The paper describes the findings of a study conductedduring 1997–1998 on changes to the structure of rentalhousing provision in two post-communist cities,Budapest and Sofia. After nearly a decade of `transition' to market economies, the public rentalsectors have shrunk dramatically and becomeresidualised. Despite the rapid privatisation andassociated growth of owner-occupation there is littlesign that the privately rented sector (PRS) isregaining any of its pre-communist stature as theprincipal form of housing provision. There is almostno company landlordism and 80 percent of thelandlords in both cities let out only one property.They are mainly `incidental' landlords who haveinherited or previously owned the property. Few havebought it as an investment. There are few signs ofinstitutional support for the PRS in either city.Despite this common context, the reasons for thedevelopment of the PRS in the two cities aresignificantly different. In both cities the PRSaccounts for about 4 percent of households. But inSofia nearly half the landlords let out their ownhouse for income, depressing their housing consumptionagainst a back-cloth of poverty and desperate need forincome. `Landlords' move in with relatives or to`second homes'. Thus a large number of landlords arealso tenants in another property. In Budapest, unlikeSofia, new entrants to this market have fallen sharplyin the last 18 months. High taxation, falling realhouse prices and over-supply of property, followingthe rapid privatisation of the state rental housingstock, are the underlying problems inhibiting thegrowth of this sector. There is no sign of a return tothe tenure that was the foundation of their urbandevelopment, although explanations for this differbetween the two societies. The `transition to themarket', at least in housing, continues to be parlousand immature.