The private rented sector (PRS) is a classification of United Kingdom housing tenure as described by the Ministry of Housing, Communities and Local Government, a UK government department that monitors the national housing supply.
Other classifications are:
Owner-occupied
Rented from registered social landlords (housing association) Rented from local authorities
In 2014 the private rented sector consisted of 2.7 million dwellings in the United Kingdom, or some 10 percent of the total housing stock. Of this total, 2.4 m were in England, representing 12 percent of the English housing stock. The sector had grown by over 10 percent in the previous ten years and, according to the Centre for Economics and Business Research, was forecast to grow by a further 40 percent over the coming ten years . However, government measures introduced by George Osborne as Chancellor of the Exchequer were aimed at reducing its size, and the sector began to shrink in 2017.
History
For the greater part of the 20th century the private rented sector was in long-term decline. The combination of growth in owner-occupation and the role of city councils, borough councils, and district councils as social landlords, through public housing and latterly the housing association movement, contributed to a decline in the private rented sector.
Rising prosperity and pro home-ownership HM Government policies brought owner-occupation to its peak between 1985 and 1987, whilst reducing the private rented sector. During this period owner-occupied dwellings rose by 24 percent whilst the private rented sector contracted by 10 percent.
Growth in the PRS was inhibited by a regulatory regime that discouraged landlords. Because of regulated rents, limited profitable returns and tenant legislation, the right of landlords to recover their property from a defaulting tenant, had become extensively limited.
Regulatory change
This long-term decline was arrested by the Housing Act 1988. This introduced a radical reshaping of landlord and tenant law, and in particular introduced the assured shorthold tenancy (AST), and the Section 21 and Section 8 aspects. This arrangement made the contractual relationship between landlord and tenant clearer and allowed landlords to recover their property relatively easily from a defaulting tenant. However, the process still often requires recourse to Her Majesty's Courts & Tribunals Service (HMCTS), and sometimes can go to the First-tier Tribunal (Property Chamber), if there is an appeal by the landlord or tenant concerning a Section 21 notice, or a Section 8 possession order. The growth was met by tenant demand as improvements in the quality of the rental stock made being a tenant a viable option.
In 2014 Electrical Safety First and Shelter released a joint report examining current electrical conditions in the private rented sector. The report found that sixteen percent of renters have experienced problems with electrical hazards in the last year alone. The report calls for mandatory five-yearly checks of electrical installations and electrical appliances supplied with private rented sector properties by a competent person.
Economic and social change
Of equal importance to the changes in legislation have been the economic and social changes that took place over the next decade. The recession which lasted from 1991 to 1992 reduced the appeal of home ownership as a complete solution for housing need, and the impact of unprecedented levels of arrears, possessions and falls in value remain etched on the national consciousness.
More recently, social changes, especially an increase in student numbers, old age pensioners (OAPs), greater labour mobility amongst young people and a rise in immigration, added to the demand for rented accommodation, causing a second growth period.
With local housing authorities unable to expand council rented housing to fill the gap and limited funding for housing associations, the newly reinvigorated private rented sector expanded in response to demand and grew by 27 percent in the 15-year period to 2004.
In 2010, the British government ran a large scale survey of the private rented sector and analysed the social and economic spread of private landlords. Some key findings were: