The changing face of the Lettings Industry
The landscape of the housing market is changing faster than many in the industry have witnessed before, as well as it is central to much of the political debates going on at the moment; with a large section of Labour’s pledge being related to the property industry and when we look behind the reasons for the changes, it becomes quite clear.
The Private Rental Sector (PRS) is growing at such a rate, faster than any of the other tenures, and is also starting to increasingly house those that are more needy (those that would normally be housed by the council or specialist organisations) and it seems that this is also the driving force behind the interest in increased regulation and tenants rights, now more so than ever before, so how will it evolve?
Since 1987 the PRS has grown from being only 7% of the housing stock to now reaching almost a fifth (19%), but with this rise it means there have been falls in other sectors and changes the way the nation is now housed.
The Social Housing sector has substantially reduced, primarily due to the lack of council homes; many sold off, plus, not enough social houses being financed and built, leading to the PRS being looked at as a solution to provide homes for those normally housed through the social sector as well as the working tenants for whom a mortgage is not available.
Many more tenants that would normally be entitled to a council home, or social housing accommodation, are now renting through the PRS, totally changing the demands on the sector, for both landlords and agents alike and challenged further by the introduction of Universal Credit affecting many in the sector to varying degrees.
It’s worth noting at the same time, that many higher income families are also choosing to rent now as a lifestyle choice, to give themselves flexibility, as well as the ability to move on “at will” without having to wait for a sale; or to deal with the burden of cumbersome mortgage applications as the lending criteria becomes more difficult. We are seeing many of these lifestyle choice tenants, still owning property elsewhere, but themselves renting their own property out.
The rapid rise in the social housing need, is also seeing the high rental value areas, such as inner city London, starting to attempt to shift their tenants out of the locale into cheaper north of London territories, to reduce the burden on the Housing Benefit budget, and increasing the demand even further on the Midlands and North West regions.
This means that the PRS is set to grow, but it appears that the needs of the tenants (and landlords) in the future will be different to what we have seen in the past, with a whole new sub market within the PRS, which will need to be managed very differently to anything most landlords and agents have dealt with before.
If the social housing entering the PRS is the largest growth area in the marketplace then many landlords would be wise to gear up for this, and agents too. Learn to understand and manage the complex LHA (Local Housing Allowance) marketplace and the unique needs of this sector and its tenants, and find ways to make it work for them.
Whilst it appears that still only around 5% of the letting agents in the UK really understand, and operate fully, within the LHA sector; handling it properly, meaning that many appear to be just ignoring one of the fastest growing sectors this industry has ever seen; some are making it their bread and butter, offering the services that landlords and tenants renting within this complex area so desperately need and doing exceptionally well as a result.
I can remember having adverts running in the 90’s saying “no DSS”, we all did, but now we embrace the LHA market and have found a way to make it work for us, our landlords and our tenants alike, offering safe accommodation, profitable tenancies and solving a big need in the market.
So calling landlords and agents… maybe it’s time to stop doing what we have always done, and take a look at this massively growing market, make some changes and start to work on a solution, rather than turning a blind eye.