The competitiveness of rental market structures and its effect on landlord behavior

Abstract

Governments in many European countries have required social housing providers to become more market orientated and work more efficiently. As a result, the demarcation between the activities of social and private landlords seem to have become more blurred, which has presumably led to increased competitive pressures on both landlord groups. In an attempt to create a better understanding of the basic conditions of a competitive relationship between social and private renting providers, this paper sets out the idea of a market structure in rental housing and makes a comparison between the situations in England and the Netherlands. In economic theory, market structure is defined by the degree of supply concentration, existing barriers to entry and exit, and the extent of product differentiation. In the theoretical part of the paper it is discussed how those three components apply to rental housing and why some changes of the original concept of market structure seem to be inevitable. The refined theoretical concept is then applied to rented housing in England and the Netherlands. On the one hand, the comparative approach will show that market structures can differ significantly across countries and with them the conditions for the competitive behavior of rental housing providers. On the other hand, it will reveal the methodological challenges that are involved with the analysis of rented housing, particularly private renting.