Economic flexibility and the private rented sector

Over the last few years there has been a growing emphasis on the need for a well operating and larger private rented sector in the UK in order to improve macro-economic performance. Indeed it has almost become a matter of dogma that the current tenure structure is harmful 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 gorwth 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 of 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.