Residential tenure: owner occupation, social and private rented sectors – what are they?

Defines and explains the differences between owner-occupied, social and private rented sectors.

According to English Housing Survey (EHS) Headline Report 2013-14 published February 2015 published February 2015, 63% of households in England were owner-occupiers, 19% rented in the private sector up from 11% in 2003 and 17% in the social housing sector.  In 2013, approximately 58% of households in Scotland (Scottish Government)  were owner-occupiers and 70% in Wales (Welsh Government)  whilst the number of households renting in the private sector throughout the UK continues to grow.

Owner-occupation remains the largest form of tenure but the size of the private rented sector continues to increase partly due to the 2007-2008 economic downturns and the reluctance of mortgage providers to lend.

The EHS Headline Report 2011-2012  defines residential tenure into three main categories:

Owner-occupier

Owner-occupiers own the property outright or are buying with a mortgage or part of a shared ownership scheme.

Social housing

Properties ae owned by  local authorities, housing associations, local housing companies or charitable trusts. A key function of social housing is to provide accommodation that is affordable to people on low incomes.  Social housing providers offer some properties at affordable rent which are deemed to be 80% of the market rent in the private sector.

The Summer Budget 2015  sets out proposals requiring social housing tenants with household incomes of £40,000 and above in London and £30,000 and above in the rest of England to pay a market or near market rent for their accommodation

Private rented sector

Properties are owned by a private landlord who can be an individual or a company. Sometimes tenants deal directly with their landlord but many cases management companies and estate agents manage the property on behalf of the owner.

The sector  is divided into two categories market and non-market renters. Market renters occupy the properties under Assured and Assured Short hold Tenancy agreements paying market rents. Non-market renters do not pay rent for example renting from a relative and also includes tied accommodation (which they occupy as part of their employment) e.g. A manager of a public house may occupy flat over the pub rent free or a caretaker in a block of flats.

Many properties in their private sectors are owned by individuals who purposely purchase properties on a buy to let basis whilst others find themselves as reluctant landlords who choose to rent out their properties in order to step up the property ladder or move due to employment/family reasons are unable to sell their properties.

Some landlords manage the property themselves whilst others use management companies and estate agents to manage the property on their behalf. RICS Find a Surveyor  can help with finding regulated firms of chartered surveyors offering residential management services.

RICS along with other organisations including Association of Residential Letting Agents, National Association of Estate produced the Private Rented Sector Code of Practice 1st ed  (revised July 2015) promoting best practice in the letting and management of private rented sector housing in England..

Institutional investors and pension funds are being encouraged to invest in the private sector property sector in order to increase the choice and availability of good quality housing for renting.  The Government is offering financial backing through schemes such as Rent to build  to encourage growth in this sector.