Private Rental Housing in Transition Countries

An Alternative to Owner Occupation?

József Hegedüs, Martin Lux, Vera Horváth, József Hegedüs, Martin Lux, Vera Horváth

• Publisher: Palgrave Macmillan
• Year: 2017
• Print ISBN:
  9781137507099
• eBook ISBN:
  9781137507105
• Topic: Social Sciences
• Subtopic: Political Economy
• Index: Social Sciences

This book presents an overview of private rented housing in selected new EU member states and other transition countries – a topic scarcely researched to date, as it is largely part of the informal economy, and consequently often invisible to official statistics. Part I presents the private rented sector in Western and Northern European countries, the history of private renting under socialism in Central and Eastern Europe, and thematic issues such as restitution and marginalized groups depending on privately rented housing. Part II provides a series of country case studies from the Central and East European region. Part III concludes with chapters on the possibility of utilizing the private rental sector in affordable housing provision through good practices in both old and new EU member states, and sets out to further the housing policy debate on European housing regimes. This unique edited collection will be of great value to scholars of and practitioners involved in housing policyand economics, urban development, international relations, politics, economics and sociology.

Part I
Private Renting in Transition Countries: Historical Perspectives and Structural Changes

© The Author(s) 2018

József Hegedüs, Martin Lux and Vera Horváth (eds.)Private Rental Housing in Transition Countrieshttps://doi.org/10.1057/978-1-137-50710-5_1

Begin Abstract

1. The Private Rental Sector in Western Europe

Marietta Haffner¹ , József Hegedüs² and Thomas Knorr-Siedow³

(1)

TU Delft/RMIT University, Delft, South Holland, Netherlands

(2)

Metropolitan Research Institute, Budapest, Hungary

(3)

UrbanPlus Droste & Partner, Berlin, Germany

Marietta Haffner (Corresponding author)

József Hegedüs (Corresponding author)

Thomas Knorr-Siedow

End Abstract

Introduction

Across Western Europe, private renting is viewed from very different perspectives. In some countries, especially the UK and Southern Europe, the reputation of this sector of the housing market has often been linked to insecure housing of questionable quality for the less privileged. By contrast, in Germany, Austria, and Switzerland, private rental housing has become a widely accepted and secure form of tenure for a wide variety of people; it is a solid part of housing policy and is often considered a cornerstone of market stability during economic crises.

The Private Rental Sector (PRS) currently plays a relatively limited but stable role in European housing markets, as in many countries its decline in market share has stabilised (Peppercorn and Taffin 2013; Ball 2010; Gilbert 2003; Scanlon and Whitehead 2011). According to Eurostat data, 19 per cent of the housing stock in the 28 countries of the European Union (EU) was rented at a market price in 2014. Home-ownership is the dominant tenure form in European countries, except in Germany and Switzerland, where private rentals have been supported by the housing system since the early twentieth century. As the share of the PRS is relatively high in both of these countries and renters’ rights are secure, many mainstream households see the sector as a competitive part of the general housing market. Private rental housing plays different roles on housing markets when it provides housing solutions for low-income and marginalised households, as well as for higher-income groups, as is the case in the Netherlands (Haffner et al. 2009). The PRS has also increasingly become attractive to affluent groups in a number of countries. On the demand side, upmarket private rentals fit the dynamic lifestyle of the new creative class, as well as the mobile workforce . On the supply side, the upper-middle class may see a benefit from a financial investment in the PRS as a way of supplementing their retirement income.

The potential role of the PRS in offering alternative housing options may be important in Central and Eastern European countries, where home-ownership has become predominant as a result of the post-transition privatisation wave. Furthermore, the expansion of affordable housing options could include private renting options based on (temporary) state support. Therefore, the PRS may play a key role in the future of post-socialist countries’ housing regimes (Hegedüs et al. 2014). The aim of this chapter, therefore, is to provide a historical overview of the development of the PRS in Western European countries and offer insight into key factors that may influence its development in transition countries.

To provide a context for the analysis of the PRS in the post-socialist countries, the chapter clarifies the term ‘private rental’ in the section titled ‘Tenure Types and Landlord Types’ and explains its different meanings. This section presents an overview of the various forms of private rental tenure. It draws attention to the legal-economic relationship of the actors in the PRS and the sociological/legal meaning of the PRS in the context of national housing regimes. In the section titled ‘The Historical Development of the Private Rental Sector in Western Europe’, we describe the four dominant housing policy approaches of the last century that have impacted the changing position of the PRS, but not necessarily in the same way. The section titled ‘Rent Regulation and the Subsidisation of Private Renting’ focuses on key areas of housing policy intervention in the PRS that could help explain the development of the sector. The section ‘The State of Private Renting in Europe’ summarises the development of the PRS in the countries, especially in those where either a large PRS has been preserved in this century or where its market share has significantly increased in this century. The final section ‘A Future for Private Renting’ sets out the authors’ insights regarding various aspects of the sector’s future development.

Tenure Types and Landlord Types

Tenure structure is a key and dynamic characteristic of European housing systems. It reflects the social, cultural, economic, and legal use of housing as a consumer good as well as an asset. It defines the opportunities for the types of landlords that operate in a country.

Tenure Types

Tenure structure reflects a wide variety of property rights, ranging from full legal and actual ownership (as in owner-occupancy) to partial rights (as in cooperative-owned housing or shared ownership) and various grades of distinction between ownership and use (as in leases and rentals). However, the meanings of the various forms of rental tenure in general and of private rental housing in particular have evolved over time and across countries and are thus embedded in a sociological, economic, and cultural context (Kemp 2010; Mandic and Clapham 1996; Hegedüs and Teller 2007). This is why defining the PRS is not straightforward (Crook and Kemp 2014a, p. 5).

A two-step approach is taken to defining tenure here. First, the owner and the tenant are different roles; that is, the housing is not owner-occupied, but could be cooperatively owned. Second, private rentals are distinguished from social rentals according to the way in which the dwellings are allocated. ‘Social’ housing is allocated to households administratively on the basis of a level of need defined by society (Haffner et al. 2010). ‘Private’ rental represents an agreement between resident and landlord, which is typically based on market, or more precisely a regulated, market relation, though the agreement could be based on principles like family relations or employee–employer. The definition and the typology are based on the type of allocation of the dwelling and type of the institution and the subsidy involved in the transaction. Subsidy could be continuous rent allowance or capital grant, but, as in the case of the rental cooperatives or municipal housing, accumulated capital grant makes possible (and according to regulation forces of some countries) to set rent under market price. Ownership of the dwelling implies that the terms ‘social’ or ‘private’ are used according to the fact of whether an allocation system with subsidy is implemented as a distinctive criterion on the basis of which rental tenure can be compared across countries (Hantrais 2009). Rental housing owned by private actors can play a social role as well (Table 1.1).

Table 1.1

A typology of the rental sector by landlord, allocation, and subsidies

	Social rental		Private rental
Landlord type	Rental cooperative, NGO (Church, etc.)	State, municipal, or municipal company	Institutional	Private person, accidental, or non-institutional professional
Control of allocation rules	Rules set by the institution consistence with the law or housing policy	Based on government-defined rules with reference social need	Market based	Typically market based, but other principles influence the agreement, no specific rule
Subsidy	Accumulated (mortgage free) capital, and/or different subsidy scheme. Though the conditions are in the process of change		Typically not subsidised, but specific programmes may be involved, both on the supply side and on the demand side

Moreover, if we look at specific behavioural and cultural factors, we find that tenure forms have different social connotations depending on the socio-economic context. The most widespread tenure forms —private or market or commercial rentals; public or social or non-profit rentals; and owner-occupation, which are often considered the three ‘basic’ tenure forms—have very different meanings in different historical and national contexts. Tenure forms ‘are not fixed or immutable sets of social relations around the ownership, occupation and pricing of the accommodation. […] As the wider economy and society change, so too do the social relations embodied in housing tenures’ (Kemp 2010, p. 122). This is demonstrated in the next chapter of this volume, which deals with tenure forms in the PRS in the socialist...

Table of contents

• Cover
• Frontmatter
• 1. Private Renting in Transition Countries: Historical Perspectives and Structural Changes
• 2. Country Case Studies: History, Current Status, and Future Prospects
• 3. Conclusion: Private Renting—A Viable Alternative?
• Backmatter