The Supply and demand over the last 5 years has been somewhat of a rollercoaster, with a mass influx of “accidental landlords hitting the market in 2007” when the property market crashed, followed by a reduction in housing stock hitting the rental market due to lack of mortgage funding availability shortly after, which we are still suffering from today although It is hoped that the new measures being proposed by the Governments Housing strategy, will start to help ease the situation with regards to supply and demand.
Although there is a shortage in supply, from an agents perspective this is counteracted by the fact that so many Agencies have closed, which means although there is less supply, there are less agents to share the market, as well as there being an unprecedented amount of tenants looking for accommodation. This means that any decent property available is being snapped up, quickly and easily. There is however some anecdotal evidence that the supply is increasing in some areas throughout the country as the mortgage market eases and investors become more sure of the current market.
With unemployment being shown by the governments latest figures to have reached the highest levels in 15 years, it is fair to assume that this will lead to much higher arrears problems in 2012 than before and products like Rental Guarantee are likely to become more in demand this year, and it will be more important than ever to have strict rent arrears collection policies to ensure that you get paid first.
Repossession is also likely to become more prevalent this year as more tenants and landlords become more unable to pay their mortgages and rent and end up losing their properties. I can see more and more landlords and agents, insisting on Landlords “proof of financial stability” in the form of an up to date mortgage statement, to ensure that they are up to date with their payments, as well as the usual financial checks carried out on tenants.
Due to the above I would envisage that even though there has been a huge shake up of the LHA (local housing allowance rules) recently, I can see that LHA is going to become a very important part of the Private Rented Sector, especially as the councils themselves are looking to the Private rented sector to provide housing and I wouldn’t be surprised to see some effort here on the governments part to make the LHA market more attractive to the Private Landlord.
I would suggest that there will be a lot more scrutiny on the PRS (Private Rented Sector) as it becomes a major player in the housing market this year and beyond. The Government has already proposed a review of the PRS (following the Rugg review 2 years ago) as more and more Consumer Rights Bodies raise issues and highlight issues within the industry, we have already seen the regulation of Sale and Rent back, Introduction of Article 4 regulation in some councils, proposals to insist on smoke alarms in every rented property, tighter regulation on registering of deposits coming in this month, the minimum Energy Efficiency standard rating of rental properties being introduced from 2018, talk of regulating lease options and the never ending question of whether landlords and agents should be regulated or licensed by law.
However, Governing body for Letting agents ARLA (the Association of Residential Letting Agents) predicts that one positive outcome of a challenging 2012 could be increased scrutiny of the PRS, both as part of the PRS Review proposed in the Housing Strategy, and as a result of increased attention from consumer rights bodies.
ARLA President Tim Hyatt said: “An improvement in the standards of consumer care in the PRS could be the silver lining of the post-recession cloud currently covering the housing market. Lettings is an unregulated industry which means unethical letting agents, and landlords, are able to exist unchallenged.”
Tim goes on to say that the only way to protect themselves currently is to ensure that they use a Qualified Agent, which is a member of a self regulatory body such as ARLA, with client money Protection in place..
I get tired of time and time again hearing stories of unscrupulous agents, Rogue Landlords and properties not fit for animal occupation being let as homes, (when all the regulation exists to prevent this but it doesn’t get policed or enforced) and this is my industry, which makes me sad. Let’s move it into the 21st century and make it safe for everyone, because than and only then can it grow with trust and opportunity to its full potential to meet the levels of the Private Rented Sectors in the European Countries, that we have always lacked so far behind.
So although 2012 looks set to be a variable year for all of us Landlords and Professionals in the Private Rented Sector, I look forward to the challenge ahead, we may have short demand but a larger share, there may be arrears, and an even tighter referencing process for both landlords and tenants may be required, but I welcome with open arms an improved Private Rented Sector, which can only be good for us all
Sally Lawson is a Leading authority on Residential Lettings and Management in th UK, Sally has ran Lettings Branches since 1990, and let over 5000 properties during that time. She has also worked as a consultant and trainer to Letting agents nationwide. Sally is actively involved with ARLA (the association of residential letting agents) as a regional representative and Media Spokesperson for the group, and runs the rapidly expanding nationwide Concentric Lettings operation and Franchised network. www.SallyLawson.co.uk