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Understanding the role of private renting: a four country case study

The objective of this project, funded by Realdania, was to better understand the incentives and constraints around private rental provision across different institutional, economic and policy frameworks. The research also sought to clarify the factors that might help generate investment in private renting and an efficient and flexible sector which could meet household requirements.

It is important to limit the number of countries so that it is possible to ensure coverage of the full range of factors determining the role of the sector – and to examine institutional, economic, policy, and both quantitative and qualitative evidence on each country. Equally the countries should provide a spectrum of experience among highly sophisticated housing systems. To this end we include four countries: Denmark; the Netherlands; England; and Germany.

A fundamental aim is to help provide an evidence base for policy makers in Denmark – which currently has a large and well operating social rented sector; a longstanding mortgage finance system; some concerns about levels of debt and volatility in the owner-occupied sector; and a relatively small privately rented sector subject to complex regulation and not able to provide the flexibility necessary to ensure a well operating housing system for all types of household. In particular dwellings cannot transfer readily between sectors – so investment in additional private renting requires additional newly built or renovated units.

The Netherlands are seen as being the country that is most closely comparable to Denmark. It has an even larger social sector organised in a rather different way to that in Denmark; rather less emphasis on owner-occupation but even higher debt levels; and a smaller private rented sector of which 30% is now deregulated. But in the Netherlands dwellings can fairly readily transfer across tenures.

England has seen far greater change in tenure mix over the last thirty years as a result of liberalisation and deregulation. In particular England has seen a rapidly growing private rented sector over the last decade based on the transfer of units from both social renting and owner-occupation. England’s housing system has many of the same attributes as that of Netherlands and there is a great deal of policy and good practice transfer between the two countries.

Finally, Germany is very different, notably because it has experienced far greater stability in both the market and in policy. Private renting dominates but within a highly sophisticated regulatory system, while formally there is now no social sector: the social housing role is played by private landlords within a well-defined financing and regulatory regime. 

We would expect the project to run for 18 months starting in January 2013. Stage 1 will run until end-June 2013; stage 2 to January 2014; with completion of stage 3 in June 2014.



The Changing Role of Private Renting in Europe

This research suggests that it is economic pressures rather than government policies which have been most important in changing the role of private renting across Europe. The research, undertaken by LSE London with the Cambridge Centre for Housing and Planning Research and experts from Denmark, Germany and the Netherlands found that demand for private renting is growing for four main reasons. First, in many places it has become harder to buy a home. Also, shifts in economic activity mean younger and more mobile people want to live in big cities and university towns, and the number of students (both national and international) in higher education has grown. Finally, there is some evidence that more young households are actively choosing to rent—some because of credit constraints and a growing feeling that home ownership is risky; others because renting privately offers better choice.

The Changing Role of Private Renting in Europe - Read More…

CCHPR Contact

Funder

Realdania

Project Start Date

1st January 2013