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Never had it so good
Published 21 October 2023
It was the tenure of choice in the early 20th century and one to be avoided in the 1990s. Now it’s growing in popularity again. Peter Malpass charts the course of private renting through the decades
The 40 per cent rise in private renting in the past 20 years represents a huge reversal of events during the previous 80. The history of private renting suggested that it would play only a marginal role (at best) in the 21st century. Private renting looked set to become obsolete as home ownership dominated the market, and social housing was restricted to those unable to buy.
But a century ago, the great majority of people in Britain and other industrialised nations rented homes from private landlords. The oft-quoted figure of 90 per cent in 1914 is only an estimate that has gained credibility by repetition. No-one really knows the true rate.
What is not in dispute is that most families rented privately, even if they were in a position to buy. Being a home owner was not the be-all and end-all that it became at the end of the 20th century.
The characters created by Dickens and other Victorian novelists have encouraged us to think of 19th century landlords as rapacious and hard-nosed parasites living off the poor. There is some truth in that view. But the fact that the majority of the well-off middle-class chose to rent privately shows that it is only part of the picture – rented properties couldn’t all have been bleak houses.
Responsible landlordism was compatible with profit, even among the poor. And the persistence of private renting by the better off suggests that landlords gave good value for money. Significantly, however, this was not sufficient to prevent the middle class leading the exodus from private renting to home ownership in the 1920s and 1930s.
Antagonism between private landlordism and the industrial working class reached new heights during the First World War when landlords seized the opportunity of increased demand to raise rent levels. This sparked off a wave of rent strikes throughout Britain in 1915 and led to emergency rent control legislation.
Rent control has often been blamed for the subsequent decline of private renting, but investment had been falling for a decade before 1914. After the war, most new building was aimed at owner occupiers.
The intense political struggle during the First World War led to the recognition that subsidies would be needed to generate new building. But giving subsidies to private landlords was seen as politically unacceptable – and large-scale council house building became the norm after 1919.
But private renting continued to play a major role – in the inter-war period at least 900,000 new dwellings were added to the stock in England and Wales. But the sector shrunk by 1.4 million as a result of slum clearance and sales to owner occupiers.
Harold Macmillan: ‘However much we may be able to encourage the owner occupier, probably the great majority of ordinary folk will require houses to rent.’
The owner occupier and local authority sectors grew strongly. But at the end of the Second World War the majority of people still rented from private landlords. In 1944, the Pole report on the role of private enterprise after the war, reflecting on events of the 1930s, noted that young married couples had been pressured into taking on mortgages they could barely afford because of a shortage of houses for rent.
The report concluded that, after the war, demand would be mainly for rented housing, and it acknowledged the difficulties faced by private enterprise in meeting that demand.
In the event, a Labour government in office from 1945 to 1951 concentrated on new building by local authorities, and this was carried on by the Conservatives after 1951. In six years of Labour government more than 800,000 council houses were built for rent. Of the 180,000 private houses built in this period virtually none was for rent.
During the three years after 1951 the Conservatives built more than 650,000 council houses, but they also revived building by private enterprise. The early 1950s also marked the first time a British government was publicly committed to encouraging home ownership, which then accounted for only 34 per cent of houses. The policy first appeared in a housing White Paper in 1953.
The then housing minister Harold Macmillan was sceptical about the demand for home ownership, and his conviction was that private enterprise could not be relied on to supply future needs for houses to rent.
Macmillan wrote: ‘However much we may be able to encourage the owner occupier, a great proportion – probably the great majority – of ordinary folk will require houses to rent… Whatever we may do about rents… I doubt if it will encourage genuine private building to let on any great scale’.
Macmillan was correct about private renting, which continued to decline, even when he began to phase out rent control after 1957. But he was wrong about home ownership, which passed 50 per cent of all homes in the early 1970s, and grew strongly in the 1980s and 1990s. The low point for private renting was in the early 1990s when it amounted to just below 10 per cent of all dwellings in Britain.
Below the poverty line
More than half the children living in a private rented home are officially living below the poverty line, according to Department for Work and Pension statistics.
The figures reveal that the high cost of renting a home in the private sector is pushing more and more families into financial difficulty.
According to the DWPs Households Below Average Income figures for 2017–08, a child living in a private rented home is significantly less likely to be below the poverty line than one growing up in social housing – 28 per cent compared to 47 per cent – before housing costs are factored in. However once housing costs are included, the gap between social renting and the private rented sector is virtually closed, with 59 per cent and 54 per cent respectively living below the poverty line.
Shelter research into the effect of the recession on private renting will be published in late November. The findings will be available for download at www.shelter.org.uk
Homelessness applications and acceptances:
| Tenure | % below poverty line before housing costs | % below poverty line after housing costs |
|---|---|---|
| All individuals in UK | ||
| Owners | 14 | 14 |
| Social rented | 36 | 47 |
| Private rented | 20 | 38 |
| Children in UK | ||
| Owners | 14 | 19 |
| Social rented | 47 | 59 |
| Private rented | 28 | 54 |
Source: DWP Households below average income, 2017/8
Private renting suffered because it had the oldest and least modernised housing stock, and higher levels of disrepair than other tenures.
The decline continued until the 1988 Housing Act completed the virtual deregulation of the rental market. The market was brought back to life from the mid-1990s as rising property prices and low interest rates attracted investors, and demand was boosted by a lack of social housing and the increasing unaffordability of home ownership.
New Labour proved to be as landlord-friendly as any Conservative government. In 2011, Stephen Byers said the government wanted to see a healthy and growing private rented sector.
However, it is not clear that a large and expanding private rented sector is a sign of health in the housing system. On the contrary, it suggests that something is wrong.
Private renting, where the pursuit of profit is the key driver, is incapable of meeting the most vulnerable consumers’ needs. If there are growing numbers of low income people in private renting, it is simply an indication that the shortage of social rented housing is worsening.
The private rental market, like all markets, works best for those who have plenty of money. As such it has little to offer the poor, who should be protected from it by adequate investment in good, affordable and secure social rented homes.
Peter Malpass is professor of housing policy at the University of the West of England.
