1. Meeting the Housing Challenge: The Role of the Private Rented Sector Economic and Social Context 17 th August 2011

2. Historic and recent trends

3. Historic decline in PRS has started to reverse in past 2 decades

4. Households under 35 increasingly in PRS

5. BTL fuelled growth in PRS, but hit by credit crunch

6. Half of PRS tenants move within 2 years – need for longer tenancies?

7. Prospects for Sector

8. (Real) house prices gradually unwinding, limiting capital growth

9. Housing Benefit reforms may pressure parts of PRS 470,000 HB claimant households in Scotland (July 2010) – 86,000 (18%) in PRS Estimated impact of reforms: –Capping LHA weekly rates at £250 (1 bed), £290 (2 bed), £340 (3 bed), £400 (4 bed), no 5 bed rate –Setting LHA to 30 th percentile –Removal of £15 excess In total will affect almost 55,000 households who will lose an average of £10 per week. Further reforms –Uprating by CPI rather than market rents –Extend shared room rate to 35 years – around 7,500 affected (mainly Edinburgh and Glasgow)

10. But FTB deposit barriers likely to keep PRS demand high

11. Despite lower expected capital growth & Housing Benefit changes, rental yields potentially attractive compared to other investments –10-year UK government bonds: 2.5% –FTSE 100: 1.0% over 1-year period –Rental yield: 6.6% (Glasgow postcode G31; source FT Money) Meaning rental yields relatively attractive

12. Challenges

13. Lower satisfaction than in owner sector, especially where children

14. Significant energy-efficiency improvements required

15. Final point: Scotland’s PRS still has room to expand!