For a long time we have thought of the private rented sector as the most disorganised part of the housing market. Most properties were let by small landlords who owned one or two properties. Very few landlords belonged to any form of trade association, although around half let their properties through letting agents. On the demand side, most tenants held six month tenancies and many tended to be young, mobile and poor. Quite a lot of tenants lacked familiarity with their rights or the incentive to enforce them, particularly in the absence of any legal barrier to retaliatory eviction. A few localities had established groupings of private tenants, but such organisations were most notable for their rarity. Information was relatively sparse and circulated with difficulty: so reputation effects, on either side of the market, were weak.
These characteristics present considerable regulatory challenges. The levers for enforcing rights and obligations are weak. The consumerist model is most inadequate in precisely those subsectors of the market where rights are most likely to be violated. Command and control regulation around standards relied upon local authorities for enforcement, and this function was perennially under-resourced.
Yet we are witnessing a reconfiguration of the landscape of private renting that has the potential to completely transform the nature of the game. [Read more...]