3 PRIVATE RENTED HOUSING IN LIVERPOOL:

AN OVERVIEW OF CURRENT MARKET CONDITIONS

THE CENTRE FOR URBAN AND REGIONAL STUDIES

R GROVES, P LEE, A MURIE, B NEVIN

JANUARY 2001

ACKNOWLEDGEMENTS

We would like to acknowledge the assistance obtained in carrying out this study from a variety of different organisations and individuals who gave us time and information for the study. This report is one of a series which have been produced which have examined the dynamics of the housing market in Liverpool/Merseyside. The other reports include: • Changing Demand: Making the Links between Housing and Planning

• Stablising the Population of Liverpool: Employment Markets and Housing Choice • Developing a Housing Investment Framework for the Inner-Core of Liverpool

• A Comprehensive Housing Regeneration framework for the Eastern Fringe Estates

• Measuring the Sustainability of Neighbourhoods in Liverpool

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CONTENTS Acknowledgements Executive Summary Chapter 1: Introduction Chapter 2: Recent Trends In The Private Rented Sector Chapter 3: Student Housing In Liverpool Chapter 4: Conclusions: The Future Of The Private Rented Sector In the

Inner Core References Appendix 1: List Of Interviewees Appendix 2: Inventory Of Student Halls Of Residence And Map Showing Their

Locations Appendix 3: Copy Of Postal Questionnaire For Students’ Survey

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EXECUTIVE SUMMARY 1. Context

This report charts the recent changes that have taken place in the private rented sector in Liverpool. It outlines the decline in the private rental market owing to the disposal of better quality properties into owner occupation; slum clearance and the transfer of ownership associated with area renewal

With changing central government policies in the 1980s, the sector began a modest revival. Amongst the most significant policy changes were the introduction of assured and shorthold tenancies; the new housing benefit system; and various other deregulatory measures. Private renting grew during the 1980s, not only in the inner core, but also in some of the suburban areas of the city which had not experienced private renting in the past. It is clear that the provision of housing benefit was a very significant factor in accounting for this growth.

2. Private Renting

By the early 1990s the inner core of the city was characterised by an oversupply of privately rented accommodation. This oversupply has persisted throughout the decade and during the latter part of the 1990s there has been a fall in rent levels in this part of the market. Paradoxically, alongside this oversupply there has also been an increase in the diversity of the rented market with an increase in student rented accommodation and a newer, more expensive professional and executive market in the city central area.

The oversupply of privately rented accommodation and the operation of the housing benefit system are generating an important series of neighbourhood impacts in certain parts of the inner core of the city. In these neighbourhoods costs are high because of high rates of turnover, void rates are also high and rents and rates of return have become increasingly low. Such areas are becoming less attractive to owner-occupiers and house prices in some areas are falling. The response of landlords in these circumstances is to reduce expenditure on maintenance and to contribute further to a downward spiral of decline. Students, in the meantime, are also leaving these areas so that the problem of oversupply is becoming more, rather than less marked. Hence these neighbourhood problems cannot be solved without some form of intervention in the market.

Student Markets 3. Chapter three turns its attention to the market for student rented accommodation

in the city. This reveals that student numbers attending higher educational institutions in the city have more than doubled since the mid-1980s. Whilst student numbers have increased the amount of direct provision by the universities and housing associations has fallen, inferring that that part of the privately rented sector accommodating students has grown by more than 50% since 1990. There is also evidence of oversupply of rented accommodation in the student market. Despite this oversupply, there has been a very active programme of new building for students in the city central area during the last

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three or four years. This new building, and changes to student funding over recent years, has meant that students are seeking accommodation in locations which are increasingly secure and convenient for their studies and are leaving other inner city neighbourhoods.

The survey of student preferences tended to consolidate the changes taking place in the city. Whilst students are looking for accessibility and good value for money, they are also seeking safe premises in a secure environment. There were two factors highlighted by the survey which also hinted at some change in consumer behaviour: the first was the obvious lure of a city centre location, and the second was poor service delivery by a significant number of landlords of traditional shared housing.

Policy implications

• The oversupply of privately rented accommodation will not be self-

correcting. It is likely that there will have to be selective clearance of the worst privately rented properties, and many landlords are prepared for this providing that they are adequately compensated;

• there are adverse neighbourhood effects of this oversupply on the inner

core of the city and likely continuing negative impacts. This is particularly evident in the Anfield and Kensington areas;

• without effective action to manage and improve the property of the

privately rented sector in the short and medium term it is likely that some segments of the owner-occupied market will be critically undermined by neighbourhood blight.

• in areas where property values are low, turnover is high and the quality of

housing is poor the case for comprehensive redevelopment is very strong. These areas will tend also to include high turnover properties currently owned by RSLs;

• there is a need for active intervention by the local authority which includes

current initiatives, such as the Landlords’ Forum, the development of a local Accreditation Scheme, and adjustments to the housing benefit scheme;

• there is a further need to consolidate these actions with greater regulation

and enforcement and enhanced neighbourhood management activity. This may also have to be considered in the Eastern Fringe estates where there is evidence of a growth in private sector renting;

• More than a fifth of students intend to stay in Liverpool following graduation, it is a major challenge for local policymakers to create the environment where this significant group of future high earners can be retained.

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CHAPTER ONE: INTRODUCTION 1.1 This report is part of a wider programme of research designed to broaden the

understanding of the pattern of change in housing provision within the city of Liverpool and to inform the strategy for housing in the future. Following previous reports, there is a particular concern to clarify the nature of changing housing markets within the Inner Core of the city in order to better understand changing patterns of demand, and supply (See Nevin et al, 1999).

1.2 As part of this study, the present paper focuses upon changes in the size and nature of the private rented sector in the Inner Core of the city. There has been a steady and continuous decline in the size of the privately rented sector throughout the United Kingdom in the period up to the 1980s. A variety of factors have contributed to this.

• The underlying economics of private rented provision were being

questioned prior to 1915 and the introduction of rent control during the First World War is generally regarded to have added to the problems of attracting new investment into the sector in the subsequent periods. Existing rent controls were extended in 1939 and the process of deregulation through vacant possession has proceeded slowly since then;

• The encouragement of the owner occupier market and the tax advantages associated with owner occupation have not only reduced the demand from middle and high income groups for privately rented housing, but have also inflated property prices. For private landlords the attractions of selling properties once vacant possession is obtained have been greater than offering them for rent throughout most of this period. Consequently the amount of new investment in the sector has been low and the amount of active disinvestment or disposal, especially to owner occupiers has been high.

• The development of council housing and the much higher quality of newly built council housing compared with an older dilapidated private rented stock, has, for most of the past seven decades, also affected the demand for private renting. The images of these two sectors have meant that council housing was more attractive to the affluent working classes throughout most of the period under discussion.

1.3 In the period since 1980 the situation has gradually changed. Legislation

designed to deregulate the sector has added to the effects of continuing deregulation through vacant possession. And the introduction of housing benefit has influenced change and growth in the sector. At the same time social and demographic changes including the growth in the numbers of students has affected the demand for accommodation in the sector.

1.4 This report is not concerned to explore or elaborate upon these longer term trends but rather to look at the specific pattern of change in Liverpool. While Liverpool has been affected by these broader national trends, the precise pattern of change and decline is affected by local circumstances. As with every other city, the market which exists in 2000 is the product both of national and local

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influences. This paper then focuses upon the most recent changes and the specific nature of the Liverpool case. It is particularly concerned with the development of the privately rented sector in the period since 1980. It seeks to identify major changes in the location of private rented housing and the structure of the private rented sector in terms of the market it serves. Some reference is also made to aspects of the ownership of the sector, although we have no detailed research material to draw on for this.

1.5 This study is designed as an initial scoping study. It draws upon a variety of different sources of existing evidence as well as some new research. It has been informed by a range of interviews with local authority staff, private landlords and landlords’ agents, the rent officer, estate agents, and those involved in the provision of social rented and student housing. Staff at CURS have also drawn upon data which is held within Liverpool City Council on matters such as houses in multiple occupation and housing benefit payments to private tenants. Additionally we have carried out a specific piece of work to look at the student housing market. This has included a survey of student housing and interviews with the key agencies involved in this provision. This research has obtained additional data related to the location of student housing and future trends in provision. Finally we have made use of Census and other data which relate to the nature and location of privately rented housing provision in the city.

1.6 The remainder of this report sets out this material and draws conclusions from it. Chapter two provides a brief sketch of the changing size and location of the privately rented sector in Liverpool since 1981. Chapter three sets out the changing nature of the provision of student housing in the city and draws upon the evidence which we have obtained about the future of that sector. Finally, Chapter four draws together information from different sources to discuss the present structure of the privately rented sector in the city and its future and sets out some key issues for policy and for further investigation.

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CHAPTER TWO: RECENT TRENDS IN THE PRIVATE RENTED SECTOR

2.1 The 1971 population census showed 33% of dwellings in Liverpool as privately

rented. The number of properties recorded was 67203. These included properties rented from Housing Associations and at that time these were estimated to be 500. At this stage the private rented sector roughly matched the size of the council sector (71757 properties) and the owner occupied sector (65952). The city was fairly evenly divided between three dominant tenures. By 1981 the situation had changed dramatically. Both the council sector and owner occupied sectors had increased to 78381 and 80024 properties respectively. In contrast the privately rented sector had declined by some 57% to 28857 properties. Conversely housing associations had increased over the previous decade from a figure of around 500 properties to 13443, or about 7% of the housing stock. The number of households recorded in the 1971 and 1981 censuses shows slightly more dramatic change: in 1971 62,392 households (32.1%) were in the privately rented sector; in 1981 there were 26003 households (14% of the housing stock in the city). This represented a 58.3% decrease between 1971 and 1981.

2.2 The decline in the relative importance of the privately rented sector was greater

outside the inner core of the city. This change was associated with very low levels of new building by private landlords but the key elements in change relate to slum clearance, purchases by owner occupiers and purchases by Housing Associations. Between 1971 and 1981 more than 22,000 properties were demolished or closed in Liverpool and the bulk of these were located in the inner city and in the privately rented sector. Clearance peaked in 1973 with a figure of almost 6,000 properties demolished or closed. Slum clearance activity declined through the 1970s and was replaced by an active improvement policy. In 1983 the city council established its urban regeneration strategy to tackle the severe problems of decay and dereliction in Liverpool. This strategy complemented the private sector renewal programme and extended the Housing Action Area approach to encompass the environmental, recreational and other services of the council.

2.3 It is important to note that this pattern of change was not out of step with the

trend in other cities. The rate of decline of the private rented sector was the same as for Sheffield; lower than for Manchester; and both Newcastle and Birmingham recorded changes in excess of 50%. However, demolitions were maintained at a relatively high rate in Liverpool between 1971 and 1985. The average annual rate of demolition between 1971 and 1981 was 2,126 properties. Between 1981 and 1985 it was 1,908. While the average figure for 1971 to 1981 was exceeded in Manchester and Sheffield, Liverpool’s figure for 1981 to 1985 was higher than in Manchester, Newcastle, Sheffield or Birmingham. The longer continuation of slum clearance followed by a very active housing improvement programme, targeted upon the inner city had a particular impact upon the privately rented sector. (Table 2.1)

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Table 2.1 Comparative Housing Activity 1971-85 Total Households

(000s) 1971 1981

Demolitions 1971-81 1981-85

Ratio of 1981-85 to 1971-81 Rate of demolitions

Liverpool

194.4

180.5

2126

1908

90

Manchester 185.0 163.9 2962 682 23 Newcastle 107.3 105.2 782 127 16 Sheffield 202.6 203.1 2148 1198 56 Birmingham 361.5 356.8 1475 432 29

Source: Liverpool City Council (1986) Tables 13a and 13b

2.4 By 1985 the council sector was in decline (68069 properties, 34% of the total)

while owner occupation had grown to 93,642, (46.9%) of the total. However the private rented sector had declined by a further 30% to 20101 and represented only 10% of the housing stock. In contrast Housing Associations had increased by a further significant amount to 17956 and almost matched the proportion of private rented housing (9%).

2.5 In 1971 the majority of pre 1919 dwellings lacked exclusive use of basic

amenities. Just over a third were in clearance areas. By 1981 the clearance programme was largely complete and had been replaced by improvement policies concentrated in Housing Action Areas and General Improvement Areas. The Housing Action Area programme began in 1976 with declarations involving 4400 dwellings. Subsequent phases involving over 36,000 dwellings had a major impact combined with slum clearance. The number of dwellings lacking amenities declined dramatically from 63,500 in 1971 to 7,700 in 1985. Both the clearance and renewal programmes concentrated on the worst properties first and the majority of these were in the privately rented sector.

Change and Decline in Private Renting

2.6 The data relating to the private rented sector demonstrate that this tenure has

declined dramatically in the city. The remaining privately rented housing stock no longer included what had previously been regarded as the worst properties. These had been cleared or improved by other owners. Nor did it include what had previously been the best stock: these had disproportionately been sold to owner occupiers and other owners. The remaining stock was more concentrated in the Inner Core of the city and the effects of clearance and transfers between tenures were that ownership within the private rented sector changed and the holdings of individual landlords were smaller. The very large landlords which had dominated the ownership and management of particular parts of the city were no longer significant. Ownership was more fragmented and mixed with other tenures. The major landlords in the city had in most cases, divested themselves of properties as they gained vacant possession and were additionally affected by urban renewal programmes.

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2.7 Thus if we focus upon the factors contributing to decline in the city, and bearing in mind the general background to this issue referred to in chapter one, three key factors are involved in the numerical decline of the private rented sector.

I. Disposals of better quality properties with vacant possession or to

sitting tenants; II. Slum clearance; III. Transfers of ownership associated with area renewal policies.

2.8 Three further factors should be noted at this stage. The first relates to the development of a distinctive student housing market. In some parts of the city existing landlords began to switch properties to letting to this market when they were able to do so. It is also likely that some new landlords are brought into the market because of the perceived opportunities in this area. The student market has different rent paying capacity and landlord concerns about security of tenure and the ability to regain possession are less marked in the student sector of the market at this time.

2.9 Secondly, the ageing of the cohort of tenants who had security of tenure and

were in controlled tenancies meant that this segment began to decline. The decline in this part of the market is associated again with tenure transfers, slum clearance and area improvement policy. However it is also associated with the ageing of the cohort, their residential choices and the increased likelihood of their releasing properties. There is a process of deregulation of the private rented sector which pre-dates 1980 and later legislation and is associated with the actions of tenants and their household characteristics.

2.10 The third feature of the privately rented sector at this stage is its increased role

in housing groups other than students and the now long established tenants. These particularly related to the growing numbers of younger single persons in the population.

2.11 Some indication of key features of the privately rented sector at the end of the

1970s is indicated in Tables 2.2 and 2.3 through data obtained through the National Dwelling and Housing Survey carried out in 1978. These data reflect the conventional way of referring to the privately rented sector at that stage by dividing it into an unfurnished, and a furnished sector. While the unfurnished sector was not wholly controlled or regulated it continued to disproportionately represent the older declining part of the market. In contrast the furnished sector was unregulated.

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Table 2.2 Property Types and Tenure: Liverpool Inner City 1978 COUNCIL PRIVATE RENTED % Unfurnished % Furnished % All pre 1919 houses 2 69 66 All 1919-39 houses 29 12 8 All post 1939 houses 21 1 - All flats converted houses * 13 25 All purpose built flats 48 4 1 Flat with shops - 1 1 Total (No) 1909 768 129 Unknown (No) 278 134 62 Source: NDHS Table 2.3 Household Type and Tenure: Liverpool Inner City 1978 HOUSEHOLD TYPE COUNCIL PRIVATE RENTED

%

Unfurnished %

Furnished %

No 2167 895 188 Single person over retirement age 17 21 10 Couple at least 1 over retirement age 10 14 Nil Single person under retirement age 6 10 47 Two adults both under retirement age 14 19 20

Other household without children 13 10 14 Households with children 38 26 9 Source: NDHS

2.12 Table 2.2 demonstrates the dramatic difference between the types of properties in the privately rented sector and those in the council sector at that time. The privately rented sector was dominated by pre 1919 houses and by flats in converted houses. Neither of these elements was significant within the council housing stock which consisted predominantly of purpose built flats and of houses built in the period since 1919. This contrast in what the different tenures included is associated with the difference in spatial distribution. The privately rented sector was located in parts of the city developed before 1919. The local authority stock was in different parts of the city. People wanting to live in particular neighbourhoods and areas would be unlikely to find a choice of tenures as these neighbourhoods were highly differentiated by ownership. This situation became less apparent as Housing Associations acquired properties from private landlords.

2.13 Table 2.3 refers to the different household types in different tenures. At this

stage the council housing stock had a major role in housing households with children, (38%). The greatest contrast is with the deregulated furnished rented sector where the largest group, (47%) was single persons under retirement age and the role in housing households with children was minimal, (9%). The privately rented unfurnished sector in these data is a mixed sector including the old controlled and regulated tenancies largely dominated by older people, and unfurnished deregulated tenancies let to different types of households.

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2.14 One of the important issues in relation to changing demographic structures

within the city, is that the household types which were most prominent in the council sector at this stage, households with children, have declined nationally during the study period. The demographic structure of the population has switched towards older households and towards single person households in younger age groups, and the expectation is that this trend will continue. These groups and especially single persons under retirement age, have traditionally been concentrated in the private rented sector. No doubt this has partly been because of lack of access to council housing and other tenures, but it also reflects the means of access, types of properties and location of properties in this tenure.

2.15 Maps 1 and 2 set out the geographical pattern of private renting in the City of

Liverpool in 1981 and 1991. These maps are based on data from the Census of Population and indicate the areas with the highest proportion of private tenancies in these two years. Comparison of the two census years show that there have not been the same trends everywhere and it is helpful to divide the city into four different areas. (See Table 2.4).

i) Areas with a high rate of private renting in both years and an increase

in the percentage share: Arundel, Kensington, Aigburth.

ii) Wards with a relatively high rate of private renting in 1981 but a decline in proportion between 1981 and 1991: Tuebrook, Picton, Anfield, Old Swan, Granby, Warbreck, Melrose, County, Church.

iii) Areas with a relatively low rate of private renting in 1981 but a growth in the number of dwellings in the sector between 1981 and 1991: Abercromby, Vauxhall, Gillmoss, Clubmoor, Everton, Speke, Netherley.

iv) Areas with a low rate of private renting but an increased percentage share. This includes iii) above plus Dovecot, Walton, Grassendale, Breckfield, Smithdown.

2.16 The striking feature of these statistics is that there are some parts of the city where the proportion of private rented housing had grown over the decade 1981-91. As would be expected this includes areas in the inner city. However the private rented sector plays a significant role beyond the Inner Core and, as a result of tenure transfers, has an increasing importance in a number of the wards which have traditionally had a low proportion of privately rented housing. While the concentration of properties remains greatest in the Inner Core, the long term decline of the sector has not eliminated it elsewhere and its revival in the 1980s would appear to have increased its representation beyond the core of the city. (See Table 2.5)

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Table 2.4 Private Renting in Liverpool 1981 and 1991: Ward Analysis Ward Name Number of

households in private renting 1981 1991

PRS as % of all households in ward 1981 1991

PRS in ward as % of all PRS in city 1981 1991

Arundel 1714 1489 32.5 26.8 7.0 7.9 Kensington 1752 1489 28.4 21.9 7.2 7.9 Tuebrook 1811 1376 30.3 21.8 7.4 7.3 Aigburth 1587 1386 27.4 21.3 6.5 7.3 Picton 1592 1168 28.3 19.7 6.5 6.2 Anfield 1553 1044 25.9 17.1 6.4 5.5 Smithdown 721 702 13.9 15.1 2.9 3.7 Abercromby 483 635 10.2 15.1 1.9 3.4 Granby 1221 838 21.5 14.6 4.9 4.4 Old Swan 1241 809 21.7 14.1 5.1 4.3 Warbreck 1305 853 21.2 12.0 5.3 4.5 Church 1090 827 15.7 11.5 4.5 4.4 Melrose 1060 695 20.6 11.4 4.3 3.7 County 1141 712 18.4 11.2 4.7 3.8 Breckfield 691 586 12.4 10.3 2.8 3.1 Dingle 771 491 14.3 8.9 3.2 2.6 Childwall 713 543 12.0 8.9 2.9 2.9 Fazakerley 576 399 11.4 7.8 2.4 2.1 Vauxhall 210 237 4.9 7.5 0.9 1.3 Grassendale 499 412 8.7 6.6 2.0 2.2 St. Marys 530 354 9.6 6.5 2.2 1.9 Broadgreen 585 399 10.1 6.3 2.4 2.1 Croxteth 418 308 7.0 4.7 1.7 1.6 Woolton 332 282 5.6 4.4 1.4 1.5 Allerton 220 180 4.1 3.1 0.9 0.9 Everton 48 79 1.0 2.9 0.2 0.4 Valley 114 101 2.4 2.3 0.4 0.5 Gillmoss 102 125 1.9 2.1 0.4 0.7 Dovecot 108 104 2.1 2.1 0.4 0.5 Clubmoor 104 120 1.8 2.0 0.4 0.7 Pirrie 90 82 1.8 1.6 0.4 0.4 Speke 38 45 0.9 1.1 0.2 0.2 Netherley 19 28 0.5 0.9 0.1 0.1

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Table 2.5 Tenure Profile of Liverpool 1991-7 and Housing Zones in Liverpool 1991-97

0/0 CC RSL PRS Inner Core 37 28 18 17 Central Buffer 58 20 7 15 Suburban Core 81 10 2 7 Southern Fringe 41 49 5 5 Eastern Fringe North Central South

38 39 34

54 54 61

3 3 2

5 4 3

Liverpool 51 28 9 12 1997 Liverpool 50 24 13 13 Source: 1991 Census; 1997 Housing Needs Survey 2.17 The discussion of the development of the private rented sector in this report so

far has emphasised decline. A number of factors in the period since the early 1980s have begun to modify this picture. Government sought to achieve a revival of the privately rented sector in legislation in 1980 and further legislation in 1986. The development of assured tenancies and shorthold tenancies represented a major step in the deregulation of the sector. Although it may be argued that deregulation had been occurring anyway and that many lettings in the privately rented sector were effectively free from regulation, the development of new forms of tenancy enabled landlords to operate legally in a more deregulated environment.

2.18 While deregulation was the key measure designed to encourage a revival of

privately rented housing, it can be argued that other elements of the then government’s general approach to housing policy were designed to reinforce this effect. Housing finance and subsidy changes were particularly important within the development and extension of the housing benefit scheme to embrace private tenancies provided a different environment for landlords. • Potential tenants were able to afford to rent because of their entitlement to

housing benefit.

• The housing benefit scheme initially operated in a way that was generous and accessible for landlords who could obtain rent payment direct from the local authority. Landlords were still able to require deposits and the risks associated with letting to low income households and benefit dependent households began to be seen to be less problematic.

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MAP 1 Percentage of households in private rented sector by ward, 1981

Private Renting in 1981(1991 ward boundaries)

21 .5 to 32.6 (8)12 .0 to 21.5 (8)

4.1 to 12.0 (8)0 to 4.1 (10)

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MAP 2 Percentage of households in private rented sector by ward, 1991

Private renting in 199115.1 to 26.8 (7)

8.9 to 15.1 (8)3.1 to 8.9 (10)0 to 3.1 (9)

The Revival of Private Renting

2.19 Both in Liverpool and nationally it would appear that this encouraged some new

landlords to enter the market, specifically to provide housing for people on housing benefit. In the early and mid 1980s the growth in the number of single young person households seeking separate housing and entitled to housing benefit, appears to have encouraged the growth in this part of the market. These households were unlikely to obtain council housing and at this stage were entitled to receive housing benefit. High rates of unemployment and economic problems may also have encouraged a growth in this sector of the market. Thus we have both demand and supply side factors encouraging the growth of the market.

2.20 A separate set of considerations applies to the student housing market. The

growth in overall student numbers has been particularly marked in Liverpool

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and, as in other cities, the student population appears to have begun to express a preference for living in the community rather than in the halls of residence, or lodgings associated with earlier generations of students. The growth in student accommodation was effectively in multi- occupied housing in areas accessible to the universities. These issues are developed further in the next chapter. Oversupply

2.21 Leaving aside the issues associated with student housing, it seems likely that the

factors contributing to a growth in the demand for housing in the private rented sector in the late 1980s have not been sustained since. Government has become concerned about the growth of housing benefit expenditure, the regulations related to local reference rents and the rents which can be reclaimed by benefit have been significantly tightened. In Liverpool’s case, it is evident that landlords serving the housing benefit market are not able to charge the rents that they were, unless tenants are able to supplement their rents from sources other than housing benefit. The changes in housing benefit entitlements for young single people have been followed by a period in which demand from this section of the population appears to have declined considerably. The two factors may not be simply related to one another. Other reasons exist for changes in the demographic pattern. Young single people may choose to move elsewhere, where employment prospects are better, or may in some cases be more likely to stay longer in the parental home.

2.22 In Liverpool what has emerged are twin problems of reducing public subsidy –

thereby reducing demand – and an increase in supply. This has led to a chronic oversupply in certain segments of the privately rented market. A key element in this is the continuing entry into the market of new providers of rented housing. The interviews, which we have carried out with representative bodies of private landlords, indicate that in the period since 1990, a considerable number of new landlords have come into the market. A key element here is problems, which have been experienced with the sale of properties by owner occupiers. Some owner occupiers in some parts of the city where property values have declined, have found difficulty in selling properties or selling them at a price which they consider appropriate. Rather than sell at a reduced price and perhaps at a price, which would not cover the outstanding debt, they have on the property, some of these owners choose to let the property. These ‘reluctant’ or ‘non- business’ landlords have formed one new element in the market. Another appears to be speculative purchasers buying properties at a very low price and seeking returns on that investment solely through the rental income from letting the property.

2.23 Both of these groups are evident in other cities. They contribute to the

expansion of the privately rented sector and have exacerbated the over supply of property. At the same time it is argued that these new landlords are relatively inexperienced and may under estimate the difficulties of managing property and letting it in an effective way. In some cases, these landlords have very low expectations of recouping their own investment through the sale of properties. They are not particularly concerned with maintaining properties because of this. Their business calculations are based on maximising the rental income stream while minimising expenditure. Their expectations are that asset values are

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likely to remain very low and the argument for spending money on management and maintenance is undermined.

2.24 Landlords interviewed about general trends and patterns in the market were

concerned about oversupply and changes to the traditional rented market and it is appropriate to refer to their views in more detail.

Landlords’ Views on Recent Developments in the Privately Rented Market in Liverpool

2.25 As part of this study we have interviewed a small number of landlords and the

representatives of the two major landlords’ organisations in Liverpool. The views expressed by landlords may be open to challenge and may in some cases appear incorrect or discriminating. Nevertheless, it is important to appreciate how the changing market is perceived by different groups. There was consistency in the views expressed by landlords about the changes to and nature of the market in the city. These views often accorded with those of others with knowledge of the sector.

2.26 The Business Expansion Scheme and deregulation of private renting under the

1988 Housing Act had increased the supply of private rented housing. At the same time changes in the economy and demographic patterns brought more young, single people into the market in Liverpool. The increase in supply was largely of similar properties to those already in the market, in similar locations and at market rents. Before 1988 most flats were not regulated. The 1980 Housing Act had provided the impetus to expand, and to remove the remaining security of tenure. By 1981 there was no requirement to register assured tenancies and it was possible to let unregistered properties. In the 1980s it was easy to let any kind and condition of property. Student lettings were an important part of this market context and ‘students would take anything, even bedsits’. A single advert could produce 30 to 40 people queuing for property.

2.27 These circumstances changed throughout the 1980s, and by the end of the

1980s, bedsits had become impossible to let and the supply of tenants responding to a single advert had dwindled by up to 90%. The increased supply of properties meant that better properties had to be offered to attract what landlords considered to be reliable tenants. The introduction of the Council Tax meant a change from bedsits to self-contained flats - landlords of HMOs were responsible for council tax but the tenant was liable in self-contained flats. In the 1980s there was a further addition to supply because of the emerging problems related to selling properties in some parts of the Inner Core.

2.28 In this context of oversupply, where tenants are better able to choose there

would have been an incentive to improve properties in order to ensure that they could be let. However, improvement grants were not available and without these the costs were greater than could be recovered through rents. Many of the private rented properties improved under GIA and HAA rules are now in poor condition given the history of low investment and the expiry of the additional years of life given by the urban renewal process.

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2.29 Given the changes outlined above, local reference rents for housing benefit have declined as the Rent Officer is following the market and changes in housing benefit regulations are impacting significantly. In much of the market the only people seeking accommodation are those on housing benefit. The decline in reference rent, therefore, means that landlords have two choices. Either they accept the reduced rent or the hawkish ones try to get the tenants to pay the difference.

2.30 The landlords interviewed in this part of the study highlighted a range of

problems arising from the present market situation and the following section refers directly to landlords views:

• Landlords felt that the press still implies that it is very easy to be a landlord. Partly as a result of this there are landlords moving in and out of the market with a short-term view of the market and no idea of how demanding tenants are. These new landlords think housing benefit means revenue which is received automatically and do not recognise the delays in the system. They are also drawn into landlordism because of problems of selling properties;

• The top end of the market is mainly fuelled by people moving from outside Liverpool;

• No parts of the market were seen as easy to let but properties in better locations are easier to let if rents are kept down;

• Rent recovery from tenants who are permanently on benefit or never on benefit is more straightforward than for those with volatile work histories. People who move on and off benefit have a disinclination to pay rent and the change in circumstances builds debt. Changes in housing benefit regulations also mean that some people find that when they move back on to benefit their entitlement is less than it was at an earlier stage, for example, in relation to single room rents;

• Housing benefit is not sufficiently flexible for this middle group or for the self-employed or part-time workers;

• Good landlords’ margins were being squeezed and bad landlords get away with it. Bullying and illegal eviction was made more possible. Penalties were too low;

• Landlords views are that unemployment is the root problem. Letting to non-working tenants and people who have never worked creates difficulties. There is a culture of dependency with no respect for others or for property;

• Tenants’ care of properties is poor. They do not decorate, they are demanding and there are problems relating to drug use.

• Tenant fraud can affect the landlord. Overpayment of housing benefit to tenants can impact on landlords who may be left with some liability for the overpayment;

• The concerns about tenants relate to high turnover, damage to properties, moonlighting and stripping the accommodation. These problems have become common;

• Older tenants are regarded as more reliable - especially regulated tenants. If

18

tenants stay more than six to twelve months they are more likely to stay permanently and to be good tenants. The problems arise in the first six to twelve months.

Area-based Issues

• Area problems were seen by landlords as linked to issues of oversupply and lettings. Hanging on to the investment and letting to anyone is detrimental to the area;

• Sefton Park and the waterfront area are seen as the easiest areas to let property in;

• Car parking is regarded as a problem in some areas and the demolition of every other row of properties would begin to relieve some of these problems;

• There is a view that substantial demolition is required in some areas and landlords did not consider this to be a problem as long as there was adequate compensation;

• Landlords recognised that changes in the student market were having a big impact on the City. Students had now moved to the City Centre. The areas left behind had empty properties, closed shops and landlords had sold in some cases. There is a devastating impact of this on some areas. The landlord view was that students were acceptable as tenants although they created some neighbourhood problems. They were now replacing students with housing benefit cases and low income households and this created much more severe problems;

• The poor condition of properties was partly a response to the landlords’ view of tenants. Landlords stated that if you thought tenants would move on very rapidly the standards of redecoration and the quality of, for example carpeting, would be much lower than if you thought people would stay;

• Landlords suggested that 50% of the spend on repairs is associated with tenant neglect. The penalties and the risk all fall on the landlord;

• Landlords find it is difficult to judge who is a good commercial risk. Someone with a poor credit history does not represent a bad risk if they are on income support and housing benefit, but it may indicate other things. In practice there is a policy of ghetto-isation, filtering the most difficult tenants into the most difficult to let properties;

• Better liaison to explain tenant responsibilities would help;

• Landlords feel tenants are now looking for bigger and better properties and gardens. There are changes in expectations and aspirations; people want at least two-bed properties. For example, split marriages frequently need a spare room for children. Housing benefit regulations do not recognise this and the different treatment between RSLs and private landlords in this respect is a matter for concern to private landlords;

• There is limited room for manoeuvre - you cannot create gardens where

19

there are none and the costs of labour and materials are too high. Conversion of two flats to one larger property is not practicable without active policies and grant assistance.

The Housing Benefit Market 2.31 The discussion of the private rented sector in this paper has referred to a number

of distinctive parts of the market.

• As the traditional market has declined other markets have grown;

• An executive or professional market operates with high rents and is targeted at employed persons who are not in receipt of housing benefit;

• Since 1991 students have not been eligible for housing benefit;

• The development of the housing benefit scheme has begun to have a major impact in shaping the operation of the remainder of the market.

2.32 The following Chapter of this report discusses the student market. In this

section it is appropriate to consider the part of the market which is most influenced by housing benefit. This housing benefit market is not wholly separate – especially from the student market – and there is a transfer between these ‘segments’ as demand changes.

2.33 Data relating to housing benefit claimants in the private sector in the City of

Liverpool indicate the contemporary geography of private renting (Maps 3 and 4). As would be expected the greatest concentration of claimants is in the Inner Core and in the areas which recorded high levels of private renting in the 1991 Census (see Map 2). Nevertheless private sector housing benefit claimants lie beyond the Inner Core and in particular are evident in areas which have historically had high proportions of council housing. There is important evidence in this data of a spread of private renting to parts of the city which have not had significant amounts in the past (for example, in Fazakerley, Croxteth and Gillmoss).

2.34 This research has not been able to explain the development of private renting in

these wards. It may be to do with patterns of development by registered social landlords. It could be explained in whole or partly by the private letting of former Right to Buy properties. In either case but perhaps especially in the latter, it would be important to establish what underlies these figures and to consider whether it is likely that such developments will continue in the future. One possibility is that a similar process could be underway in council estates where the resale value of properties is very low. In these situations existing owners may choose to let their properties or the properties may be bought for letting. In either event there are consequences for social change and the management of estates which may become more important if there is an increasing trend for the development of private rented accommodation in such neighbourhoods.

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2.35 Map 4 presents the number of private sector housing benefit claims as a percentage of all properties in each ward. This makes it clear that, while there are a significant number of claims lying outside the Inner Core, the concentration of claims is very much greater in the Inner Core area. It is also evident that the concentration is greatest away from the river frontage and the central business areas of the city. This pattern conforms with the evidence that we will present about changes in the student market. It is the areas slightly further from the main higher education institutions which have the greatest concentration of non-student tenants. It is also consistent with what would be expected from the expansion of a professional and executive market of more expensive dwellings in the centre of the city.

2.36 The patterns illustrated by Maps 3 and 4 provide an initial picture of the

operation of this housing benefit influenced market. These parts of the city are considerably affected by the interaction between landlords’ and tenants’ decisions in a different environment than existed in the past. It is in these parts of the city that there is an over supply of rented housing and where the changing preferences of students as well as house purchasers, have resulted in an increasing concentration of benefit dependent tenants in the private sector. Alongside this has been the decline in the numbers of older, regulated tenants. Housing benefit has the effect of enabling people to move around.

2.37 The view that there is an oversupply in this part of the market was expressed by

all of those interviewed for this study. The hard data to support such a view is provided by the rent officer and refers to rents (see Table 2.6). These data are not area specific but demonstrate an underlying pattern which is most apparent within the Inner Core and the market related to housing benefit. Between 1996 and 1999 there has been a significant fall in mean rents for most property types. These figures take no account of inflation and the real decline is greater than indicated. For the terraced properties which are most common in this part of the market the fall in rent levels has been in the range 14% to 18% in this period.

These data also corroborate the views expressed by private landlords and landlord organisations.

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MAP 3 No of Housing Benefit Claims by postcode sector (April 2000)

No. of HB (PS) Claims

92 to 51842 to 9216 to 421 to 16

22

MAP 4 No of Housing Benefit Claims (April 2000) expressed as a percentage of residential properties (Nov 1998) by postcode sector

HB Claims as % of PropertiesProperties as of Nov 1998, claims April 2000 (Postcode sectors)

11.8 to 1004.9 to 11.82.5 to 4.90.1 to 2.5

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Table 2.6 Mean Rents in Liverpool (£ per week) June

1996 January 1999

% change (cash)

4 bed terrace 101.02 82.89 -17.9 3 bed terrace 79.88 68.73 -13.9 2 bed terrace 68.90 59.06 -14.3 Converted flats 3 bed 82.63 68.63 16.9 Converted flats 2 bed 81.44 63.21 -22.4 Converted flats 1 bed 57.45 48.99 -14.7 Rooms 40.53 36.96 -8.8 Self-contained bedsit 48.56 42.57 -12.3 Detached house 4 bed 144.79 125.64 -13.2 Detached house 3 bed 110.61 110.38 -0.2 Semi-detached 4 bed 116.75 107.16 -8.2 Semi-detached 3 bed 99.48 93.36 -6.1 Semi-detached 2 bed 81.37 84.40 +3.7 Bungalows – all 97.65 90.57 -7.3 Purpose-built flats – 3 bed 95.47 64.89 -32.0 Purpose-built flats – 2 bed 88.34 77.82 -11.9 Purpose-built flats – 1 bed 64.25 63.68 -0.9 Boarders 71.80 84.74 +18.0

Source: Rent Officer

Conclusions 2.38 The material presented in this chapter suggests that the structure of the private

rented sector within the Inner Core of Liverpool, has changed over the last three decades. A period of consistent decline has been followed by a revival associated with the student housing market, deregulation and problems in the owner occupier market. We have moved beyond the point at which the market has been in decline. It is now a larger sector than in the past. Its management and organisation is more fragmented with landlords focused upon different parts of the market, and with different motivations.

2.39 Although the bulk of the private rented sector in the city of Liverpool is now in

the Inner Core there is evidence of growth elsewhere and there is an important agenda around the impact of this change beyond the Inner Core. Some initial conclusions can be drawn:

• A residual long established rented sector will remain in the traditional areas

of renting, but it is much more dispersed than previously and will continue to decline;

• A newer, more expensive, professional and executive market is expanding in converted premises in the city centre and continues to exist beyond this area. This sector is expanding through conversions and new investment;

• Areas of student housing close to the city centre and the universities are expanding through investment in new purpose built student accommodation;

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• A fourth area of private renting has a role in housing households with a periodic or long term dependency on housing benefit. This market is associated with low incomes and high turnover. This part of the market overlaps with the student market. However areas of the city which served the increasing student market in the 1980s and 1990s but where the restructuring of the student market has led to a withdrawal of demand subsequently are now more likely to house benefit dependent households;

• Where these areas still have a mix of student and other clientele, there is a probability that there will be a decline in demand from students over the next decade as alternative accommodation becomes available.

2.40 The evidence provides a view of the position of the private rented sector in the Inner Core. There are gaps in the evidence both about landlords and their decisions and about the aspirations and choices of people who rent the types of property that are mainly on offer. At the same time there is a consistency which suggests an over supply of housing in the private rented sector and an increasing concentration of problems in older parts of the Inner Core. These areas are becoming less attractive to students, are not attractive to professional and executive groups and are increasingly unattractive to owner occupiers. In these parts of the city the oversupply of private rented housing and the operation of housing benefit generates an important series of neighbourhood impacts. It is in these areas that costs are high associated with high turnover. Void rates are high and rents and rates of return have become increasingly low. Rents have declined in recent years especially in older terraced accommodation.

2.41 The responses of landlords who own properties in these areas and the kinds of management and financial strategies that they adopt are increasingly likely to mean a minimum of expenditure on maintaining properties. If such expenditure cannot be assumed to result in appreciation in asset values, then the owner is more likely to limit expenditure. Perhaps more importantly for the strategic development of the city is the fact that there are neighbourhood impacts of this pattern of over supply. One way of perceiving these impacts is to refer to a downward spiral. The characteristics of properties and neighbourhoods makes them unattractive for purchase by owner occupiers. This triggers a situation in which property values fail to keep pace with other parts of the city or result in a natural decline. This further reduces the demand for purchase from owner occupiers who are seeking to invest in an appreciating asset. At the same time it makes it more difficult to sell properties and some owners will choose to let properties rather than accept what they regard as inadequate prices or prices that would leave them with an outstanding debt because they bought when the market was higher.

2.42 Declining property values mean that some owners will become reluctant

landlords. Other properties are purchased by landlords but they increasingly look to the income stream associated with letting the property as the basis for their investment and management decisions rather than any long term appreciation in asset value. All of these factors contribute to higher rates of turnover and changes in the characteristics of the population living in accommodation. Neighbourhood change and high turnover makes the area even less attractive to existing residents and to potential residents. It consequently triggers a further turn in a downward spiral.

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2.43 Without wishing to dramatise this view of what is happening to the private

rented sector, in some parts of the Inner Core it is important to recognise that the oversupply in the market is not self-correcting. Indeed, the dynamics of the market may have the opposite effect. It is the oversupply of rented housing and the effects of this which make investment in the area less attractive and means that over supply is likely to increase. The changes in the student market and the lack of alternative purchasers in some areas means that over supply will become more marked rather than less.

2.44 The implications of this analysis are that within the Inner Core of Liverpool,

oversupply of private rented accommodation will add to neighbourhood problems and it is essential to adopt strategies to halt the downward spiral and deal with oversupply.

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CHAPTER THREE: STUDENT HOUSING IN LIVERPOOL

Introduction 3.1 This section of the report records the research findings relating to the provision

of student housing in Liverpool. This analysis is in two parts:

i. Part one is concerned with developing an understanding of the student

housing market in the city over recent years and the way it works. In doing so the report acknowledges the work of Liverpool Student Homes (LSH) and the series of annual reports produced by LSH. Whilst our research draws heavily on this work it is not our intention to replicate it. The primary concern of our research is to analyse the impact of recent changes in the student housing market and their effects on the traditional private landlord and the traditional areas of privately rented accommodation in the Inner Core. Accordingly, this part of the research has drawn on a number of interviews with key players involved in the student housing market, (see Appendix One), as well as desk research.

ii. Part two outlines the findings of a postal survey of students living in some of

these core areas highlighting their experiences and preferences regarding student accommodation. The areas surveyed were chosen from LSH’s database of student addresses and were concentrated in the city central area, and the most popular areas of shared student accommodation: Wavertree (L15), Kensington (L7) and Aigburth (L17). A copy of the survey form is to be found in Appendix Three.

Part One : The student housing market in Liverpool

The expansion in student numbers 3.2 In 1988 the then Conservative government announced its intention to double the

number of students in higher education by the year 2000. Academic institutions in Liverpool, as in other parts of the country, responded immediately to this challenge and according to Liverpool Student Homes (LSH 2000) the total number of students attending higher educational institutions in the city has grown from around 19,000 in 1986/87 to over 41,000 in the current academic year. This represents an increase of approximately 115%. It also means that the student population in higher educational institutions alone is about 10% of the current population of the city. Hence, the preferences of the student population and where they choose to live have a significant effect on the local housing market and most particularly on the privately rented sector.

3.3 One indicator of the increase in demand from the student population is the number of full-time students attending higher educational institutions, (although some of these too will live at home). It is difficult to obtain comparable statistical information from the mid-1980s, but the following statistics have been gleaned from HESA and elsewhere.

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Table 3.1 Growth of full-time students in higher educational institutions in

Liverpool 1985/6 1989/90 1994/5 1996/7 1997/8 1998/9 1999/00 Uni. of Liverpool

7,679 8,688 11,289 12,183 12,156 12,709 12,700*

LJMU 7,200* 7,700* 9,097 13,159 13,609 13,882 14,000* HOPE 3,223 3,327 3,685 3,600* LIPA 400 600 600* TOTAL 14,789* 16,388* 23,609 29,069 30,050 30,828 30,900* Source: HESA, LJMU, Liverpool Student Homes Annual reports, (* estimates) 3.4 Whilst overall student numbers have grown by 115%, Table 3.1 shows that the

demand for accommodation as represented by the growth in full-time student numbers is likely to have been very similar, perhaps increasing by just over 100% over a period of about fifteen years. This growth in demand has not been evenly spread over time. The most rapid growth took place during the first half of the 1990s and as the table shows, since 1996/97 the growth in full-time student numbers has been comparatively modest.

The direct provision of accommodation by the higher educational institutions

3.5 The different institutions have approached the task of ensuring accommodation

for their students in different ways. The University of Liverpool, the oldest of the higher educational institutions in the city, has been able to develop over time a substantial portfolio of accommodation for its students. As a result, it has for some time been able to operate a policy of guaranteeing accommodation in its own halls of residence for all first year students, (except those arriving through ‘clearing’), and for overseas students. It owns and manages about 3,360 bedspaces in its own halls and has an agreement with Liverpool Housing Trust whereby the Trust manages an additional 306 bedspaces on behalf of the University. This (academic) year, however, its intake was around 4,000 full time students and there were over 200 first year students who came through ‘clearing’ that the University was unable to place in its own accommodation. After assistance by the University and Liverpool Student Homes, however, all of these were accommodated in the private sector, most of them in newly constructed privately managed halls of residence.

3.6 Formerly Liverpool Polytechnic, Liverpool John Moores University (LJMU)

originally generated most of its students from within the Merseyside area and, hence, the need for accommodation of its own developed at a later stage. Since acquiring University status, however, it has been remarkably successful in attracting students and, (as Table 3.1 shows), its full-time student numbers have grown rather more quickly than UoL. Unlike UoL, however, LJMU has preferred to concentrate its resources on its academic building programme and in order not to prejudice its capacity to attract student numbers it has relied heavily on the privately rented sector for residential accommodation. Despite this provision, the scale of the increase in its student numbers, particularly

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during the early 1990s, has meant it has had to adopt a rather more pragmatic approach to student accommodation than UoL. It has, in the past, supplemented its own modest programme of provision with high-rise blocks acquired from the city council and by adopting leasing arrangements with local housing associations. But its continued success in generating student numbers, coupled with this dependence on the private sector, has provided the impetus underlying the niche-market for new, purpose-built student accommodation which has become a unique feature of the private rental market in Liverpool. Furthermore, as more accommodation in newly constructed privately managed halls has come on-stream, LJMU has been able to divest itself of some of its own stock either because it has become difficult to let for locational reasons and/or because the stock has been in need of substantial investment. The amount of direct provision provided by LJMU in recent years has therefore been falling.

3.7 Hope University, (formerly Liverpool Institute of Higher Education), specialises

in undergraduate and post-graduate courses in primary and secondary education. It has Halls of Residence places on campus in the Sefton Park area for 800 students. The Liverpool Institute for Performing Arts (LIPA) opened its doors to students for the first time in January 1996. It operates an annual intake of 200 places with a full complement of 600 students. It is located close to the main campus of UoL and whilst it has no accommodation of its own it has an agreement with a housing association (Cosmopolitan HA) to provide accommodation for first year students.

3.8 Table 3.2 summarises the provision of accommodation by the three Universities

over recent years. Table 3.2 Provision of bedspaces by the higher educational institutions in recent

years 1997/98 1998/99 1999/00

Uni. Of Liverpool 3,666 3,666 3,666 LJMU 1,834 1,654 1,494 HOPE University 800 800 800 Totals 6,300 6,120 5,960 3.9 It may be seen from tables 3.1 and 3.2 that whilst the number of full-time

students attending these higher educational institutions has been growing, the amount of direct provision (at least in recent years), has been marginally declining.

3.10 A further important influence on the nature and location of student accommodation in the city has been the contrasting way in which the two main universities have developed geographically. The University of Liverpool is largely a campus based university and when it embarked upon a major programme of student halls of residence during the 1960s its locational choice was in pleasant parkland in its own ownership approximately two miles to the south east of the campus (Sefton Park). When Liverpool Polytechnic began to develop its own halls it adopted the same idea of bussing in its students from

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‘the leafy suburbs’. As student numbers increased, this geographical concentration of students in the south of the city was consolidated in the privately rented accommodation along the axis of Smithdown Road between Sefton Park and the main campus of UoL at Mount Pleasant. The rapid expansion of the higher educational institutions during the late 1980s and early 1990s and their increasing reliance on the privately rented sector considerably widened the potential areas for student rented accommodation to other parts of Liverpool, but most notably within the pre 1919 stock in the Inner Core of the city.

3.11 The expansion of LJMU, first as Liverpool Polytechnic and subsequently as the

university, has been in marked contrast to UoL, however. It has acquired buildings over time throughout the city on a dispersed basis and now has a number of academic teaching centres, (referred to as ‘campuses’), throughout the city central area. In providing accommodation of its own, its more recent efforts have been focussed on securing accommodation much more readily convenient for these ‘campuses’. Despite straitened times for students during the 1990s, this has greatly increased the attraction of the central area of the city for student accommodation, and in the last three or four years in particular, private developers have seized upon this opportunity to embark upon a major programme of new building specifically oriented to the student market.

The provision of accommodation for students by local housing associations 3.12 A number of local housing associations have, at various stages, also provided

accommodation for students. Formerly called the Young Persons Housing Association, Cosmopolitan Housing Association has been providing accommodation for students in the city on a ‘not for profit’ basis since the 1960s. Whilst it has no formal agreements with the universities, much of its accommodation is made available to LJMU and LIPA students because of the proximity of its accommodation to LIPA and various LJMU ‘campuses’. In total it provides over 400 bedspaces in a variety of types of accommodation including furnished and unfurnished bedsits and flats. Cosmopolitan HA, as the name implies, also tends to specialise in accommodation for overseas students. It has also been one of the leading organisations in accommodating asylum seekers in the city under the Government’s current National Asylum Seekers Scheme (NASS), which has meant diverting some of its halls accommodation for students to asylum seekers.

3.13 As mentioned above, Liverpool Housing Trust, has a management agreement with UoL whereby UoL allocate 306 one and two-bed flats and collect the rents, and LHT manage the accommodation. This provision is currently being supplemented by another 50 bedspaces under phases II and III of the development, although these are not part of the management agreement.

3.14 During the period of the rapid increase in student numbers during the early 1990s, LJMU entered into a leasing agreement with Riverside HA over a purpose built development of three storey buildings, comprising approximately 200 bedspaces in self-catered five and six bedroom flats. The development is in Kensington, an area which is currently losing popularity with students, and the leasing arrangements are expensive for the University. In the light of these

30

problems, LJMU has subsequently negotiated a different agreement with Riverside over the conversion of a former local authority estate comprising over 420 study bedrooms. Under this arrangement the rental and tenancy policies are determined by Riverside, whilst LJMU manage the flats, which vary in size from three to six bedrooms, in return for a management fee.

3.15 In aggregate, therefore, local housing associations are contributing around 1,200 bedspaces, in a variety of types of accommodation, towards students’ requirements and there are proposals to provide more in future. Most of the accommodation provided to date, however, is included within the Universities’ own figures and to avoid double counting an estimate of perhaps an additional 250 bedspaces would be appropriate. This implies that the direct provision of accommodation by the Universities and housing associations in the city is about 6,200 bedspaces. If we assume that around 10% of full time students are living at home or do not require accommodation, this implies that around 21,700 students were seeking accommodation in the private rented sector this academic year.

The supply of student accommodation by private sector landlords

3.16 From 1990 to 2000, the overall growth in full-time student numbers has meant a

substantial increase in the student rental market. Around 1990, for example, full-time students numbered around 20,000. Direct provision by the universities themselves was likely to have provided about a quarter of this total, implying that the remainder, (with the exception of those living at home or in housing association accommodation), numbering perhaps 13,000 to 14,000 students, would have been accommodated in the privately rented sector. This suggests that demand for student accommodation in the private rented sector has grown by about 50% over the decade.

3.17 Most of this provision is made available in the form of shared houses and flats in pre- 1919 accommodation in the older areas of the city which appeals very much to students in their second and third years at university. In recent years, however, there has been a tendency for private developers to refurbish blocks of property for student lettings, or to construct new halls of residence on a significant scale and to take advantage of a city centre location for their developments. The scale of this phenomenon is unique to Liverpool and is a major departure from the type of provision normally made by the traditional private landlord. Apart from these new ventures, however, the overall profile of the student rented sector accords very much with the traditional pattern, where one or two large managing agents are responsible for a substantial portfolio of rented properties but the vast majority of provision is characterised by a large number of landlords and agents owning and/or managing a relatively small number of properties.

Changes in the student rental market during the 1990s

3.18 Whilst much of the student rental market may be regarded as traditional, this is

obviously changing. We know that there have been some significant changes in the nature of the market over the decade and that over the last four or five years

31

the market has been particularly dynamic. At least four major trends are discernible:-

• the tendency for students to seek accommodation in locations increasingly

secure and convenient for their studies;

• continuing evidence of an oversupply of accommodation in the traditional student rented sector;

• increasing fluidity between sub-sectors of the privately rented sector;

• and despite an oversupply, there has been a marked rise in the provision of newly constructed student accommodation in the city centre in recent years by private developers. We will now discuss each of these trends in turn.

Increasingly secure and convenient locations

3.19 During the 1990s the financial circumstances affecting students has become

increasingly stringent with exclusion from eligibility from Housing Benefit in 1991 and, more recently downward pressure on student grants and the introduction of means-testing, and finally, the introduction of student loans. The financial pressures on students are now much greater than they were with the result that most students are tending to consider their expenditure much more carefully. One obvious way in which they can save money is to minimise transport costs by living closer to college. LSH has charted the distribution of student addresses since its inception in 1992. Since then there has been a dramatic fall in the proportion of students living in peripheral locations such as The Wirral and L19, (see Table 3.3). These areas accommodated 8.7% of the student population in 1992/3, but by 1999/2000 this proportion had fallen to only 1.1%.

Table 3.3 Areas with a substantial fall in student population (1992 – 2000) 1992/3 1996/7 1999/00 % change L6 8.1% 8.1% 5.9% -2.2 L13 5.7% 4.2% 2.3% -3.4 L19 3.5% 1.7% 0.9% -2.6 L4 5.5% 1.9% 0.6% -4.9 The Wirral 5.2% 0.8% 0.2% -5.0 Source: LSH, 2000 3.20 At the same time Table 3.3 also shows a decline in the student population in the

east and north of the city in areas L6 and L13 (from 13.8% to 8.2%) and a dramatic decline in L4 (Anfield), (from 5.5% to 0.6%). All of these areas are in the Inner Core and whilst the scale of the decline in Anfield has been influenced by the disposal of a large number of properties by LJMU, it is suggested that these falls are not only the result of students moving for convenience but also because of the declining security of parts of these areas from the viewpoint of students.

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3.21 In contrast, Table 3.4 highlights those areas which have experienced an increase in student population over the decade. It shows a strong consolidation of student numbers in residential areas to the south of the city in Wavertree, Smithdown Road and Sefton Park.

3.22 These three areas, (L15, L7, and L17) now account for two-thirds of the student

population in the city, a growth of over 50% during the decade. Table 3.4 Areas that have experienced an increase in student population

(1992 – 2000) 1992/3 1996/7 1999/00 % change L15 18.9% 27.3% 31.5% +12.6 L7 13.8% 16.7% 20.5% + 6.7 L17 10.8% 15.5% 13.7% + 2.9 L18 7.1% 8.3% 9.9% + 2.8 Source: LSH, 2000 3.23 The two areas conspicuous by their absence from these tables are L8 (Toxteth),

where there has been very little change in the proportion of students, (from 8.6% in 1992/3 to 9.0% in 1999/2000), and the city centre. The latter shows a marginal growth in student numbers (from 3.0% to 4.0%), but it is felt that much of the growth in the city central area may be subsumed within the postal districts of L7 and L8.

3.24 The popularity of different areas is reflected in the chances of a landlord

completely letting his/her property. In the three main areas of student concentration the chances are relatively high (72 – 75%), whereas in L4 they are very low (25%).

An over-supply of student rented accommodation

3.25 The long-term decline of the population in the city has meant there has been a

city-wide oversupply of housing for some time, recently estimated by the Housing Department to between 8,000 and 16,000 units, (LCC, 1998). This oversupply is most manifest in the pre 1919 stock in certain parts of the Inner Core, as well as in some of the peripheral council housing estates. There are two key indicators which suggest that the student rented market is also characterised by an oversupply: the first is the information relating to unlet bedspaces obtained by Liverpool Student Homes on completion of the student ‘house-hunting’ period each year; and the second is the almost static rent levels recorded in certain areas of student accommodation.

3.26 Each year Liverpool Student Homes records the number of bedspaces which remain advertised at the end of the student ‘house-hunting’ period in February. Although some landlords/ladies fail to notify the bureau when their properties have been let and others only advertise some, rather than all their properties with the bureau, LSH still regards the surplus as a “fairly good indicator” of the rental market for students in the city. Table 3.5 shows that there has been a significant surplus of accommodation over recent years.

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Table 3.5 Bedspaces remaining unlet at the end of the house-hunting period (February)

0500

100015002000250030003500

93/94 94/95 95/96 96/97 97/98 98/99 99/00

Source: Liverpool Student Homes, 2000. 3.27 The table above shows that the number of unlet bedspaces has grown from a

surplus of about 1200 bedspaces in 1993/94 to over 3,000 in 1998/99 before falling again last year to around 2,750 bedspaces.

3.28 The second indicator of oversupply is reflected in relatively static, or even

declining, real rent levels. Again, LSH records rent levels by postal district areas and Table 3.6 shows the effect of comparing actual rents with real values in four different areas of student rented housing in the city. The figures in the columns marked (A) are actual rents, whereas those marked (Rl) are adjusted for inflation using 1993/4 as a base year. The four chosen areas are the areas with the highest and lowest rents, (city centre and L6), and a popular and less popular area, (L15 and L8).

Table 3. 6: Actual and real rents compared in four areas of student rented housing in the city 1993/4 1994/5 1995/6 1996/7 1997/8 1998/9 1999/00 L1, L2, L3 £36.00 £40.12 £41.00 £45.54 £46.64 £49.15 £53.13 A £36.00 £36.86 £38.15 £39.07 £40.28 £41.65 £42.32 RI L6 £31.32 £32.49 £34.09 £34.74 £34.22 £35.36 £35.20 A £31.32 332.07 £33.19 £33,99 £35.04 £36.23 £36.82 RI LI5 £30.72 £32.90 £33.89 £35.85 £35.85 £37.21 £37.62 A £30.75 £31.49 £32.59 £33.37 £34.41 £35.58 £36.18 RI L8 £32.75 £34.41 £37.25 £38.52 £37.75 £41.77 £41.72 A £32.75 £33.54 £34.71 £35.54 £36.64 £37.89 £38.50 RI 3.29 Table 3.6 demonstrates very modest rental growth in all areas with the

exception of the city central area (L1, L2 and L3) where actual rents have increased by just under 50% since 1993/94 and are 25% higher in real terms. In L6 actual rents have not kept pace with inflation and have fallen in real terms by 4.6% since 1993/4. This information is consistent with that provided by landlords during interviews. Several owning property in the L6 area of the city stated that their rents had not increased at all throughout the 1990s and, indeed,

34

that property prices in the area had fallen dramatically. Figures for the remaining areas are also interesting in that they show the reverse of what might have been expected in that rent levels in the less popular area (L8) are not only higher than L15, but they have also experienced a higher real increase, (8% compared with 4%).

3.30 During the interviews one or two landlords claimed that student rents in

Liverpool were amongst the lowest in the country. Comparing rents for student properties in these areas of Liverpool with those for student accommodation in south Birmingham would suggest they may have a point. The most frequently charged weekly rent band for student accommodation in south Birmingham during the academic year 1999/2000 was between £41 and £45 per person, (Groves and Revell, 2000). Although not exactly comparable with the figures in Table 3.6 it suggests rents may be higher in Birmingham than in most areas of student housing in Liverpool.

3.31 Taken together these two indicators would suggest an oversupply of property

available in the student rented sector in the city. The question is complicated by the recent dynamics of the market, however, in which substantial numbers of bedspaces have tended to be added to, or removed from the student market very quickly. This tendency towards increased fluidity in the market is considered next.

Fluidity between sub-sectors of the privately rented sector 3.32 One of the larger managing agents interviewed questioned whether it was

appropriate to study student rented housing in isolation from other aspects of the privately rented sector. His was a reminder that accommodation for students is only one sub-sector of the market for privately rented housing and that over the decade there appears to have been some fluidity between different sub-sectors as overall market circumstances have changed. Both LJMU and Cosmopolitan housing association have withdrawn substantial amounts of property from the student market in recent years. LJMU has either demolished or sold various student halls which it has used in the past and indeed some of that stock has been refurbished and re-let by private managing agents as residential accommodation for a business clientele. More recently, Cosmopolitan HA has withdrawn stock from the student market for use by asylum seekers.

3.33 These ‘social’ landlords are not alone in wishing to use their stock in a flexible

way to accommodate shifts in market demand. Indeed landlords owning substantial portfolios of rented property may be simultaneously letting their accommodation to different client groups, e.g. students, professional clientele, DSS claimants and, most recently, to refugees and asylum seekers. While each of these groups forms a sub-market with its own opportunities and challenges it is evident that landlords do sometimes attempt to switch between these sub-markets as circumstances in the wider market dictate. As has been set out previously the early 1990s was a boom period for the private rented sector in Liverpool with at least four factors sustaining a high level of demand for privately rented accommodation in the city:-

35

• the rapid growth in full-time student numbers;

• a severe recession in the market for home ownership, resulting in a high level of repossessions and a subsequent demand for rented accommodation;

• high levels of unemployment implying that the numbers of Housing Benefit recipients was relatively high;

• and government encouragement to potential investors in the privately rented sector through the deregulation of rents and the introduction of the Business Expansion Scheme, to increase the provision of assured tenancies through tax incentives.

3.34 All of these factors contributed to a buoyant private rental market in the city

during the early 1990s. One by one, however, these circumstances have changed in the intervening period.

• The BES scheme was discontinued in 1993;

• although slower to come out of recession perhaps than other parts of the country, the local housing market began to revive during 1996;

• the growth in student numbers has slowed considerably during the latter half of the 1990s;

• An improvement in the local economy has increased employment opportunities, reduced the numbers on Housing Benefit and raised aspirations towards low-cost home ownership once more;

• Successive governments have introduced measures to constrain the growth in Housing Benefit.

3.35 Since 1996, however, as the local housing market has revived, there has been a

resurgence in interest in city centre living and considerable investment in residential apartments for letting to a professional clientele, (as well as for students) in the central area. Currently, there is also a great deal of interest in the provision of rented accommodation for asylum seekers. As these changes occur, e.g. a fall in the number of HB recipients, or a substantial fall in benefit payments for supported housing, landlords may seek to compete for tenants in another sub-sector, by entering the student market, for example. By the same token, as the student market becomes highly competitive, and depending on the location and condition of his/her property, a landlord or agent may seek to let to asylum seekers. This market appears to offer the prospect of a more lucrative rental income, or he/she may have to seek to attract DSS applicants.

3.36 In many circumstances it may be extremely difficult for a landlord/agent to

transfer from one sub-market to another but even where it appears possible, there are serious issues for a landlord to consider. Not only do the sub-sectors pose different management challenges, they also have significant financial consequences. To give some indication of current variations in the latter, the potential rental income for a three-bed terraced house in inner Liverpool might be seen as follows:-

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a) average student rental income in Wavertree £150 pw £7050 pa (total weekly income = 4 persons x £37.50 per week: annual income = 42 weeks x £150 + 50% rent for 10 weeks) b) HB rental income (3 bed terrace) £69 pw £3588 pa c) appropriate rental under interim arrangements for the National Asylum Support Scheme (NASS) Singles (3 persons x £80 per week) £240 pw £12480 pa (annual income = 52 x £240) Families £165 pw £8580 pa (annual income = 52 x £165)

3.37 On the basis of these rental considerations alone it may be seen why there is so much current interest amongst landlords relating to asylum seekers. There are, of course, risks and responsibilities associated with the provision of accommodation and support for asylum seekers which do not exist for other sub-groups of tenants, but the potential financial benefits for landlords who are successful in securing approval for their properties to be used by asylum seekers are clearly evident. On the other hand, for a landlord struggling to let his/her property to students because of the perceived insecurity of an area there is a significant drop in income associated with a decision to let to DSS applicants.

3.38 The fact that landlords seek to transfer their properties between sub-sectors of

the rental market does introduce an element of complexity into our attempts to reach an understanding of the student rented sector and whether or not there is an oversupply of accommodation. There are a variety of reasons why landlords may seek to rationalise their portfolios. In some instances, a number of landlords seeking to switch out of the student sector may itself be an indication of falling demand; in other circumstances it may be an attempt to tap into a potentially more lucrative markets. Our conclusion is consistent with other observers in the market, that there does appear to be an overall surplus in the student rented sector, both in the provision of ‘halls’ accommodation for first year students and in the ‘traditional’ sector for shared accommodation by second and third year students. Having said this it also seems apparent from our interviews that there remains an active market for one bed apartments. The above discussion is also a timely reminder, however, that the rented market is both complex and dynamic and that the student sub-market does not exist in isolation from other sectors.

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The dramatic increase in the supply of purpose-built private sector halls of residence in recent years.

3.39 Despite this apparent oversupply there has been very substantial provision of

newly built and converted halls of residence by housing associations and private developers in recent years. A list of these schemes and their locations is provided in Appendix Two. LSH’s analysis of the student housing market in 1995 makes reference to 9 developments already undertaken by the private sector accounting for almost 700 bedspaces and a further five schemes by Young Persons HA (now Cosmopolitan HA) accounting for more than 400+ additional spaces. This accommodation was provided independently of the universities but was clearly intended to cater for the rapid expansion of student numbers during the early 1990s and some schemes were grant aided through City Challenge funding. At the time they constituted a ‘mixed bag’ of schemes ranging from some fairly basic hostel accommodation to new purpose-built schemes. The latter afforded a substantial improvement in standards over the traditional pre-1919 rented housing, whilst most also had locational advantages as they were often situated in the city centre as well as close to particular academic institutions. Several of these schemes are no longer available for students, however, one has been closed and at least two others are now used for asylum seekers.

3.40 With the easing of circumstances in the local housing market after 1995 and the

development of the City Council’s ‘City Centre Living’ strategy this practice of building new halls of residence in central locations has continued, despite the fact that the growth of student numbers has slowed very significantly. More recent developments, however, have not only been larger but have also been constructed to higher specifications, most notably eschewing communal bathing facilities in favour of en suite showers and WCs, adding the installation of individual internet connections, and in most recent circumstances, intending to provide shops, fast-food restaurant and pub facilities as well. Since the 1995/6 academic year, LSH estimates about a further 2,000 bedspaces have been provided by the private sector in this way.

3.41 Despite relatively high rental charges compared with the traditional pre-1919

stock and some management problems, all of these new developments have been successfully let in previous years, although LSH argued in its most recent report that this had not been entirely “plain sailing”. Nonetheless, according to information supplied by the Planning Department, there are currently seven developments on site in preparation for September 2000 accounting for another 2260 bedspaces and further planning applications under consideration for at least another 550 bedspaces. As the number of bedspaces is not specified in respect of several of these applications, this is a potential underestimate of the total number of bedspaces planned.

3.42 In comparison with the 2,000 newly-built (or converted) bedspaces which have

already been provided since 1995/6, full-time student numbers in the higher educational institutions have grown by an estimated 2750 students over the same period. Whilst a small proportion of these students would have lived at home and presumably would not have required accommodation of their own, we

38

know that this additional provision has been superimposed on an over-supply of rented accommodation by the traditional private landlord and, in recent years, a modest fall in the direct provision of accommodation by the Universities.

3.43 It is clear since 1995/6, therefore, that the growth of provision of private sector

halls has accommodated the equivalent of almost the entire increase in total student numbers over the same period. What this increase in halls provision has done, however, is to enable LJMU in particular to meet its objectives in guaranteeing accommodation in ‘halls’, (albeit in some private sector halls), to all first year and overseas students, whilst at the same time off-loading some accommodation of its own which had become expensive or difficult to let for locational reasons. LSH, in commenting on the impact of the new private sector developments, has suggested that the main impact hitherto has been on other, smaller private sector halls of residence which, either for locational reasons or because they simply do not have comparable facilities, have been unable to compete for students. By way of illustration, two recently constructed developments owned by Cosmopolitan HA, offering a total of 230 bedspaces, have been transferred for use by refugees and asylum seekers in the last two years. LSH concludes that, “The traditional private rented sector has not suffered as much as we may have expected, if at all”, (LSH, 2000).

3.44 Perhaps unsurprisingly this was not the view of most of the landlords and

managing agents interviewed. All expressed some anxiety about the effects of the new developments (the equivalent of an additional 2260 bedspaces) this year and most, although not all, claimed to have experienced more difficulties in letting their accommodation this year than in previous years. Of the three medium-sized management agents interviewed all had experienced difficulties in letting their accommodation, (mostly in the form of shared houses or flats), for September/October 2000. One admitted having had “their worst year this year” and having experiencing ‘shrinkage’ as a result of increased competition. By this he meant that he had lost a number of properties he had hitherto let on behalf of owners because the margins for owners after the management fee had not permitted them to make sufficient surplus. A second also felt this year had been their most “difficult” and they had more unlet properties at this time of year than hitherto. This year, unlike previous years, current private sector developments on-site and being marketed for the first time will significantly outstrip the annual growth in student numbers. The provision of accommodation in ‘halls’ (provided both by the universities and the private sector) will then exceed that required to accommodate the first year intakes of all the higher educational institutions and overseas students. Whilst it seems likely that LJMU will continue to ‘offload’ accommodation, this will effectively bring this type of accommodation directly into competition with the shared housing of traditional private landlords in the Inner Core which has, hitherto, been the preferred option of students in their second and third years especially.

3.45 As far as the new halls are concerned they have already been advertised to

current students, (who will be in their second and third years from the autumn term), for some time. They also have some distinct advantages over the competition. Almost without exception they have been constructed in a city centre location which has proved to be a major attraction for students and

39

parents alike. The location is seen to be secure, convenient for a number of colleges, but with the added advantages of shopping centre facilities, restaurants, pubs and ‘nightlife’. The private landlords interviewed saw the latter as being increasingly attractive to the lifestyle of current students and argued it was one of the major attractions of the city as a whole for prospective students. Other major advantages include the en suite facilities and internet connection available in each room; good furnishing and other facilities, such as the communal sitting room/ kitchen and heating systems; and the overall 24 hour security arrangements. The principal disadvantages are twofold; the relative cost and the institutional ‘feel’ of the accommodation. The advertised rents of three of the new halls range from £55 to £59 per week (over a 42 week year) for single rooms, and £99 per week for doubles, although there are various discount schemes available for prompt/single payments.

Conclusions: the impact of these new developments on the traditional landlord and private rented housing in the Inner Core

3.46 The above discussion has illustrated that the student rented market has been

particularly dynamic in recent years. It has also shown that there are sub markets within the sector itself. This is most notably between first year students who are largely accommodated within halls of residence (where there is some supervisory presence as a result of the ‘duty of care’ exercised by the universities), and second and third year students who appear to prefer to leave the institutional environment of halls in favour of shared accommodation within the privately rented sector.

3.47 The private sector new build provision of recent years has largely been targeted

at the first year student market. With the amount of new halls accommodation coming on-stream for the first time this year it is evident that the overall amount of this type of provision now significantly exceeds the combined intake of first year and overseas students from all of the higher educational institutions in the city. It is not yet known exactly what is likely to happen at the commencement of the next academic year but there are likely to be a number of different effects.

3.48 Firstly, most observers in the market feel that it is unlikely that the new hall

operators will successfully let all of their accommodation. Some feel that there isn’t the demand for the scale of accommodation on offer at current rent levels. This market is now highly price sensitive and the potential for voids may persuade hall operators to reduce rents in order to attract more students; alternatively, they may attempt to diversify the potential market for their accommodation. One operator already argues that their development is not solely for students but also for ‘key’ workers. There is, however, likely to be a significant conflict of lifestyles between students and those in the labour market. Another option would be to seek an alternative market altogether and it is already rumoured that one of the developers of a newly constructed ‘hall’ is seeking to accommodate asylum seekers in the block.

3.49 A second effect is likely to be that the new provision will continue to have an

impact on existing halls of residence both in the private sector as well as those owned and/or managed by, or on behalf of, the universities. It seems highly

40

likely, for example, that LJMU will continue to offload some of the halls of residence currently advertised for its students. At the same time some of the halls of residence at UoL are now a little “jaded”, they are over thirty years old and offer catered facilities which are not as popular with students as they once were. This may create greater difficulties for UoL in filling its own halls accommodation. There may also be a similar impact on some of the less well appointed privately owned and managed halls in the city centre where standards are low, but the accommodation is cheap.

3.50 Most observers also believe, however, that the new halls provision will now

begin to spill over into direct competition with the shared accommodation provided by traditional private landlords by the attraction of second and third year students. Already, in recent years, there has been a tendency for students to move away from those areas of the city which they perceive to be increasingly insecure. These include areas such as Kensington, where there are many boarded up properties; parts of L8, such as Granby Street, which has failed to live down its reputation from the 1980s riots; and parts of Anfield.

3.51 Whilst it was felt that many second and third years would often prefer to live in

shared accommodation, there was also a view that the facilities and city centre location of the new private developments were also attractive. These facilities now offer a choice for some second and third year students which was not available before. The effect of this will be to provide further competition for traditional landlords within a market in which there is already an oversupply. This means that landlords trying to let properties in locations which were felt to be insecure, or at a distance from the universities, or who were charging ‘over the odds’ were likely to be more vulnerable than in the past. Areas mentioned which were likely to be vulnerable for these reasons were, Kensington; the city end of Smithdown Road/Lodge Lane; and parts of Wavertree (north of Gainsborough Road). As the student population leaves these areas, landlords will seek to replace them with other tenants, e.g. DSS claimants, homeless households. This not only changes the nature of the clientele, it also reduces the rental income for the property by approximately 50%, (see earlier discussion on rental incomes), and depresses other expenditure which may have taken place in the area. On this basis the loss of 100 student households from an area like Kensington, might reduce the revenue to the area by an estimated £500,000 per year.

3.52 It will be important for all concerned to monitor these new developments in the

student rental sector much more closely than has been the case hitherto.

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Part Two : Findings from the Social Survey of student preferences

Introduction to the survey and the sample

3.53 The survey of student preferences was conducted as a postal exercise and, at the

request of the Housing Department, was focussed on particular geographical areas of student concentration. The LSH database of student addresses was used as the sampling frame and in all 3,081 questionnaires were despatched to addresses in the central area (L1, L2 and L3); Wavertree (L15); Kensington (L7) and Sefton Park/Aigburth (L17). One questionnaire was sent to each address, but because the number of students actually staying at each particular address was not known, the sample size is difficult to calculate. In order to give some indication of sample size, however, we have calculated the potential number of bedspaces available and the percentage of those bedspaces represented by the number of questionnaires received. 324 questionnaires were returned, which amounts to a 2.2% response from all potential students in these areas. This means, however, that the number of returned questionnaires for the different areas, (e.g. the city central area) is very low and hence the findings are indicative only and need to be treated with caution. The distribution of returned questionnaires is shown in Table 3.7.

Table 3.7 The distribution of returned questionnaires No. of

questionnaires % of questionnaires

Returned questionnaires as % of total bedspaces

City Centre (L1, L2, L3) 10 3.1 0.31 Wavertree (L15) 158 48.7 3.14 Aigburth/Sefton Park (L17) 68 21.0 3.29 Kensington (L7) 79 24.4 1.84 Other 9 2.8 N/a Total 324 100.0 2.21

Background information 3.54 Despite the very modest sample, the survey solicited responses from students

from all four higher educational institutions, although only two respondents were from LIPA. Over half the respondents (53.1%) were from UoL, 36.1% were from LJMU and 9.9% from HOPE University. Given the response rates from the different areas of the city it is not surprising that only a small percentage of respondents were first year students (4.0%). A much larger group were second years (45.1%) and a significant group were third years (30.9%). Postgraduates amounted to 9.3% of respondents and a further 7.1% were in the fourth year of their taught programme.

3.55 Since only a modest proportion of respondents were first year students (4.0%), it

might reasonably have been assumed that most of these were living in halls of

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residence. However, in practice only 23% of them were, a similar proportion were living in housing association property, (although some of these might also be classed as ‘halls’), and almost half were in shared accommodation in the private sector. Surprisingly in our sample, only 7.7% of first year students responding to the survey were living in university halls. The vast majority of students (79.3%) were living in shared housing in the privately rented sector. This sector attracted students at all stages of their university education, but 45.7% of these were second years and 33.3% were third years. A further 7.4% of students were living in housing association property and these were reasonably divided between first, second and third years as well as some postgraduates. Very few students these days appear to live in bed-sit accommodation or as lodgers. In comparison with the overall distribution of students in the city this constitutes an under-representation of students in halls, (and particularly university halls) and a corresponding over-representation of those in shared accommodation.

3.56 In response to the question asking where students found out about their

accommodation, 62.3% of the sample cited Liverpool Student Homes and a further 8.0% mentioned the university accommodation offices. In the case of the former, this would have included obtaining information via the web-site as well as making a personal visit to the LSH office. A significant amount of information about accommodation is still clearly transmitted by word of mouth, (19.8%), but surprisingly few students had found their accommodation through newspaper adverts (0.9%) or adverts in local shop windows (0.3%), or through estate agents (3.4%). These figures suggest that LSH is working very effectively as a clearing house for student accommodation.

Rents 3.57 More than 8 out of every 10 students (84%) were paying weekly rents of

between £31 and £45 per week. Most students paid weekly rents of between £36 - £40, (43.8%) and a further significant proportion (22.5%) paid rents of £31 - £35. For the most part these rent levels reflect the costs associated with pre-1919 shared housing in the privately rented sector and they contrast sharply with the higher rents of the more recently constructed and better appointed ‘halls’ accommodation generally located in the central area. By way of illustration, 97.7% of rents in shared housing in the privately rented sector are less than £46 per week, whereas 85.7% of ‘halls’ accommodation exceed £46 per week. Housing association rents tend to come between the two with 50% of tenancies falling below £40 per week and the remaining 50% amounting to between £40 and £60 per week. A general breakdown of rents is shown in Table 3.8.

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Table 3.8 The distribution of weekly rents per person Rent levels Frequency % Cumul %£21-25 3 0.9 0.9£26-30 15 4.6 5.6£31-35 73 22.5 28.1£36-40 142 43.8 71.9£41-45 58 17.9 89.8£46-50 14 4.3 94.1£51-55 10 3.1 97.2£56-60 2 0.6 97.8Over £60 7 2.2 100.0

3.58 Translating these rents into monthly and annual figures means that typically for

a pre-1919 terraced property with four persons sharing the monthly rent will amount to between £576 and £640. Most contracts now appear to be based on a 42 week academic year with a 50% rental over the remaining ten weeks, (although 20.4% of respondents paid rent over a full year). Calculating annual rents using the former contractual arrangement brings the annual amount to between £6768 and £7520 per property. On an individual basis this works out at between £1680 and £1880 per annum. There is usually a refundable deposit of one month’s rent, (95% of respondents paid a deposit), and in over 80% of cases (83.3%) students were responsible for additional charges, such as, electricity, telephone rental, etc.

3.59 These figures compare with weekly rents of between £56 and £59 in two of the

new private sector ‘halls’. On top of these rents, deposits of between £295 and £400 are also payable, (on a refundable basis), and in one of the halls a booking fee of £45 is also required, although this may be offset against the security deposit. Contracts are also for 42 weeks, bringing the annual rental charges up to £2,352 and £2,478 respectively. One of the halls operators gives a 5% discount for a single annual payment (in August) which would bring the annual rent down to £2,234.40. Both halls operators also charge for electricity. In summary, it appears that there is a difference in annual rents of the order of £500 - £800 between the ‘halls’ accommodation and typical pre-1919 rented stock. There are, of course, variations from these figures in both the halls and the pre-1919 stock.

Factors influencing choice of current property

3.60 In response to the question asking respondents to rank in order of importance

various factors in their choice of current property the following six factors were considered ‘very important’.

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Table 3.9 Key factors rated as ‘Very Important’ in choice of current property Rank Factor Frequency 1 Affordable rent 58.8% 2 Choice of whom I live

with 48.6%

3 Security/safety in property 45.1% 4 Cond/standard of

accommodation 39.5%

5 Security/safety in neighbourhood

33.4%

6 Proximity 22.2% 3.61 Table 3.9 shows that ‘affordable rent’ emerged as the most important issue in

determining students’ choice of property. It was the only factor ranked as ‘very important’ by a majority of respondents (58.8%). Close behind was ‘choice of whom I live with’ (48.6%) which is, of course, a major factor which explains why shared accommodation is so popular with students. Third was ‘security/safety in the property’ (45.1%). At the other end of the spectrum, less than 1% of respondents regarded ‘catered accommodation’ or ‘On-site supervision’ as ‘very important’ issues.

3.62 When we consider the ranking of issues regarded as ‘important’, (as distinct

from ‘very important’), the top six rankings vary a little but not much, (see Table 3.10). Affordability drops out of the frame, but some other very interesting considerations are introduced, ‘closeness to social attractions’ emerges as joint first, (59.9%) and ‘reputation of landlord’ comes in at 5 with 50.9% of respondents’ votes. Again, in contrast, fewer than 5% of respondents saw ‘On-site supervision’ or ‘catered accommodation’ as ‘important’ for them.

Table 3.10 Key factors seen as ‘Important’ in choice of current property Rank Factor Frequency 1 Closeness to University 59.9% 2 Closeness to social

attractions 59.9%

3 Condtn/standard of accommoodation

54.9%

4 Security/safety within neighbourhood

53.6%

5 Reputation of landlord 50.9% 6 Security/safety within

property 50.6%

3.63 Adding ‘Very important’ and ‘Important’ rankings together provides the

following factors as they emerge as most important to our sample of students in choosing their current accommodation.

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Table 3.11 Adding rankings for ‘Very important’ and ‘Important’ considerations Rank Factor Frequency 1 Affordable rent 95.5% 2 Security/safety in property 95.7% 3 Cond/standard of

accommodation 94.4%

4 Security/safety in neighbourhood

87.0%

5 Choice of whom I live with

85.5%

6 Closeness to university 82.1% 3.64 Only two factors scored very low on this basis, both scoring under 6% and these

were, ‘On-site supervision’ (5.3%) and ‘catered accommodation’ (2.8%). The next lowest ranking was ‘Closeness to family/friends’ with a score of 41.8%.

3.65 Finally, the issues which were considered as ‘unimportant’ by respondents are

reasonably consistent with the findings above. The six key issues ranked as ‘unimportant’ are outlined in Table 3.12. There are two interesting inclusions on this list: the first is ‘Reputation of the landlord’ and the second, ‘closeness to social attractions’. Both of these issues also emerged in the first six issues ranked as ‘important’. Indeed ‘closeness to social attractions’ was ranked equal first. Clearly both these issues are important for some, but evidently not for everyone.

Table 3.12 Key issues ranked as ‘Unimportant’ Rank Factor Frequency 1 Closeness to

friends/family 43.3%

2 Opportunity to study in quiet environment

38.1%

3 On-site supervision 25.7% 4 Reputation of landlord 25.2% 5 Closeness to social

attractions 24.7%

6 Catered accommodation 24.1% 3.66 Having considered the relative importance of issues concerned with choice,

question 9 asked respondents to evaluate a number of aspects of their property. Five criteria were cited: overall state of repair, standard of maintenance, quality of facilities, responsiveness of landlord/manager and overall value for money. On each of these criteria a substantial majority of respondents recorded reasonable levels of satisfaction. Surprisingly perhaps, ‘responsiveness of landlords’ recorded the highest frequency of ‘very good’ responses, followed by ‘quality of facilities’ (22.5%). Somewhat contrarily, ‘responsiveness of landlord’ also recorded the highest levels of dissatisfaction. More than 11% of

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respondents found their landlord to be ‘poor’ in terms of responsiveness and a similar proportion ‘very poor’. ‘Standard of maintenance’ also returned the same level of dissatisfaction at 22.2% with 14.8% regarding the standard of maintenance on their property as being poor, and 7.4% viewing it as ‘very poor’. In terms of ‘overall value for money’ 86.7% of respondents were satisfied with their accommodation.

3.67 The aggregate numbers of shared houses permitted a breakdown of students’

levels of satisfaction with regard to this particular type of accommodation. These are illustrated in Table 3.13. Unfortunately, because these premises account for almost 80% of properties surveyed, they tend to reflect the average for the sample as a whole. Neither is it possible to make statistically justified comparisons with other types of accommodation. The one point that stands out, however, is that over 20% of shared properties were managed by landlords who were not seen to be particularly responsive to tenants’ needs. Moreover, these properties were disproportionately found to be in the Wavertree area. Given the increased competition in the market place outlined in Part I of this chapter this would not appear to be the right time for landlords of this type of accommodation to become complacent.

Table 3.13 Students’ attitudes towards various aspects of shared housing (%) Very good Good Satisfactory Poor Very

poor Overall state of repair

14.8 34.2 36.2 11.3 3.5

Standard of maintenance

15.6 29.2 33.5 15.6 6.2

Quality of facilities

20.6 29.6 37.4 10.9 1.6

Responsiveness of landlord

26.8 25.3 26.5 11.3 10.1

Overall value for money

18.3 33.5 35.4 8.6 4.3

Views regarding the neighbourhood 3.68 Respondents were asked how they evaluated various aspects of their

neighbourhoods. Aggregate responses are presented in Table 3.14. 3.69 The table shows generally higher levels of overall satisfaction with aspects of

the neighbourhood than with the property (Table 3.14) and satisfaction with transport facilities seems particularly high. There is, however, one important exception, ‘safety and security’, 23% of respondents were evidently not happy with the safety and security of their neighbourhoods. Whilst the small sample is a handicap in drawing statistically justified conclusions for the different parts of the city, it is evident that there are problems in L7.

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Table 3.14 Students’ attitudes towards their neighbourhoods (%) Very good Good Satisfactory Poor Very poor Safety and security

7.8 31.7 37.6 18.3 4.7

Shopping facilities/ amenities

23.0 40.1 26.4 9.6 0.9

Transport to college etc

39.8 44.7 9.9 5.3 0.3

Accessibility of social attractions

28.0 42.5 20.8 8.1 0.6

Housing histories 3.70 The next question sought information about respondents’ housing histories as a

student in the city and their levels of satisfaction with their housing circumstances. Most respondents (82.8%) had previous experience of student accommodation in the city. Moreover, as might be expected, the vast majority of students (84.8%) spent their first year in university halls and a further 5.3% had stayed in private sector halls. Over half (57.6%) had been resident in the south of the city, 20.8% had been centrally located and a further 6.1% were in the eastern part of the Inner Core. Most appear to have found their accommodation most satisfactory. Less than 10% rated their first housing experience as less than satisfactory and only 3.8% felt it had been ‘very poor’.

3.71 On completing their first year, the vast majority of students moved out into the

privately rented sector during their second year. Over 90% moved into shared accommodation, whilst a further 2.8% stayed in private sector halls of residence. A few, (4.2%) stayed in university halls during their second years. Wavertree became the overwhelmingly popular location for second years with exactly half the total respondents living in this area. Another popular area was Kensington with 19.6% of respondents staying there. Satisfaction with the accommodation experienced something of a fall during second years, however, with 79.6% expressing their satisfaction compared with over 90% during year 1.

3.72 Once into shared accommodation in the privately rented sector there appears no

going back, however, because thereafter the proportion of students living in shared housing is never less than 87.3%. The survey information tends to show, moreover, that once students have chosen their accommodation, most appear to stick with it, at least for the academic year. Only 8.7% of respondents expressed their intention to move during the academic year, for example, and more than a third (38.8%) indicated they were interested in returning to the same premises the following year. It is presumably these students who wish to return to the same accommodation the following academic year who are paying full rents over the summer period. Very few students recorded more than three housing experiences and these are far fewer than the numbers staying on into a fourth or fifth year, or for postgraduate study. Wavertree and Kensington are

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joined by Aigburth as another popular area for third year students, whilst overall satisfaction levels appear to re-establish themselves, (88.7%), before falling back again thereafter, (73.3%) for those experiencing their fourth housing choice.

Future preferences for student housing

3.73 If they were intending to return for their studies, respondents were then asked to

state their first, second and third preferences for area and accommodation. Over half the total of respondents (51.2%) gave their first preference, just under a third (31.7%) provided a second, and 27.2% of respondents also gave a third. For those giving their first preference the choice of areas was very much as expected. Wavertree was the most favoured location with over a third of respondents (34.3%) hoping to secure accommodation there. A city centre location was also in relatively high demand with 26.5 % of respondents expressing preferences for this area. Allerton and Aigburth were also reasonably popular, but the two least popular areas were Kensington and Anfield.

3.74 The findings were very interesting when it came to the demand for different

types of accommodation. Over 70% of all respondents expressed a preference to live in shared housing and in Wavertree, for example, the overwhelming demand was also for a shared house, (93%). In other areas, however, demand was also expressed for other forms of accommodation, most notably for housing association accommodation. In the city centre there appears to be a demand for all types of accommodation, including both university and private sector halls of residence, housing association property, bedsits and lodgings. Whilst shared housing remains the most popular choice in the city centre, the consequence of this increasing diversity of demand is that the proportion of respondents looking for shared housing had fallen to less than 50%. This suggests that students are being both informed and realistic in their choices, whilst they see the city centre location as highly desirable from their point of view they also know that the costs are higher and the amount of shared accommodation on offer is limited.

3.75 As far as second preferences were concerned there are also some interesting

changes. Wavertree begins to lose ground as a preferred location with all other areas, (except Anfield and Kensington), gaining popularity. The city centre becomes the most popular location with 29.1% support compared to Wavertree (26.2%). Shared housing remains the most popular form of accommodation (46.6%) but other types of property are gaining ground. More than a quarter (27%) opt for housing association accommodation, for example, and 16.5% for halls on an approximately equal basis between university and private sector. The most popular choices of property and location are equally divided between shared housing in Wavertree, Aigburth and Allerton.

3.76 Third preferences tend to consolidate the changes. The city centre becomes by

far the most desirable location (40.9%), followed by Wavertree (25.0%). Allerton and Aigburth retain their popularity, but Anfield and Kensington have almost disappeared from the frame. Whilst shared housing still remains the popular choice (38.6%), halls of residence, (with a slight preference for

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university halls), and housing association property substitute each other for position. Shared housing in Wavertree now shares pride of place with city centre located university halls (10.2% each).

3.77 When asked what factors would be important in making their choice

respondents (perhaps unsurprisingly) gave almost exactly the same response as they had to an earlier question asking about their choice of existing property. The first six issues ranked either as ‘very important’ or ‘important’ are shown in Table 3.15. It may be seen from the table that the issues are the same but there are some minor changes within the ordering of the priorities.

Table 3.15 The six issues ranked either ‘very important’ or ‘important’ in

determining future choice of accommodation Rank Factor Frequency 1 Security/safety in property 98.3% 2 Affordable rent 96.6% 3 Security/safety in

neighbourhood 95.5%

4 Condition/standard of amenities

95.5%

5 Choice of whom I live with

84.7%

6 Closeness to university 83.0%

Intention to stay or leave Liverpool 3.78 The final part of the questionnaire asked students whether it was their intention

to stay in the city at the end of their studies and, if so, what form of accommodation they would be looking for and where would they like to live. In answer to the first question, 22.2% of respondents said that it was their intention to stay in Liverpool, a further 40.1% said that it was not, and the remainder (37.7%) were not sure what their intentions were. Although respondents were asked to give first, second and third preferences for location their first choice in each case was consistently Wavertree. Thereafter, the city centre vied for second place with Allerton and Aigburth as the students’ choice.

3.79 As far as types of accommodation were concerned it was evident that the

majority looked forward to a change of tenure. Sharing a house might have been their preferred choice as students but once they began their careers a significant proportion were hoping to rent a house/flat in order to live ‘independently’ or on their own (60.9%). Quite a significant proportion (21.8%) wished to buy a house or a flat, whilst a rather modest 11.5% were presumably continuing to share accommodation in the private sector. As far as subsequent choices were concerned these tended to reflect lower levels of aspiration, for example, they involved higher levels of shared ownership and renting from housing associations and also introduced the option of renting from the local authority.

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Key issues for policy-makers arising from the survey

3.80 Competitive rent levels together with other key factors influencing students’

choice of accommodation suggest that there will be a sustained commitment to shared housing for the majority of students. There are, however, one or two corollaries to this statement. First, students are looking for accommodation that provides them with accessibility and good value for money, but, secondly, this must increasingly be within safe premises and a secure environment. Within the current ‘buyer’s market’ they are likely to be increasingly demanding, not only of standards of accommodation, but also of standards of service and there are two underlying sub-texts within the survey data which suggest that there is scope for some change in consumer behaviour. The first is the obvious lure of a city centre location for many students and the access this provides particularly for social attractions of one sort or another; and the second is the apparent poor service delivery made by a significant proportion of landlords of shared housing, (21.4%).

3.81 The survey evidence also suggests the continuing popularity of Wavertree,

Aigburth and Allerton as areas of concentration for students, with the city centre emerging as an increasingly important locus for the reasons suggested above. Conversely, areas of declining popularity, almost irrespective of costs, are those areas in which students feel insecure or threatened, and these have included Anfield and Kensington to the east of the central area.

3.82 There is also a strong message for the universities in respect of the changing

popularity of catered facilities. As far as the housing histories are concerned these clearly emphasise the two sub-markets between first years and older students. Unfortunately, the survey did not perhaps bring out the existence within these of quite specific niche-markets, e.g. the example mentioned in part one of one-bed apartments, or specific provision for overseas students with particular religious or cultural needs, or post-graduates. As the market evolves these market distinctions are likely to grow in significance.

3.83 Finally, the survey revealed that a proportion of those studying at universities in

the city actually intended to remain on completion of their studies. There is clearly a challenge here for the local authority and local businesses to mount a campaign to seek to retain a higher proportion of graduates who are educated in the city and have some affinity with it. Such a campaign would seem to have much to commend it, not least of which because almost 40% of respondents were undecided about their future and were potentially open to suggestion.

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CHAPTER FOUR: CONCLUSIONS: THE FUTURE OF THE PRIVATE RENTED SECTOR IN THE INNER CORE

4.1 This report has set out the pattern of change in the private rented sector in

Liverpool in recent years and established key characteristics of the market in different parts of the city. In considering the future of the private rented sector in the inner city it is important to be aware of key elements in the background to the sector.

• It is almost 30 years since demolitions peaked in the city;

• The area has been affected by a series of major policy shifts associated with clearance, area renewal and the promotion of different tenures;

• There has been a lack of stability in the policy environment and increasing fragmentation of ownership and control of property.

4.2 The more recent history has been associated with:

• A marked weakness in the owner occupier market;

• Falling property values and the emergence of negative equity

• Falling rents;

• A growth in private renting resulting from market weaknesses rather than opportunities;

• Market weaknesses have been masked by the 100% growth in the student population.

4.3 The present situation is highly dynamic with new developments in the city

centre and new speculative developments for students exposing the weakness of the market in the Inner Core.

• There is an over supply of privately rented housing in the Inner Core and the

market itself is not clearing and correcting this over supply;

• There is little demand from owner occupiers or others for much of the property in the sector and the financial position of the owners of property may lead them to continue to seek to rent these properties;

• It is likely that increased supply is associated with problems of negative equity and falling values as a result;

• In addition, the restructuring of the student housing market may mean that there will be an increased availability of properties previously used by students.

4.4 These problems are most apparent in Kensington and Anfield. Students are

moving out and rents are not rising. The loss of students in these areas is not simply a feature of housing market change but affects the local economy with a

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significant withdrawal of spending (for example the value of expenditure from the 6,000 students in L7 is approximately £30 million per annum). The movement of students out of these areas is likely to be progressive and incremental as new development for students becomes available. It is possible however that more rapid abandonment could arise once a threshold level was reached and if this resulted in high levels of voids and associated neighbourhood problems.

4.5 In addition to the downward spiral described in relation to the Inner Core, there

are also some speculations about the possibility that difficult to sell former council properties will increasingly come on to the market for private letting. They could become a significant part of problems associated with the management of council estates. Problems associated with private renting are likely to become more widespread, and to become deeper in the declining east of the city; in Anfield and Kensington.

4.6 Choice and insecurity combined lead to a high degree of churning and the impact

of this on the desirability of neighbourhoods is damaging. It is the worst areas with the greatest problems that have seen the most rapid increase in private renting and this has adverse consequences.

4.7 The situation of oversupply has some clear consequences

• rents are unlikely to increase;

• the easy availability of property means that private landlords are exposed to the same high costs associated with high turnover as are social or not for profit landlords;

• tenants absconding, problems with obtaining rent, damage to property and the high costs of redecoration associated with a higher rate of reletting all squeeze profitability;

• except in those market niches which cater for higher income tenants both higher turnover and the responses to it by landlords are likely to make properties less attractive and to maintain high turnover;

• landlords operating in some parts of this market will see no prospects of increased values in property and they will seek to make their businesses and investments work simply by maximising rental income. This will in some cases, be associated with minimising expenditure on properties.

4.8 These developments and landlord responses in the private rented sector do not

only affect properties in that sector.

• They affect neighbourhoods and neighbourhood management;

• They are likely to increase the problems in the owner occupied market in areas where there is mixed tenure and low demand – and this applies to areas of older housing and to areas in which owner occupation forms a minority tenure in council built neighbourhoods;

• Owners in areas where property values have fallen may find it difficult to

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sell to new owner occupiers or to sell at a price which clears their outstanding debt or appears worthwhile. Consequently they are more likely to let their houses themselves – or to sell to purchasers who are investing to capture the rental income rather than with expectations of appreciating property value;

• The increase in private lettings and problems of high turnover and void property in this part of the market, is likely to make the area even less attractive for house purchasers.

4.9 There are a number of unknown factors which may modify this picture in the

next few years.

• The policies under discussion in relation to asylum seekers could contribute

significantly to reducing over supply. The National Asylum Seekers Scheme requires accommodation to be provided to specific standards and could result in both an upgrading of some property and a continuing uptake of 600-900 vacancies per year;

• The City Centre strategy will produce attractive alternatives for the emerging professional and executive market in new locations in the inner city. One view is that this is an expanding market and rather than reducing demand elsewhere the developments will draw net increases in demand for private renting. Alternatively it may draw some demand away from the more attractive properties in the private rented sector. We need more data on landlords and how they make decisions. We also need more information about the aspirations and choices of people who rent or buy the types of property that are mainly on offer for private renting. This particularly applies to those parts of the city experiencing major changes in relation to private renting but it is important beyond these areas. A wider monitoring and assessment of the development of the market is required.

4.10 How the sector changes and how rapidly is difficult to estimate. But without

some active intervention by the local authority, there is no reason to believe that the problems described will decrease. Rebuilding the housing market and a professional privately rented sector in these neighbourhoods requires active intervention by public policy agencies.

• The initiatives already taken by Liverpool City Council in relation to the

private rented sector are valuable in this context. The attempts to work more closely with private landlords through the private landlords forum and the development of the good practice landlords scheme, is important. A further development of this scheme negotiated with landlords should strengthen this element and the situation of over supply should be used to work with landlords to create an improved quality of housing and a more stable and sustainable sector;

• In addition, the operation of the housing benefit regime could be adjusted to take account of the over supply of rented housing. This should include a restriction of the payment of rent direct to those landlords who are members

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of the good practice landlord scheme;

• However, in the view of most of those that we have spoken to including the representatives of private landlords, it is unlikely to resolve the issues of over supply or the coping strategies adopted by landlords in parts of the market where asset values are not increasing or are declining. The stability of the neighbourhoods and the quality of housing is only likely to improve if action is taken to deal with the over supply of property;

• Where property values are low, turnover is high, and the quality of housing is poor, the case for significant redevelopment is very strong. These neighbourhoods will continue to be mixed tenure neighbourhoods although the decline of the owner occupier may mean that they become increasingly neighbourhoods of rented housing.

4.11 The evidence presented in this report suggests that leaving the market to resolve

the problems which have been outlined is not an option. It is not evident that the market will react to the problems outlined in a way that will reduce these problems. A sustainable private rented sector will no doubt emerge in the executive and professional and student markets located around the centre of the city and facilities which are provided there. However, the kind of market which will remain in other parts of the city and especially in the Inner Core will continue to be marked by oversupply, low standards of accommodation and low levels of maintenance and repair. It will present problems for the city through wider impacts on neighbourhoods.

4.12 Recent Government statements about neighbourhood problems and problems in

the private rented sector (see e.g. DETR (2000)) suggest that a more interventionist stance is favoured.

• Changes to legislation on houses in multiple occupation may provide

discretion to extend regulation and enforcement beyond individual properties;

• The emphasis upon neighbourhood management implies a concern with neighbourhoods rather than individual properties;

• The references to licensing and accreditation schemes in the private rented sector suggest that government will favour approaches which seek to deal with private sector landlords who wilfully provide poor properties and management.

4.13 In this context it would be appropriate for Liverpool to firm up its current

arrangements related to the private rented forum and to move towards a more fully fledged accreditation scheme in partnership with representative landlord organisations and the universities.

• It should consider developing a scheme which took into account fire

regulations, gas and electrical safety as well as the aspects of housing provision which are more normally covered;

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• It could consider a mixed scheme of one, two and three star standards as is being developed elsewhere;

• It should consider applying pressure through housing benefit procedures to encourage landlords to participate in the scheme or to put those which choose not to at some disadvantage.

4.14 An essential element in this is an ability to enforce a new regime and the

implications must be of a considerably expanded capacity to monitor and work with the private rented sector. The approach which has been taken hitherto has been one of working in partnership with responsible landlords and providing legal and other advice to enable landlords to manage their properties effectively. However, it must be backed up with enforcement action.

4.15 The problems described in relation to Anfield and Kensington require an even

more active intervention. Initiatives targeted at private landlords in these areas need to have additional elements and to form part of strategic initiatives designed to dramatically change neighbourhoods and their problems. A key element in this is clearance and purchase by agreement to enable clearance. It involves the use of planning powers to effect neighbourhood change and to enable significant renewal of housing markets and changes in activities. The worst areas of private renting require direct intervention to change the market and deal with the oversupply and this is the view being expressed to us by different people including those involved in private sector housing.

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REFERENCES Cabinet Office (2000) National Strategy for Neighbourhood Renewal: A Framework for Consultation, Report by the Social Exclusion Unit City of Liverpool (1986) , Liverpool’s Population.Population, social and housing stock changes and trends 1971-1991 DETR (2000) Quality and Choice: A Decent Home for All. The Housing Green Paper Liverpool Student Homes, (various dates) Market Analyses of the student market in Liverpool, 1995 – 2000. Liverpool John Moores University, Residential Accommodation Strategy towards the year 2000, 1999. Liverpool City Council, Housing Strategy Statements 1999/2002 and 2000/2003. Groves,R and Revell,K, (2000) The changing nature of the housing market in Selly Oak: Phase II. Centre for Urban and Regional Studies, University of Birmingham. Nevin B, Lee P and Phillimore J (1999) Measuring the Sustainability of Neighbourhoods in Liverpool. CURS, University of Birmingham.

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APPENDIX ONE LIST OF INTERVIEWEES Dave Anastoussiou, Andrew Louis, Estate/ Managing Agents Pip Backstrom, Manager, Liverpool Student Homes Bernie Benbow, Liverpool City Council Graham Burgess, Liverpool City Council Michael Derbyshire, Rent Officer John Davies, Brownlow Property Management Vivian Ellenbogen, Arathorn Ltd., Landlord/Managing Agents Phil Gandy, Liverpool City Council Jed Gallagher, Liverpool City Council Roland Hayes, Landlord Louise Hobson, Accommodation Officer, Liverpool University Jacqui Lyons, Accommodation Officer, Liverpool John Moores University Tony McVeigh , Liverpool and District Property Owners Association Dave Murphy, Andrew Louis, Estate/Managing Agents Paula Murphy, Manager, Liverpool Housing Trust Carl Norman, Landlord Colette Parker, Merseyside and Wirral Landlords Association Miles Pickering, Liverpool and District Property Owners Association Ian Roche, Landlord Mike Roxburgh, , Liverpool City Council John Russell, Rent Officer Semina Simpson, Student Accommodation Officer, Cosmopolitan Housing Association

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Lynn Smith, Merseyside and Wirral Landlords Association Ged O’Toole, Manager, Atlantic Point Mandy Wardell, Manager, Victoria Hall Karl Oram, Asylum Seekers Unit, Liverpool City Council.

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APPENDIX TWO INVENTORY OF STUDENT HALLS OF RESIDENCE AND MAP SHOWING THEIR LOCATIONS

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APPENDIX THREE COPY OF POSTAL QUESTIONNAIRE FOR STUDENTS’ SURVEY

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