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Is the Private Rented Sector in Northern Ireland a safe haven for social housing tenants

The Growth of the PRS in NI 1974-2006. Reasons for the increase. Supply side: Investor interestCapital gains

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Is the Private Rented Sector in Northern Ireland a safe haven for social housing tenants

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    1. Is the Private Rented Sector in Northern Ireland a safe haven for social housing tenants?

    2. The Growth of the PRS in NI 1974-2006

    3. Reasons for the increase Supply side: Investor interest Capital gains – rapid house price increases 51% q2 2007, 40% q3 2007 Poor performance of savings and pension plans Low-interest rates - Buy to Let mortgages By 2006 cŁ2 billion in outstanding BTL mortgages in NI Demand side Demography: students, young professionals, migrant workers Difficulties accessing other tenures Affordability problem for first time buyers Growing waiting list for social housing Increase in standards

    4. NI Average House Price: Quarterly 2004-2007 (UUJ)

    5. Characteristics of tenants in the PRS Household Type 2001 & 2006 (%)

    6. Employment Status 2001 & 2006 (%)

    7. Annual Gross Household Income 2001 & 2006 (%)

    8. Housing Benefit HB is playing an increasingly important role in the PRS Currently approx. 40,000 tenants in receipt of HB in PRS Annual budget approaching Ł150 million mean weekly shortfall = Ł20 per week

    9. Why are these traditional social tenants living in the PRS? Difficulty accessing social housing Reduction of stock, 116,000 properties sold, current stock = 91,000 Some estates 75% of stock sold New build had not keeping pace with house sales Over the past five years new social dwellings has replaced only one-third of Housing Executive stock lost - however this decline has now come to a halt as less than 1,000 dwellings are due to be sold this year. Increase in number on waiting list In high demand areas lengthy wait, particularly for singles Nearly half of those on waiting list are single people

    10. Rising waiting lists for social housing 1997-2007

    11. Why are these traditional social tenants living in the PRS? Attraction to PRS properties: PRS offers access to areas that would otherwise be difficult to access In high demand public sector estates - via RTB properties emerging in PRS – no waiting list Owner occupied areas – in particular lower cost new build developments Highly segregated nature of public sector - PRS only option for some (in 2001 8% of households in PRS of mixed religion compared to 4% in total stock)

    12. Why are these traditional social tenants living in the PRS? Increase in standards Unfitness decreased from 15% in 1996 to 2.7% in 2006 Decreasing proportion of pre1919 dwellings (49% in 1996 to 28% in 2006) and increasing proportions of post 1980 dwellings (5% in 1996 to 25% in 2006) In 2004 50% of new build in Belfast went directly to PRS Oversupply in some areas – landlords must compete for tenants

    13. Threats to the growth of PRS Limit to the growth of the PRS in terms of demand from the low-income sector Potential for dis-investment and the implications of this

    14. Presenting as homeless due to loss of PRS accommodation 1995/96 to 2006/07

    15. Reasons for increase in presenting as homeless due to loss of PRS Bona Fide Homeless Landlord selling the property Income Factors Difficulty in paying the shortfall between HB and total rent payable Contrived homelessness Tenant achieves extra points to move up the waiting list for social housing Landlord can advertise for new tenants quicker Thwarted expectations Issues of repairs and maintenance

    16. Disinvestment Several factors may influence disinvestment Increase in interest rates (half of landlords had loan-to-value ratios of over 75%) Stabilising or falling house prices (most landlords gave capital appreciation as the main reason for continuing in the sector) Regulation (23% of landlords – recent regulations had affected their future intentions) Implications of disinvestment for social sector 40,000 PRS tenants in receipt of HB - 10% decrease in PRS = 4,000 displaced households - would look to social sector to be re-housed given their income levels

    17. Multiplier effect Significant disinvestment = undersupply Landlords can increase rents – low income/hb tenants may face difficulties Standards can fall Potential for overcrowding

    18. Conclusions Rapidly expanding PRS has performed an important role in housing vulnerable groups Affordability issues for low-income PRS tenants Risk of dis-investment growing – recently stabalising house prices

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