Photo credit: Boyce Duprey
The report, A lifestyle choice for families? Private renting in London, New York, Berlin and The Randstad (Amsterdam, Rotterdam, The Hague and Utrecht) by Kath Scanlon, Research Fellow at the London School of Economics, highlights the significant differences in the structure of the private rental markets in these major cities that have led to vastly different numbers of families choosing to rent.
The report argues that the complex nature of housing systems and important differences in the economic incentives to both landlords and tenants have resulted in wildly different private rental sectors across the four cities investigated.
Indeed, in New York and London, where property is expensive compared to average earnings, the cost of housing is a key driver in the rental markets.
While that may be true for American and British families, though, lifestyles are very different elsewhere. Indeed, Berlin does not have such high prices, and yet 90 per cent of homes are rented there. The Randstad cities are broadly similar to Berlin in both cost and structure, but only 8 per cent of homes are rented.
The number of tenants in Berlin and New York is attributed to the strong culture of families renting homes because many private tenants enjoy a security of tenure that offers similar benefits of owner occupation.
And what about London? Tenants in London said they were worried about the lack of security afforded by short term leases and by poor maintenance of their rental homes.
Nonetheless, the UK capital’s private rented sector has almost doubled in size, a trend sparked by the abolition of rental controls in 1988 and the increase in buy-to-let lending in the 1990s. The movement is expected to continue with further incentives to both landlords and tenants and the growth of institutionally-backed Private Rented Sector.
The report concludes that, in the majority of cases, renting is a choice made for economic reasons. Most respondents wanted to own their homes, but could not currently afford to purchase in the area they had chosen to live in and as a result, live in the private rented sector.
“Conditions are now right for a larger number of families to rent in the capital,” says the report, but notes that “dynamics can change quickly”.
The report was commissioned by Get Living London, the residential owner and rental management company that has created London’s newest neighbourhood at East Village, the first legacy neighbourhood from the 2012 London Olympic and Paralympic Games. Get Living London offers a choice of 1, 2 and 3 bedroom apartments as well as 3 and 4 bedroom townhouses under three year tenancies with a resident-only break clause after six months.
Derek Gorman, Chief Executive of Get Living London, comments: “We are particularly interested in the clear evidence that security of tenure and the benefits of a strong local neighbourhood network are critical determinants of rental satisfaction. These are the core elements that Get Living London offers private rent residents at East Village and some of the significant ways that we are changing renting in London for the better.”