There appears to be no ‘silver bullet’ for a solution to these issues, but there is scope to increase the flow of information to give each participant the best available knowledge, and to encourage increased professionalism in the sector.

Commitment by Government to make improvements

In May 2010, the DSD issued Building Sound Foundations: A Strategy for the Private Rented Sector.  The strategy is guided by a vision of a “professional, well managed, service driven sector, grounded in high standards and good practice”.  It focuses on proposals to overcome aspects of the private rented sector which currently make it less attractive to people in housing need, thereby offering greater choice in particular to households who traditionally would have entered the social housing sector.  From the point of view of landlords perhaps the most important changes have been the introduction of the Tenancy Deposit Scheme and the requirement for all landlords to be registered.  However, from the standpoint of the market as a whole there is no doubt that this represents a commitment by Government to further promote the private rented sector, thereby ensuring its viability and indeed probable expansion into the foreseeable future.

It is important not to take our eye of the ball in accommodating this expanding sector. On the one hand there is a need for proper regulation to tackle the difficulties of the ‘rogue landlords’, and at the same time we must not push out the ‘good’ landlords from investing in a sector that is being increasingly catering for the needs of a variety of groups including the most vulnerable. We need to equip those who are willing to provide a good service with the necessary skills and support to do this and at the same time ensure adequate standards and security for those availing of the sector.

Housing Rights Private Rented Sector Conference

Paddy Gray will be part of the line up at the Fit for the Future? Private Renting Conference NI 2015. The event will be on the 17 November in Riddel Hall. The full line up includes speakers looking at how we can improve standards, increase supply and promote professionalism within the private rented sector.

Early bird discount available until 9th October. £99 for members of Housing Rights and £126 for non members (10% discount)