A new study has discovered that the private rented sector (PRS) has expanded by 36 per cent in the past decade – twice the growth rate of households. This progress is likely to continue due to the decline in home ownership, especially amongst the middle-aged and younger generations which are faced with a receding social housing sector and rising house prices.

The UK is far from alone in its housing problems. The same issue is reflected across the world in many advanced countries, particularly New Zealand, Australia, the US and Canada where the issues are almost identical. 2.1 million households, over a quarter of all homes in Australia, are privately rented. This compares to 20 per cent of households in the UK. Australia also has the highest level of debt per household relating to both rental and owner-occupied housing, out of the ten countries included in the study.

The Australian PRS is unusual as it demonstrates a high level of integration with owner-occupied homes, which often sees flats and houses transfer between these two sectors. In most other countries, rental housing stock is commonly more differentiated. However, in the event of economic turbulence, Australia’s integration in the housing sectors increases the prospect that investment in both sectors will fall simultaneously. The study has discovered that the private rented sector in Australia is fragmenting into specialised markets, especially at the lower-priced end of the market. The sector is also expanding with the development of niche services and markets, with a growing informal sector specialising in tenure protection and a lack of transparency.

The report has highlighted this trend in countries across the world, with growing concern about this expanding informal sector. Informal housing arrangements such as short-stay or room rentals are often under the radar of policy makers unless safety and health concerns are raised. Newer markets such as boarding houses, the student housing sector, not-for-profit organisations offering affordable rental properties and an expanding informal sector together with older sectors of marginal housing such as rooming houses and residential parks are on the rise across the world.

In particular, low-income households are facing barriers accessing housing in the PRS, claims the report. Rental property investment has become skewed to highly and moderately priced rentals, with limited dwellings for lower rent. The research has also discovered evidence that a few rogue landlords are acting unscrupulously in order to raise their income through methods such as converting living areas into sleeping spaces and overcrowding dwellings.

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