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 HOUSING
DEVELOPMENT AND
MANAGEMENT
A Book of Readings

Second Edition
(Enriched and Enlarged)
 HOUSING
DEVELOPMENT AND
MANAGEMENT
A Book of Readings

Second Edition
(Enriched and Enlarged)

Edited By
‘TUNDE AGBOLA
‘LAYI EGUNJOBI
C.O. OLATUBARA

Department of Urban and Regional Planning,

University of Ibadan, Ibadan, Nigeria
Housing Development and Management
A Book of Readings

Revised Edition

First Published 2007

Second Edition 2016

Published by
Department of Urban and Regional Planning,
Faculty of the Social Sciences,
University of Ibadan,
Ibadan, Nigeria.

All rights reserved

No part of this book may be reproduced, stored in any retrieval system or
transmitted in any form or by any means whatsoever without permission
in writing from the copyright owner

ISBN: 978-978-54736-0-5

Printed by:
Artsmostfare Prints,
Ibadan, Nigeria
Email: artsmostfareprints@yahoo.com
 CHAPTER EIGHTEEN

Rental Housing

J.O. Omirin, Olusegun Falola and Gregory Amune

18.1 Introduction
Access to decent and affordable housing has emerged as one of the
most daunting challenges of the 21st Century in many countries. In
settlements around the world, a significant proportion of residents are
tenants. For various reasons, millions of people in developing and
developed countries rent, rather than own, the housing unit in which
they dwell. They include, for instance, low-income households who
cannot presently meet the expense of home ownership, recent urban
migrants who prefer centrally located rental accommodation that gives
them flexibility; young people who value mobility and; individuals who
choose to spend their money on other priorities rather than home
ownership. These are only a few of the characteristics and motivations of
tenants.
Rental housing has always provided a broad choice of homes for
people at all phases of life. The recent global economic meltdown
underscored the many advantages of renting and increased the

599
600 Housing Development and Management

barriers for homeownership, thus sparking a surge in demand that has

buoyed up rental markets across countries. The Joint Centre for
Housing Studies of Harvard University (JCHS) (2013a) argues that
recent conditions have brought renewed appreciation for the benefits
of renting, including the greater ease of moving, the ability to choose
housing that better fits the family budget, and the freedom from
responsibility for home maintenance. In the United States, for
instance, JCHS (2013b) reports that households of all, but the oldest
age groups, have joined in the shift toward renting. The largest
increase in share is among households in their 30s, up by at least 9
percentage points over an eight-year span, while shares of households
across all five-year age groups between 25 and 54 also rose by at least 6
percentage points. Indeed, the jump in rental rates for most age groups
was well above the 4.0 percent overall rise reflecting how the
movement of the population into older age groups (when owning is
more prevalent) reduced some of the drop in homeownership (JCHS,
2013b).
In order to improve national and local housing policies which
recognise and facilitate the development of rental housing, the many
traditions, stereotypes and peculiarities surrounding rental housing need
to be debunked (Box 18.1). According to Gilbert (2011), homeownership
(as listed in Box 18.1) has been encouraged through a combination of
improving housing finance systems, to make ownership more accessible,
by giving tax relief to both owners and builders; by providing transport
and infrastructure to new suburbs; and generally by constructing an
ideology favourable to home ownership. Gilbert (2011) further argues
that while ownership has been encouraged, the rental sector has been
neglected, even disparaged. In the developing countries, most landlords
exploit poor and vulnerable tenants, only too happy to charge high rents
for crowded and sub-standard housing. Eviction is common and renting
is perceived to offer tenants little in the way of security. Rental housing,
particularly at the lower end of the market, has often been seen as
being shrouded in illegality and as contributing to inner-city decay.
Thus, whereas homeownership is a source of pride, happiness and
stability, renting provides unsavoury accommodation for the
unsuccessful. However, these are ‘idealised conceptions’ that should be
demystified (Box 18.1).
 Rental Housing 601

Accordingly, this chapter broadly discusses rental housing in a

global perspective, clearly illustrates the need to place rental housing

Box 18.1: Eight Common Myths about Rental Housing

1. Everyone owns in rich countries. There is little relationship between a country’s
level of economic development and the incidence of homeownership and tenancy.
Homeownership is actually lower in many wealthy European countries, e.g.
Switzerland, where rental markets have developed to satisfy the needs of any income
group that prefers to rent rather than to own.
2. Everyone wants to be a homeowner. All over the world, people are bombarded
with the message that homeownership is the best and indeed the only sensible choice of
tenure. Yes, there are big advantages from owning one’s own home, but renting also
offers its own benefits such as mobility, flexibility, and reduced financial commitments.
Yet, many households that could afford to own choose not to.
3. Homeownership offers people a better life. Ownership is often presented as a superior
tenure to renting. People who own are more responsible citizens with closer links to their
community and neighbourhood. But homeownership has its problems: maintenance
costs have to be borne by the owner household alone, and failure to pay the monthly
mortgage payment puts tenure security at risk. Of course, most homeowners were once
tenants and perhaps at times in their lives renting offered them what they needed.
4. Nobody invests in rental housing. Investing in rental housing may not be as attractive
to either businesses or governments as it once was. Nevertheless, there are few cities
where the rental housing stock has not increased in size. The paradox is explained by
the proliferation of small units produced by large numbers of small-scale landlords.
5. Renting is inequitable. In the days when most landlords were rich and most tenants
were poor, the rental housing market was indeed inequitable. Today, however, rich
landlords tend to rent to rich tenants, and poor landlords to poor tenants. The
landlord-tenant relationship is often one of mutual benefit and dependence. The real
gulf in cities is between rich owners and the poor who can never afford to buy.
6. Governments should prohibit poor quality rental housing. Many tenants in African,
Asian and Latin American cities live in crowded, under-serviced and dilapidated
housing, because that is all they can afford. If governments respond by demolishing
this housing, it only makes housing problems worse and leads to even greater
overcrowding elsewhere. A much better approach is to find ways to improve the
quality of the existing shelter and to encourage the construction of more rental
housing.
7. Mobility is bad for you. Poor people often need to move home as their jobs are
insecure and they need to go where they can make a living. For some, mobility means
survival and the flexibility that rental housing offers is highly desirable.
8. Homeownership generates political stability. In the USA, tenants were not allowed
to vote until 1860, because home-owners were considered to be “better citizens, better
neighbours and even better persons.”
This kind of thinking is still widespread among policymakers today, who see tenants
only as transient, poor, unsettled and undesirable characters.
Source: UNCHS (2003, pp. 103-126); Gilbert (2011, pp. 2-3)
602 Housing Development and Management

on the national housing agenda and provides policy options for a viable
rental scheme for low-income households. Following this section, a
discussion of the characteristics of rental housing is presented in
Section 18.2. This is followed by a discussion of the demand for rental
housing in Section 18.3. Section 18.4 examines the dynamics of rental
housing supply, focusing on the diversity of rental housing and
arrangements. In Section 18.5, the conditions of rental housing market
are discussed and the key problems often associated with rental
housing and landlord-tenant relations are examined. The 6th section
emphasises the need for housing assistance and gives various types of
housing assistance. The last section provides the conclusions and
policy options for rental housing in cities.

18.2 Characteristics of Rental Housing

In some cities, the majority of the population rent, while in others, it is
a minority. Unfortunately, rental statistics are often confusing because
few countries distinguish accurately between rental housing and other
forms of non-ownership, such as sharing, squatting or borrowing
someone’s home. Sometimes, the distinction between renting and
sharing is hard to make, especially in countries where extended family
households are common. Relatives and grown-up children, sometimes
with families of their own, live in the family home. Their contribution
patterns vary; sometimes they pay rent, sometimes they contribute to
household costs and sometimes they pay nothing at all. This section
examines these diversities.

18.2.1 Types and Forms of Rental Housing

There are several types of rental housing available in countries across
the world. Rental housing varies by type, size, construction, quality,
ownership, rents, kind of contract and profitability (Ballesteros, 2004).
Rental housing takes many forms. Naturally, the form that renting
takes is highly variable. For example, rental housing ranges from
penthouses to slums, they are let by many different kinds of landlord,
are privately and publicly owned, and they offer people everything
from excellent to appalling accommodation (Gilbert, 2011). Therefore,
diversity is the main feature of rental housing.
 Rental Housing 603

At the bottom end of the spectrum, rental housing is diverse. It

comes in the form of cheap rental rooms in small owner-managed
apartment buildings, flats of various sizes in subsidized public housing
blocks, rooms built in self-help structures or partitioned rooms within
dilapidated older buildings. It can be a room in a tenement or a shack
built behind the owner’s house. It can even be a space shared with
strangers, maybe with only the right to store one’s belongings and sleep
there for part of the day.
In some housing markets, condominiums play a significant role in
rental housing. For instance, a 2012 survey by the Federation of Canadian
Municipalities (FCM) reveal that condominiums represented 29% of
all new housing starts in Canada in 2010. While the primary purpose of
condominium construction is for homeownership, there is an upward
trend in buyers investing in one or more condominiums and then renting
them out, resulting in a supply of rental units (FCM, 2012).
Rental housing is mainly categorized into two types: private and
public. Private dwellings are those provided by households and the
business sector. This includes dwellings that are provided by employers
to employees and also arrangements of temporary occupation among
relatives or friends. The bulk of these rental accommodations operate
without local business license (Ballesteros, 2004). There are complications
in determining if a rental accommodation is in the formal market or
not because some middle or high income rental dwellings may have no
business registration for rental. The distinction between formal and
informal rental dwellings is thus unclear (Ballesteros, 2004). Public
rental dwellings, on the other hand, are government-owned structures.

18.2.2 Variations in Housing Tenure within Countries

Factors relating to economics, culture, and public policy contribute to
the marked differences in the rates of property ownership among
countries. In England, privately rented housing currently accounts for
some 17% of the housing stock, down from over 50% immediately
after World War II, but up from 9% at its minimum in the late 1980s
(Shelter Afrique, 2014). In Latin American countries, rental housing is
higher compared to ownership due to the pre-eminence of informal
rental housing. As revealed in Table 18.1, there is a strong cultural bias
for homeownership in Mexico as the rental housing sector is relatively
604 Housing Development and Management

smaller: 11% of the population are tenants while 81% own houses
(UNCHS, 2003). In Morocco, there was a huge decrease in urban
rental housing stock from 42% in 1982 to 22% in 2012, with over 90%
being individual owners (Shelter Afrique, 2014).
However, national statistics on rental housing (as in Table 18.1) are
an inaccurate guide to local situations because there is so much
variation within countries, between urban and rural areas and between
one city and another. One element observed by Gilbert (2011) in the
variation between cities is the size of the city. In general, metropolitan
cities in such countries as the United States, China, Columbia and
most countries in Western Europe have higher levels of renting than
smaller cities. However, city size is only one factor in a much more
complicated equation. The proportion of renters in any city also
depends on the nature of the local land market, the proportion of
recent migrants, the amount of public employment, and topography
that determines availability of affordable, well located land suitable for
residential purposes.

Table 18.1: Housing Tenure in Selected Countries and in

their Largest City
Country Owned Rented City Owned Rented
(%) (%) (%) (%)
Germany 40 60 Berlin 11 89
The Netherlands 53 47 Rotterdam 26 49
USA 66 34 New York 45 55
UK 69 31 London 58 41
Colombia 54 31 Bogotá 46 43
Brazil 74 25 São Paulo 70 20
South Africa 77 22 Johannesburg 55 42
Chile 73 20 Santiago 73 21
Bolivia 60 18 La Paz/El Alto 55 23
Thailand 87 13 Bangkok 54 41
Mexico 81 11 Mexico City 76 16
Nigeria 69 23 Lagos 18 76
Note: Where percentages do not add to 100%, it is because the authorities
have calculated other kinds of non-ownership separately.
Source: UNCHS (2003: 9-11), Gilbert (2011) and Federal Republic of Nigeria
(FRN) (2011)
 Rental Housing 605

Focussing on Nigeria, the National Bureau of Statistics (NBS) and the

National Population Commission of the Federal Republic of Nigeria
(FRN) provide some interesting statistics on variations in rental
housing. Table 18.2 shows the tenure status of regular households in
10 of the largest states in Nigeria. While home ownership was
predominant among regular households in Nigeria (19, 316, 441
households, representing 66%), rented homes were predominant in
Lagos and Ogun States. The situation in Lagos State, where 76% of
regular households were living in rental apartments, could be linked to
increasing value of the local land market and the high proportion of
migrants. In other largest states considered in Table 18.2, house
ownership was predominant among households. For instance, in
Bauchi State, as much as 90.4% (766,656 households) lived in homes
they owned, and 79.1% (678, 029 households) occupied the houses
they owned in Akwa Ibom State. Similar situation of more house
ownership were observed in Kaduna State (75.7%) and Anambra
States (71%).

Table 18.2: Housing Tenure Variation between States in Nigeria

(2006 National Census)
Total No. of Owned but not Occupied on
State Households Owned yet paid for Rented Free Rent Squatting Others
Lagos 2,195,842 386,744 12,106 1,663,621 114,124 11,923 7,324
Kano 1,603,335 1,322,394 77,735 131,248 46,508 19,796 5,654
Oyo 1,248,105 625,179 33,364 464,551 113,684 8,109 3,218
Rivers 1,123,998 709,025 11,995 302,007 89,974 8,309 2,688
Kaduna 1,115,974 845,554 20,339 192,843 41,143 11,719 4,376
Delta 890,312 405,723 16,962 365,216 91,432 9,457 1,522
Anambra 882,875 626,987 28,192 165,237 49,347 10,706 2,406
Ogun 880,970 365,514 11,885 409,875 85,936 4,828 2,932
Akwa Ibom 857,436 678,029 8,982 112,302 50,642 5,699 1,782
Bauchi 847,731 766,656 26,063 32,742 13,432 7,000 1,838
Nigeria 28,197,085 19,316,441 655,503 6,407,257 1,525,320 214,361 78,203
Source: Federal Republic of Nigeria (FRN) (2011)
Table 18.3 presents a summary of Nigerian housing tenure characteristics
by region. Overall, over 66 percent of households lived in houses they
owned. Regionally, a higher percentage of households owned homes in the
North-Central (74.1%), North-East (91.1%), and North-West (87.5%)
than in the South with the exception of the South-East where 74.1
percent of households lived in homes they owned. Rental housing were
predominant in the South, with higher occurrences of rented homes in
both the South-West (37.1%) and South-South (22.1%) more than in the
606 Housing Development and Management

North-East, North-West, and North-Central combined.

Rental housing between urban and rural settlements also varies. In
Nigeria, rented homes were significantly more common in the urban
areas (36.8%) than in the rural (4.2%) in 2010. Authorized use of
homes without charge were also more common in the urban areas
(16.8%) than in the rural areas (12.6%). Similar situation was observed
in Colombia where 31 per cent of the population rented in 2005
nationally, while the figure was 37% in urban areas compared with a
mere 12% in the countryside (DANE, 2007). In South Korea, 80 per
cent of rural households owned their home compared with only 50 per
cent of urban households in 2000 (Park, 2007). Although, in 1996,
around nearly half of urban households in China owned their homes
and another 46% rented, there were 18 cities with a rate of
homeownership of less than 25% and also 12 cities with more than
76% (Huang and Clark, 2002).
The Joint Centre for Housing Studies (2013) reveal that rental
housing is more likely to be located in the U.S. urban areas, with
central cities home to 43% of renters. But nearly as large a share (40%)
of renters reside in the suburbs – only slightly below the 49% of all
households that live in these areas (JCHS, 2013a). In major cities in
Brazil, the variation in 2000 was less marked but still considerable,
varying from a low of 11 per cent in Manaus to a high of 24 per cent in
the Federal District (UNCHS, 2003).

Table 18.3: Regional Variation in Housing Tenure in Nigeria (2010)

Regions Owned Employer Free Free Not Rented
authorized authorized
North Central 74.1 0.8 12.8 1.6 10.7
North-East 91.1 1.1 3.2 0.1 4.5
North-West 87.5 1.3 5.3 2.6 3.4
South-East 74.1 0.2 10.3 1.8 13.6
South-South 51.4 3.3 22.9 0.3 22.1
South-West 37.4 0.3 24.5 0.7 37.1
Urban 43.6 1.5 16.8 1.3 36.8
Rural 81.2 0.9 12.6 1.2 4.2
Source: National Bureau of Statistics (2011)

18.3 The Dynamics of Rental Demand

The recent plunge in house prices underscored the financial risks of
homeownership. Falling home values are especially devastating to
 Rental Housing 607

low- and moderate-income households, who often invest a substantial

share of their resources in this single asset. If such households are
forced to move when they owe more on their mortgages than their
homes are worth, owners must cover the gap between the sales
proceeds and the mortgage debt, or walk away from their loans and
face the consequences of impaired credit for years to come.
As established in the preceding sections, the demand for rental
housing is apparent in both rich and poor nations. Thus, rental
accommodation is an acceptable form of tenure for both rich and poor
households. Renting’s appeal lies in affordability, reduced stress, and
flexibility (see Box 18.2). For most households, renting is less of a
financial stretch than buying a home. Even in the best of times,
homeowners must come up with a substantial amount of cash to cover
the down-payment and closing costs, as well as the expense of any
immediate repairs. While renters typically have to pay a security
deposit plus the last month’s rent, the total outlay is usually more
modest than the upfront costs of buying. Equally important is the fact
that renters who want to move do not incur the steep costs associated
with selling a home.

Box 18.2: Benefits of Rental Housing

A 2012 Fannie Mae survey reveals many of the reasons some households
favour renting over owning in the U.S. More than half of the renter
respondents considered renting a better choice for living within a budget
and having less stress. The other common reasons cited for preferring to
rent are that it is the best decision in the current economic climate, allows
one to live in a more convenient location, and provides more flexibility in
future decisions. At the same time, current homeowners overwhelmingly
held the view that owning a home is a better way to achieve these goals,
although 28 percent agreed that renting is less stressful (Fannie Mae,
2013).
Perhaps not surprisingly, attitudes toward renting have shifted somewhat
as a result of the Great Recession. For example, slightly more than half (54
percent) of the households surveyed by Hart Research Associates (2013)
stated that renting had become more appealing given the country’s
economic situation. Consistent with a variety of other sources, however,
the same survey also found that a solid majority of renters (72 percent) still
aspire to own homes in the future.
608 Housing Development and Management

The American people believe that the country’s housing environment is

changing. While most non-owners (70%) aspire to own a home someday,
homeownership is not viewed as the vehicle to building wealth that it
once was, and the public believes that renting has grown in appeal while
owning has declined. Two-thirds of the public (64%) believes it is less
likely today than 20 or 30 years ago, for a family to build equity and wealth
through homeownership. The public is divided on whether
homeownership continues to be an excellent long-term investment (50%)
or whether this is no longer the case today (43%). Half of all adults (54%)
believe that owning a home has become less appealing in the current
environment, while a similar proportion of adults (51%) believe that
renting has become more appealing. Today, nearly 6 in 10 adults (58%)
believe renters can be just as successful as owners in achieving the
American Dream (Hart Research Associates, 2013).

18.3.1 Characteristics of Tenants

In practice, Gilbert (2011) avers that every household is constrained in its
tenure choice. The principal constraint is their income but according
to other circumstances, it can also be race, religion, family size and most
importantly the structure of the local land and housing market (Gilbert,
2011). There are also certain cases of ‘tenants by choice’, even though
they are usually less numerous. Therefore, it is difficult to generalise too
much about tenants. However, there are a few common characteristics,
many linked to income, migration, life cycle, family structure and gender.
On the basis of these attributes, tenants can be broadly categorised
into two – tenants by constraint and tenants by choice.

Tenants by constraint include:

 Slum dwellers or homeless people squatting
 Workers who migrated for employment reasons
 Working families who have no access to credit because they have
low or non-existent credit records owing to insufficient or
irregular income
 People with special needs
 Street children
 The aged
 People affected by natural and manmade disaster
 Rental Housing 609

 Socially and economically vulnerable people i.e. deserted

women, children etc.
 Defaulted borrowers

Tenants by choice include:

 Young couples and singles who want to remain mobile
 Middle- and upper-income professionals who do not desire home
ownership
 Students
 People Employed in Government, PSUs and other private sector
 Empty nesters who want to downsize after their children have
grown
 All other persons who, for work or personal reasons, prefer a
short-term residence

18.3.2 Renting Over the Lifecycle

Households of all ages often shift between renting and owning over
time. Even during the phases of life when people are most likely to
own, many households rent for at least some period of time. While a
majority of US households own homes at some point in their lives,
many return to renting in response to changing fortunes and housing
needs. In line with this, JCHS (2013a) make the following findings:
nearly one in five households that were in their 30s in 2001
switched from owning to renting at some point in 2001–11, as
did nearly one in seven of those in their 40s. Even among
households in their 50s and 60s in 2001 with longer histories of
homeownership, 11 percent of those switched from owners to
renters at some point during the ensuing decade. A return to
renting is even more common later in life, with 24 percent of
households over age 70 making that transition between 2001
and 2011 (JCHS, 2013a, p. 3).
Rental living often conjures up images of single people and
unrelated roommates. Singles are indeed the most common type of
renter, reflecting both their growing share of all households and the
fact that renting often suits their need for less space at a lower cost.
For those first leaving their family homes, the lower transaction costs
and flexibility of renting makes it a natural choice during a stage in life
610 Housing Development and Management

marked by frequent changes in jobs, periods as a student, and shifts in

personal relationships.
Preferences for location and type of housing depend on renter
household type. Non-family households, including roommate situations
that are more common among the young, are more likely to live in
multifamily housing in central cities. As they move into the childrearing
phase of life, renters tend to prefer single-family homes in suburban or
rural locations. Indeed, married couples with children choose single-
family rentals more than any other housing type (JCHS, 2013a).

18.3.3 Spatial Variations in Renting

According to JCHS (2013a), two broad demographic trends – the aging
of the population and the increasing importance of minorities for
household growth – will drive significant changes in rental demand
over the next decade. Assuming current rentership rates in the U.S.,
JCHS argue that the aging of the baby-boom generation will lift the
number of renters over age 65 by 2.2 million by 2023, generating
roughly half of overall renter growth. The older profile of renters
means much of the increase will be among single persons and married
couples without children, each group accounting for about 30 percent
of growth. Many of these older households are already renters, but will
be aging into the next phase of life (JCHS, 2013a).

18.3.4 Drivers of Future Demand

Two key factors will drive future rental housing demand: changes in
the number and characteristics of households, and changes in the
tendency of different groups to own their homes. Homeownership
rates are determined in large part by household incomes, housing
prices, and the cost and availability of mortgage financing – all of
which are highly uncertain. Preferences for owning or renting also play
a role, but are similarly hard to gauge. The changing age structure of
the population and the growing racial/ethnic diversity of nations will
alter the face of rental demand. The aging of the population means
that the numbers of renter households that are either single or married
couples without children will rise.
 Rental Housing 611

18.4 The Dynamics of Rental Housing Supply

18.4.1 Categories and Characteristics of Rental Housing Landlords

Understanding the diversity of supply is a critical element in

understanding how best to evolve policies to influence the rental
housing situation. While new construction and a reduction in vacant
for-rent housing helps to meet the surge in rental demand, increase in
the rental inventory also comes from the conversion of formerly owner-
occupied homes into the rental housing. Rental housing get to the
housing market through the activities of the ‘landlords’. There are
many types of landlord: some are rich while others are poor; many
operate in the formal sector and many more in the informal sector.
Both companies and governments may rent out property.
Gilbert (2011) identifies five categories of landlords as: small-scale;
commercial; public sector; social; and employer landlords. The small-
scale landlords are by far the most common. They may be formal or
informal, poor or middle-income earners. The key element they share
is that the income from rental housing helps them to pay instalments
on their own land or house, to meet the expense of repairs,
maintenance or improvements, or even to pay their own rent. Rental
income may serve as a safety net against unstable employment or when
moving from regular salaried work to self-employment (Gilbert, 2011).
It may also supplement or even substitute for a pension after
retirement. Sometimes, renting begins accidentally. Homeowners have
spare rooms available because the family structure has changed, a
partner has left home, relatives have died or grown up children have
moved elsewhere. It may begin because the breadwinner has changed
jobs and cannot commute to the new workplace. In all these cases,
letting out land, houses or rooms contributes to a household’s survival
strategy – keeps food on the table, brings in extra cash and makes use of
a family’s primary asset: the home. Some find that renting offers a route
to better things. They invest more resources into renting, increasing the
size of their property and renting out more rooms. Some may even buy or
construct additional properties. A few become commercial landlords.
The second category of landlords identified by Gilbert is commercial
landlords, who operate on a larger scale and act in a more professional
way. They will often rent to middle or high-income households rather
612 Housing Development and Management

than low-income groups, using written rental contracts and following

the building and safety standards. Many will use estate agents. Others
operate at the poorer end of the market and may build rows of
tenements, sometimes of very low quality and equipped with minimal
services. Some will operate responsibly, others in profoundly dubious
ways. Commercial landlords come from all kinds of background. They
may be formally constituted as companies or be ordinary people who
have made money in another field.
The public sector landlords supply large number of housing units in
many cities, particularly in China, India and some transition economies.
The landlords may be central government agencies, municipal
government or local governments. Some provide accommodation only
to their employees while others rent out subsidized shelter to the urban
poor. The social landlords are non-profit making organizations which
provide housing principally, but not entirely, for the poor. The institutions
may range from charities and housing associations to educational bodies.
In recent years, housing associations in many parts of Western Europe
have increasingly taken over the task of providing cheap rental
accommodation from governments. In many cases, schools and
universities provide accommodation for their students.
There are also ‘employer landlords’ who provide accommodation for
their employees as an aid to recruitment, usually because local housing
markets are too expensive and they will face recruitment problems
unless they provide shelter for their staff. Examples of such landlords
include hospitals providing rooms for their nurses, universities
providing rental housing for academic and non-academic staffs, and
the military. Sometimes, governments provide housing as a fringe
benefit to civil servants.

18.4.2 High-, Medium- and Low-income Rental Housing

The rental market is highly segmented as investments and incomes
vary across types of rental housing. The returns from rental housing
are highly variable. It is largely influenced by the landlord’s reasons for
letting property (Ballesteros, 2004). Clearly, the motivations of
landlords are diverse. Private homeowners lease or let their properties
to obtain an income. However, letting is not always undertaken as a
business or commercial exercise. For landlords that target the middle
 Rental Housing 613

and high-income households, letting is clearly a commercial exercise

whereby return on capital is calculated, legalized contracts are provided,
effects of government rent control laws are considered, advertising and
agents are applied. There is also a group of landlords who invest in rental
market for future security. To them, rent provides a secure investment
that provides monthly income specifically to retirees and pensioners.
Letting can also be circumstantial. A household starts letting if there is
an extra space and often the letting business is temporary.
It is often the case that low-income landlords provide rental housing
to low-income sector while the middle and high income landlords to
the same income group to which they belong. Also, high income landlords
have access to both public and private housing financing. It is possible
that lack of credit to the low-income landlords constraints them to
expand letting. Investments in low-income rental housing, however, is
not necessarily unprofitable. Landlords that invest in high- and medium-
income rental housing receive higher incomes but investments are also
high which probably will take longer time to obtain return to investment
(UNCHS, 2003). In contrast, landlords of low-income households
receive lower rents but have minimal investments thus returns on
investments may be obtained in a short while.
While losses of existing rentals are concentrated among low-rent
units, new construction typically adds residences at the upper end of
the rent distribution (JCHS, 2013b). The deterioration and loss of low-
cost rental housing are grave concerns. To some extent, the loss of
older rentals may be inevitable as time takes its toll, particularly when
maintenance is deferred. Older housing may also be less efficient to
operate and have outdated designs. While renovation and improvements
might address some of these deficiencies, the costs of upgrading older
properties to current building codes are often prohibitive. Still,
rehabilitation of older buildings would provide the kind of modest but
secure housing that is difficult to add through new construction.
The supply of rental dwellings for the low income sector has been
increasingly provided through self-help rental developments, which are
mostly found in informal settlements. For instance, Ballesteros (2004)
reports that, in Metro Manila, Philippines, 80% of the total households
in depressed settlements are renters. Most renters are thus found in
the peripheral or coastal cities where the proportion of depressed areas
614 Housing Development and Management

to total city area is high.

There are several factors affecting the slowdown in the supply of
rental housing. The cost of conventional building materials may
constrain the production of low cost housing. Another reason is the
lack of credit or financing for small scale landlords (Ikejiofor, 1997).
Borrowing through the informal sector (e.g., supplier’s credit) creates
significant financial burden and risks. The rent control law may have
also adversely affected the supply of rental housing for low income
households. Investors may have shied away from low cost rental to
avoid coverage of the law (Ballesteros, 2004).

18.4.3 The Decline of Public Rental Housing

Public rental housing proved a long-term success in only a handful of
countries (Gilbert, 2011). Political ideology also played a role in the
decline of public housing. In many transition economies in Europe and
the Far East, public housing was sold off and public investment in new
housing was only intended for sale. Similar situation was experienced
in Nigeria where such policies as privatisation and monetisation have
contributed to the decline of public rental housing. Many government
residential quarters were sold out. The privatization involved the
complete sale of the federal government’s investments in banks,
insurance companies, and the sale of staff quarters in Lagos and Abuja
has a significant negative effect on housing consumption. This reform
seems to favour the rich and the politically-inclined at the expense of
the poor (Iweala and Kwaako, 2007). It is obvious that the poor who are
also the majority cannot afford to buy these quarters. The quarters are
eventually offered for rent at higher prices by the new private owners.
Too many governments favour homeowners and ignore tenants.
The Economist (2005) reveal that the United States government’s tax
relief on mortgage payments favour wealthier households. In 2003
alone, USD 121 billion was spent on tax relief. More than USD 57
billion of this went to households with annual incomes above USD
148,000. By contrast, only USD 36 billion was spent on housing
policies designed to help the poor (The Economist, 2005). Similarly, in
Chile, Colombia, Costa Rica, Ecuador and South Africa, governments
have attempted to extend homeownership to the poor through the
 Rental Housing 615

offer of millions of targeted subsidies. While this has helped some

tenants to buy their own homes, it has not helped those tenants who
are still too poor to obtain credit or who cannot afford either the cost
or the maintenance of formal housing (Gilbert, 2004).
Governments may increase rental housing supply either through
building public housing or by offering some sort of incentive to private
or social landlords (UNCHS, 2003). Alternatively, they can increase the
ability of poor households to pay for rental housing by offering them
subsidies or housing allowances. A third way is to intervene in the
setting of rents, through rent control. A fourth is to encourage tenants
to move into owner-occupation. Each of these methods is fraught with
difficulties and few governments have got the answer right even in rich
countries. In most cities, any of the above approaches tend to break
down given the low-incomes of so many of the population and the high
price of homes.

18.5 Rental Market Conditions

A healthy housing market should provide a wide range of shelter
options at affordable prices. Unfortunately, in most cases, housing
markets tend to favour one form of tenure over another and the poor
rarely have much of a choice. Households are often forced to choose
amongst a very limited range of unsatisfactory options because of the
many characteristics of the rental housing market. These
characteristics/conditions are: the cost burden; landlord-tenant
relations; eviction of tenants; contracts, conciliation and arbitration;
and discrimination against some categories of tenants. These are now
discussed in turn.

18.5.1 The Cost Burden

While growth in the number of low-income renters is an important
factor driving the spread of cost burdens, the difficulty of supplying
housing at rents these households can afford is also a problem. As a
result, the gap between the demand for and supply of affordable rentals
continues to widen. When households pay more than half their incomes
for housing, they have much less to spend on other necessities that
profoundly affect quality of life. For the lowest-income households, high
housing costs mean skimping on other basic needs to the detriment of
616 Housing Development and Management

their health and well-being. At the same time, limited spending on non-
housing items by these households has significant implications for large
segments of the economy, including the transportation, apparel, and
entertainment sectors (JCHS, 2013a). According to the 2012 Consumer
Expenditure Survey in the U.S., renters with severe cost burdens spend
about $500 more each month on housing than their counterparts living
in affordable units (JCHS, 2013b). Kresin and Schwartz (2010) reveal
that nearly 2 in 5 renter households (42.5 percent) in the U.S. were
burdened by housing costs consuming 35 percent or more of their
incomes. From 2006 to 2013, the percentage of low-income renters
facing severe rent burdens increased in central cities of the 11 largest
metropolitan areas in the U.S. (Capperis et al., 2015). Cuts in spending
to accommodate their higher housing costs fall most heavily on the four
largest items in their household budgets – food, transportation, health
care and retirement savings. These four critical spending categories
account for more than half of the cutbacks needed to offset high
housing costs, with negative effects that are likely to be cumulative and
enduring (JCHS, 2013b; Capperis et al., 2015).

18.5.2 Landlord-Tenant Relations

Conventional wisdom decrees that landlords dislike tenants and
tenants hate landlords (UNCHS, 2003; Gilbert, 2011). While this is
sometimes true, too often, the bad image has been exaggerated
because it has been based on circumstantial explanations or on casual
conversations with tenants. Both sides are likely to abuse the statistics.
As such, it is rarely easy to establish the truth. Schill (2003, p. 505)
unequivocally stated that “just as not all landlords are devils, not all
tenants are angels. Tenants can abuse landlords and (indirectly) their
fellow tenants by failing to pay the rent and not taking appropriate care
of their apartments.” Gilbert (2011) summarises the possible sources of
landlord-tenant tension as follows:
Landlords complain that their tenants don’t take good care of
the accommodation, pay their monthly rent late, and don’t
understand that rising costs of utilities, maintenance and
repairs make it necessary to raise the rent. Tenants complain
that their landlords don’t maintain the accommodation, fail to
repair things when they break, charge too much for services,
 Rental Housing 617

increase the rent without warning, turn hostile when the rent is
paid a little late, threaten them with eviction and/or fail to
return security deposits when they move out (Gilbert, 2011, pp.
21-22).

However, without denying that tensions exist, relations between

most landlords and tenants are reasonable. Relations are often better
when landlords live on the same property as their tenants. Rental
housing with resident landlords tends to be better-serviced and better
maintained (Arifin and Dale, 2005). When landlords and tenants share
the accommodation, they get to know one another and sometimes
develop mutual bonds of friendship and support. In some cases,
landlords avoid problems by only accepting tenants who have been
recommended by people they know. However, in other cases, landlords
use a different strategy. They actively seek to attract strangers and/or
people from a different race, nationality or tribe (Gilbert, 2011). They
want to avoid too much familiarity. By establishing a business-like
relationship they hope to encourage the tenants to take care of the
property, respect the rental conditions and leave when they are asked
to. For instance, In Mushin, Lagos, private owners prefer to rent to
members of ethnic groups other than their own because, as they
report, it is easier to collect rents from those to whom one is not close
(Barnes, 1982).

18.5.3 Eviction of Tenants

The problem of eviction in rental housing, just as the landlord-tenant
relations, is a two-way situation – tenants express fears about eviction,
while landlords complain about the difficulty of evicting default
tenants. Satisfactory landlord-tenant relations have to be based on a
degree of mutual trust. If either side deviates from what is regarded
locally to be reasonable behaviour, then a case for or against eviction
can be made. If tenants are abused, they should be protected; if
landlords are victimised, they should be helped.
A real dilemma comes when tenants cannot pay the rent for
reasons such as unemployment and sickness. In such scenarios, the
landlords (especially the poor ones), should not be the ones to bear the
cost of non-payment since they depend upon the rent to stay out of
618 Housing Development and Management

poverty. Governments can intervene by subsidising the poorest tenants.

However, this is unrealistic in most poor countries and governments must
accept eviction as an unpleasant consequence of poverty. In most
cases, rent levels are not too high compared to poverty levels as evident
in Box 18.3. More so, there are many instances where owners are also
thrown out of their homes because of their inability to pay, especially
through foreclosure proceedings.

Box 18.3: Rent Levels versus Poverty Levels

In the rental housing market, tenants naturally complain that rents are
too high and landlords that they are too low. Rental housing specialists
suggest that a reasonable monthly return from renting is about 1% of the
market sale price of the unit. The fact that rent levels are tied to property
prices means that rents can go up as land values rise and as economic
forces influence property prices. These market forces put formal rental
housing out of the reach of most poor households. If the 1% rule prices
out the poor, an alternative is the 25% of the budget rule. Housing is
unaffordable when a family spends more than one quarter of its monthly
income on rent. Unfortunately, this guide loses its meaning further down
the economic ladder insofar as one quarter of a very low income does not
provide any landlord with an adequate return.
Neither rule gets round the very real problem of inadequate incomes.
If a landlord is to provide adequate and well-maintained shelter, a certain
level of rent has to be charged. If a tenant is to live in decent
accommodation, a certain income has to be earned. The unfortunate
feature of most cities in developing countries is that too many people
earn very low incomes. In such circumstances rents are simultaneously
too low and too high. Landlords do not receive enough to provide
adequate accommodation or enough to keep their own families out of
poverty. At the same time, tenants earning very low incomes are forced to
pay a high proportion of their earnings in rent.
Part of the problem about rent levels relates to what is meant by rents
being ‘too high’. Sometimes, rents make up a very high proportion of the
tenant’s income but are nonetheless still too low for landlords to make a
profit or even pay for maintenance of the property. The real problem,
therefore, lies not in rent levels but with poverty.

Source: Gilbert (2011, p. 23-24)

 Rental Housing 619

18.5.4 Contracts, Conciliation and Arbitration in Rental Housing

The rights and obligations of landlords and tenants should be assured
through the legal system. In developed countries, the vast majority of
tenants and landlords sign written contracts that conform to rules laid
down in the rental legislation. In theory, this gives both landlords and
tenants the right to go to court in order to seek redress against
wrongdoing by the other side (UNCHS, 2003). Unfortunately, the court
of law in most developing countries do not help the majority of landlords
or tenants because they simply do not work effectively, are too expensive,
and take too long to resolve disputes (Gilbert, 2011). Therefore, when
disputes occur, going to the courts for resolution is rarely possible and
so some alternative form of arbitration is required. Here, traditional
forms of conciliation, like community councils, might be appropriate.
Alternatively, local governments or business organisations, like Chambers
of Commerce, might be encouraged to set up cheap forms of arbitration
as in Bolivia, Colombia and Ireland (Gilbert, 2011). The establishment
of tenancy tribunals can be another way for tenants and landlords to
resolve conflicts without resorting to lengthy and expensive proceedings
in a court of law. Written agreements should be promoted.

18.5.5 Discrimination against Some Categories of Tenants

Discrimination permeates many aspects of housing markets throughout
the world. Women and migrants tend to have less access to ownership
than other groups, while those with political contacts gain easier access
to public housing, etc. Not surprisingly, there is plenty of evidence of
discrimination within the rental housing market. Grounds of
discrimination include race, ethnicity, marital status, age, gender,
family status, household size, disability, disease or illness, religion,
creed, literacy level, political belief and sexual orientation. In reality,
landlords do discriminate based on all or any of these things. If a
landlord has multiple people interested in a unit, they may choose who
they would like to rent to and will usually discriminate against people
based on the above. Challenging this may be very difficult.
When large numbers of immigrants from the Caribbean first began
to arrive in the United Kingdom in the mid-1950s, they faced such
severe problems in renting accommodation such that many were
620 Housing Development and Management

forced to buy in cheap housing areas. Something similar occurred with

Turkish migrants to Belgium where, in the middle 1980s, 90 per cent
of landlords refused to rent to them (De Decker, 2001). Today,
landlords in Surat (India) are reluctant to accept migrants from Orissa
under the guise that they have a reputation for drunkenness and for
being ‘difficult’ (Kumar, 2001).
In Ghent, Belgium, landlords do not like letting to ‘risky’ groups
like “single persons, single mothers, asylum seekers and people living on
social allowances.” In the United States of America, families with
numerous children find it very hard to rent (Abravanel, 2002) and
landlords in Santa Cruz (Bolivia) and Guadalajara and Puebla (Mexico)
also admit to a firm dislike of large families (Gilbert and Varley, 1991).
Having numerous children was also a major problem for families in
nineteenth century Britain, where children were considered the “worst
despoilers of property” (Englander, 1983).
In Kenya, Syagga et al. (2002) notes that landlords are reluctant to
rent to single women, although they like widows with children who
“pay rent in time and take good care of the structures”. In Surat (India),
and in Guadalajara and Puebla (Mexico), landlords do not like single
men. In Bangalore (India), it is women-headed households, whether
widows or single women, who are less welcome (Kumar, 2001). In
Mexico, and no doubt in many other places, pets are also likely to
discourage a landlord from accepting a tenant (Gilbert and Varley,
1991). In Nigeria, some landlords frown against keeping and rearing of
domestic animals.

18.6 Rental Housing Assistance

It is hardly a hyperbole to call the growing lack of rental affordability a
crisis. The low affordability levels of households, the unprecedented
increases in land prices and the untamed fiscal problem experienced in
cities are conditions that raise the need for governments to find
alternative solutions to increase the choices of the poor and low-
income sector to low-cost and decent housing in the housing market
(Ballesteros, 2004).
While eligibility criteria varies between and within countries, many
programmes target rental housing assistance to very low-income
households. Given the costs of land, building materials, labour, and
 Rental Housing 621

capital, market forces face a fundamental challenge in supplying

housing that is within reach of the lowest-income groups of society –
the elderly, the disabled, the working poor, and those underemployed
and unemployed workers seeking full-time jobs. This is a sober calculus
that reveals the clear and compelling need for public assistance to close
the gap between what these families and individuals can afford and
what it costs developers to provide decent housing and a suitable living
environment. Linking supportive services and housing assistance can
provide residents a springboard to economic self-sufficiency by
addressing the underlying causes of poverty.
Expanding the reach of housing assistance should include efforts to
make more efficient use of existing resources. And current assistance
efforts should be tailored as much as possible to help address the
underlying causes of economic instability, connecting recipients to
communities, services, and supports that create a pathway to self-
sufficiency. Housing production programs can also be better designed
to improve the fabric of the neighbourhoods of which they are a part.
Nonetheless, greater efficiency and better targeting alone are not
enough to bring existing assistance programs to the scale necessary to
meet the country’s spiralling need for affordable housing.
Despite the magnitude of the affordability crisis and the clear need
for new thinking about assistance in Nigeria, active debate on rental
housing policy has just begun. The country faces difficult choices as
economic crisis and competing costs strain the federal budget. It would
be all too easy for rental housing concerns to get lost in the debate.
Given how vital good quality, affordable housing is to the well-being of
individuals and communities, the nation needs to decide that the time
has come to recommit to its longstanding goal of ensuring that every
Nigerian can afford a decent home in a suitable living environment.

18.6.1 Types of Housing Assistants with Examples

i. Rent to Own Scheme:
Rent to own housing model typically involves the initial allotment of
the unit on a leased basis for a fixed number of years. The buyer
deposits the monthly rent (equivalent to Equated Monthly Instalment
(EMI)) in a bank account. The EMI contains a certain percentage of
rent and the rest as thrift. When EMI amount reaches a certain
622 Housing Development and Management

percentage (e.g. 10%) of total unit price, property will be registered on

buyer’s name and hypothecated to bank and government. In case of
non-payment of EMI, bank and government will resell property. Thrift
amount will be returned to buyer without interest. Resale powers lie
with bank and government till the completion of tenure. Once 100%
payment is done, property papers are handed over to the buyer by de-
hypothecation.
Additionally, Housing Associations, which are more than 1,500 in
the UK, have also begun to promote ‘rent to buy’ schemes, in which
aspiring buyers can let/rent an affordable new-build home for up to
five years, while they amass a deposit to secure a loan to buy the same.
These government-backed schemes offer discounted rent of no more
than 80% of what tenants would pay on the open market and often
less and some tenants even return some of the rent for use as part of
the deposit when they graduate to ownership.

ii. Subsidies for Low-Income Tenant:

A commonly employed method in some developed countries has been
to introduce a rent supplement or a rental housing voucher. Most
developed countries have employed some variation on this approach at
one time or another and, to a degree, it has worked. While in many
respects rental subsidies for tenants have been successful in the United
States (Capperis et al., 2015), they suffer from budgetary constraints
that limit their effectiveness for low-income renters (The Economist,
2005). There are several inherent challenges associated with the
implementation of this approach, particularly in poor countries
(Gilbert, 2011) and these are that:
 It is very costly and few governments are prepared to devote
sufficient funds to such an approach.
 If insufficient funds are allocated, many tenants are left out of
the programme.
 It is liable to abuse if governments do not target the subsidies
accurately.
 It can simply transfer public monies to landlords as tenants are
asked to pay higher rents when landlords realise that the state is
paying a subsidy.
 Rental Housing 623

iii. Finance for Private Landlords Providing Low-

Income Rental Housing:
If subsidies aimed at tenants often find their way to landlords, why not
offer subsidies directly to landlords? Such an approach can stimulate
the production of rental housing for the poor. Government can
stimulate middle income landlords to invest in low cost housing letting
part of their property. Tax incentives and credit can also be provided
for this sector (Milligan et al., 2015). In addition, low cost arbitration
and conciliation avenues to settle landlord tenant conflicts can be set
up. Speed of decision by the ‘rental housing tribunal’ is critical,
especially in low cost rental dwellings since probable losses from rents
are not included in the computation of rental rates.
Government subsidies should be directed at providing public rental
housing for low income households on a purely lease arrangement.
Lease to own scheme has become popular because it satisfies the need
for some families to rent at the beginning and to become homeowners
one day. The problem, however, with lease-to-own scheme is that it
tends to favour the middle income household. As observed by UNCHS
(2003), such schemes have not been totally successful and tended to be
geared toward middle-income groups.

iv. Helping Self-Help Landlords to Build and Improve Low-

Income Rental Housing:
Apart from providing subsidies to poor owners who are willing to
provide rental accommodation, governments can take several actions
to support self-help landlords improve low-income rental housing by:
offering small plots of serviced public land to potential landlords to
construct for rent; taking the needs of tenants into consideration
during urban upgrading programmes; providing micro-credit for self-
help landlords (Milligan et al., 2015); and modifying planning
regulations to allow safe house extensions.

v. Rent Supplements and Housing Allowance:

Rent supplements have been used in Canada as a contractual
arrangement with landlords to be allocated certain units to eligible
low-income households. The contract specified the market rent and
624 Housing Development and Management

rate at which this rent can be annually increased (usually an inflation

linked rent index). Households pay partial rent based on 30% of
income, with the program then paying the difference between this
30% RGI payment and the market rent (Pomeroy and Godbout, 2011).
These supplementary payments are made directly to the landlord.
Housing Allowance, unlike the rent supplement, does not involve
directly contracting with a landlord. It leaves recipients to freely
choose where they live and to select their own unit. It is possible to
have minimal condition or size standards in order to ensure the
program is not supporting poor quality housing. The subsidy payment
similarly uses a percentage of income, such as 30% but adds a
“percentage of gap” between the 30% level and actual market rent
(Pomeroy and Godbout, 2011). Thus, if the market rent is $500 and
30% of income is $375, the gap is $125. The percentage of gap covers a
specified percent of this gap such as 6% (so $75) or 75% ($93.75). This
approach requires the recipient to pay part of the gap and thus induces
an element of consumer control so that the recipient that is paying
part of the cost has incentive to select a lower cost unit. The cost is
also managed by imposing a maximum rent for eligible assistance.
A healthy housing sector that is able to meet a broad range of needs
is a vital part of the economic and social wellbeing of a community.
Beyond the immediate economic benefits of increased rental
construction and related employment spin-offs, a healthy rental market
will support a more mobile workforce and give young families, new
immigrants, and the aged higher-quality, lower-cost rental options
(FCM, 2012).

18.7 Conclusion and Key Policy Recommendations

Cities and regions across the world must examine their rental housing
markets, gain a better understanding of their specific availability and
affordability problems and, to the extent that they exist, find ways to
effectively attack them. The policy solutions they settle upon will need
to accomplish several things. A strategic approach to developing a
workable rental housing policy should first acknowledge the existing
rental arrangements and find flexible, realistic ways to regulate them.
In most cities, rental housing arrangements contribute significantly
to local livelihoods and thus measures to govern and promote their
 Rental Housing 625

further development should be formulated. Consequently, rental housing

is getting a second look as an important component of a national housing
policy. Local dynamics and housing market conditions are different in every
county and different cities, and so there is no single formula on how to do
this (Gilbert, 2011; Milligan et al., 2015). Nevertheless, the suggestions
in this section will help policymakers and government officials to
promote rental housing in their cities – especially for the poor.
The development of the rental market has become a critical aspect
in housing. The sheer volume of urban growth through both migration
and natural increase has strengthened the resolve to create a balance of
advantage between ownership and renting. Even in countries where
ownership has increased, the increase in the magnitude of renters has
also been substantial. Being a tenant is an optimum choice for some
households in different stages of the lifecycle. Thus, the rental housing
market is not simply an alternative to ownership (Ballesteros, 2004).
Given the developments in the rental housing market identified in
this chapter, there is a need to re-examine government policy on
housing in general and rental housing in particular. Housing the poor
and low income sector has to be undertaken with a balanced view of
ownership and rental. Housing policies need to provide more
incentives to stimulate the rental housing market. Such incentives,
according to Gilbert (2011), could include: avoiding favourable tax
breaks only for owners; providing subsidies to poor families irrespective
of their tenure; and creating prejudice against any tenure group.
While rent control law is important, it should not be a substitute to
policies that will stimulate the development of low cost rental housing.
The rent control law should also not be a priority at a time when most
low income renters dwell in self-help rental accommodations, where
informal, verbal contracts are not uncommon. In fact, Kumar (1996)
argues that the negative impact of rent control outweighs its benefits.
According to him, it has resulted in a decrease in the production and
supply of both the quantity and quality of rental housing. In line with
this, Ballesteros (2004, p. 18) argues that “when applied to the formal
market, rent control, at the most, may be relevant only in cases when
quality of rental dwellings becomes a threat to people’s lives. In this
case, the law has to be applied selectively (e.g., rental dwellings 20 years
old or higher) and based on building structure rather than rent
626 Housing Development and Management

levels.” Gilbert (2011) further warns that only in few market economies
has rent control had a long-term positive effect on rental housing for
the poor.
One way to increase understanding of the issues involved and to
reduce the chance of conflict is to insist that all landlord/tenant
agreements should be written down on standardized forms (UNCHS,
2003). Standard contract forms should be freely available in local
shops or newspaper stalls. Such a standard contract would not
determine the nature of each and every agreement, but it would help
to remind landlords and tenants that they should agree on the most
basic issues before the tenant moves in: the level of the rent, who is
responsible for paying for the services and who will maintain the
accommodation.
In addition to or apart from rent control, there are other schemes
that governments can adopt to assist or protect the poor and low
income renters. First, government could encourage small scale
landlords to provide more and better rental accommodation through
the following: (1) building rental incentives into upgrading programs;
(2) provide micro credit; (3) create appropriate planning and rental
regulations in informal settlements; and (4) provide incentives to
investments in low cost renting (Ballesteros, 2004).
In several countries, upgrading has been noted to provide
opportunities for more rental accommodation since owners are
encouraged to making improvements of sheltered space (Skinner et al.,
1987; UNCHS, 2003). Letting property in informal settlements should
be encouraged by the government and upgrading programs has to
consider the presence of tenants. Upgrading of self-help settlements
provides an opportunity to improve the conditions of low income
tenants. Incorporating rental housing in informal settlements would
require some modifications in planning regulations. These regulations
may need to be modified and standards lowered. Excessively strict
building codes, space standards, infrastructure norms and land use
regulations can increase the price of housing in these areas thus
creating problems of affordability.
Indeed, the main difficulty in commenting on the impact of
planning regulations on rental housing lies in knowing precisely to
what extent the rules are actually being implemented. Since most
 Rental Housing 627

regulations are applied in only a cursory manner in most areas of

poorer cities, it is difficult to be categorical about the overall effects of
their application. In general, however, it is probably true that in most
cities, high planning standards have either been ignored and/or have
helped to increase levels of corruption (Kumar, 1996; UNCHS, 2003).

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Ballesteros, M. M. (2004). ‘Rental Housing for Urban Low-Income
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Barnes, S. T. (1982). ‘Public and private housing in urban West Africa: The
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