Economic Flexibility and the Private Rented Sector
| Date | 01 September 1998 |
| Published date | 01 September 1998 |
| DOI | http://doi.org/10.1111/1467-9485.00103 |
| Author | C. M. E. Whitehead |
II
NTRODUCTION
Over the last few years there has been a growing emphasis on the need f or a
well operating and larger private rented sector in the UK in order to improve
macro-economic performance (Ermisch, 1990; Maclennan, 1996 ). Indeed it has
almost become a matter of dogma that the current tenure structure is harmf ul to
the economy. Yet, before it can be accepted that a significant expansion of
private renting, as opposed to a more efficiently operating housing market,
would improve economic growth and flexibility, certain fundamentals need to
be examined.
These include first, what is the relevant definition of the private rented sector;
second, what factors make accommodation of this type suited to particular
groups of households, in the sense that the real costs of provision are lower than
for other forms o f tenure: third what factors make it possible to supply housing
in a way that costs of provision are minimised in the private rented sector; and
finally what do the answers to these questions imply for the size and nature of
such a sector. In this paper we examine certain of the principles involved and
then look at some relevant empirical evidence on how the private rented sector
is developing in England.
II DEFINITIONS OF THE PRIVATE RENTED SECTOR
The private rented sector can be defined using at least four different bases
(Boelhouwer and van der Heijden, 1994; Whitehead and Kleinman, 1986):
(i) ownership— whether the unit is owned by a private individual, company
or institution;
(ii) the objectives of the owner —whether the owner is trying to provide at a
profit or for some other reason;
(iii) the way in which the market operates —particularly whether rents are
determined by market pressures so matching supply and demand and
ensuring that all demands are satisfied at the relevant price;
(iv) whether or not the government provides subsidy or tax benefits in order to
enable suppliers to provide for particular groups of households.
361
Scottish Journal of Political Economy, Vol. 45, No. 4, September 1998
© Scottish Economic Society 1998. Published by Blackwell Publishers Ltd, 108 Cowley Road, Oxf ord OX4 1JF, UK and
350 Main Street, Malden, MA 02148, USA
ECONOMIC FLEXIBILITY AND THE PRIVATE
RENTED SECTOR
C. M. E. Whitehead*
*London School of Economics
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