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close this bookHabitat Debate - Vol. 5 - No. 3 - 1999 - Security of Tenure (HABITAT, 1999, 63 p.)
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View the documentThe Benefits of the Rental Sector in Western Europe

The Benefits of the Rental Sector in Western Europe

by Nic Nilsson

Rental units are needed in every country. In Western Europe, as in other parts of the world, there are two reasons why people become tenants: they prefer to live that way or they cannot afford or are unable to secure any other forms of tenure. There are several other reasons why people in Western Europe choose to rent, rather than own, their homes, including:

Convenience

Tenants do not have to bother about all the practical things, which an owner occupier has to take care of e.g. mortgages, maintenance, repair etc. Rent covers all those costs and problems.

Security

Most Western European countries offer some degree of security of tenure to tenants. According to the housing law/rent act security of tenure means in practice, that tenants are protected if they meet certain basic preconditions. The landlord cannot get rid of the tenant without any legitimate reason. The rent act applies to agreements on the letting of a house or part of a house let and there must be “rent” payable. In the British Housing Act it is stated:

A landlord wishing to obtain possession of a flat let on a secure tenancy, or wanting an order ending the secure tenancy (which may or may not involve a possession) under a provision for re-entry or forfeiture, must first serve a notice on the tenant giving particulars of the ground on which the landlord will apply to the court. The court has no power to order possession unless this notice is served. The grounds might be: failure to pay the rent or breach of any other obligation of the tenancy agreement.

This applies to most other Western European countries. Countries with the strongest tenancy rights include Austria, Germany and Switzerland.

Tenant Participation

Tenants in Western Europe get to participate in the management of housing, either by participating in the decision-making organ (Neighbourhood or Housing Estate Committee etc) or by running some of the activities in the housing estates. In France, tenants in public housing get to formally elect the management board of their area. Something similar exists in Vienna. In the UK, a lot of social activities are conducted and carried out by tenants. In Denmark, the social housing movement is run just by tenants. In Sweden, tenants negotiate through their organizations about rents and other tenant-related questions.

Reasonable Rents

The issue of what is a reasonable rent has been discussed extensively in Western Europe. Should the rent be determined by market forces, or should there be some sort of rent regulation? It is important to keep in mind that in most European countries, the private sector was associated with overcrowding and slum conditions at the turn of the century. It might be said that it was a result of the poverty at that time. This is partly right, but it also has to do with unscrupulous and uncaring landlords and practices. At that time there were no laws about security of tenure. Different kinds of rent regulations were introduced only after World War II.

Rent Regulations and Housing Subsidies

There is no country in Western Europe with a totally free housing market. Various kinds of rent regulations and housing subsidies exist in all countries. These are important as they mitigate the negative effects of pure market forces. For example, Swedish rent regulations are carried out in a system of negotiations between the tenants associations and the landlords. (This is possible in countries where there are strong tenants’ associations.) This law has been in force in Sweden for 30 years and is still functioning.

Tenants Associations

In all Western European countries, there are tenants associations at the national (except Spain), regional, municipal or local levels. They are open to all citizens and are ready to help the tenants in many ways. In Germany, 1.3 million households are members; in Sweden nearly 50 per cent of all tenant households belong to an association.

Box 1. Types of Tenure in Western Europe (1990)

Country

Owner occupiers

Social housing

Privately rented

Others

Belgium

65%

6%

28%

1%

Denmark

52%

24%1

18%

6%

France

54%

17%

20%

9%

Germany

38%

15%

43%

4%

Greece

77%

0%

23%

-

Ireland

81%

11%

8%

-

Italy

67%

7%

25%

5%

Luxembourg

68%

1%

30%

1%

Netherlands

45%

40%

15%

-

Portugal

58%

4%

35%

3%

Spain

78%

2%

16%

4%

UK

67%

26%

7%

-

Austria

50%

18%

21%

11%

Finland

71%

14%

13%

2%

Sweden

43%

21%

21%

15%2

Switzeland

31%

3%

60%

6%3

Norway

61%

0%

20%

19%4

As Box 1 illustrates, the highest number of tenant households are in Switzerland, Germany and the Netherlands. Austria, Denmark and Sweden have 40 per cent of their population living in rented accommodation. All of these countries are also known for their high standard of living and their strong State welfare system.

Social Housing

Although the extent of social housing varies in each country, most Western European countries have governments which are involved in some form of rent regulation, which makes rents affordable. Subsidies are based on income. If your income rises, you have to either move out or pay a higher “super” rent.

As shown above, the governments of Western European countries play a crucial role in ensuring that rental housing - both in the public and private sectors - is fair and affordable and is not left purely to market forces. This ensures that almost everyone, regardless of income, has access to security of tenure and some kind of shelter.

Nic Nilsson is a former General Secretary of the International Union of Tenants, based in Stockholm, Sweden.

References

1 Includes 7% under co-operative management.

2 Includes 15% co-operative housing.

3 Includes 3.7% co-operatives.

4 Includes shareholders and co-operatives.