As we progress through the 21st century, the Private renting sector is maturing, coming out of the doldrums of the 19th century, and into the mainstream way of life once again. More and more people are becoming landlords and more people are making a “lifestyle choice” to remain as tenants for life, (some even owning properties to let themselves) elsewhere, but are the processes, that letting agents and landlords operate under, which were developed in the 90’s when tenants were in the main looking for a temporary solution, really ready for it?
Renting property is now a “choice”, people that can afford to buy, are choosing NOT to buy, but to rent for “life” instead, in order to have flexibility, or to invest their money elsewhere, rather than in a home, so why are our attitudes towards the Private rented sector still “temporary/short term” or for those that “can’t afford to buy”?
If you go back to the 1900, when 90% of our homes were privately rented, it was the poor and downtrodden, that were the tenants, with only the big wealthy landowners having sufficient wealth to own their own homes and the homes of others. Tenants were disposable and in the main treated quite unfairly.
Through the first half of the 20th century, the council, started to build homes and create Social Housing for the homeless and needy, and regulation made the lot of the poor tenant much better, so much better in fact that a landlord in most cases couldn’t get a tenant out for 3 generations, due to the protected and regulated tenancies. This had a catastrophic effect on the rental market, and a final nail in the coffin for landlords as they turned their back on the PRS as a viable investment and the Private rented Sector plummeted to o a lowly 7% by 1987!
During this time Margaret Thatcher was pushing the “Got to get your foot on the ladder at all costs” campaign and many people jumped into home ownership, yet again from here on in, tenants were seen as second class citizens. But due to the recession and the new need for rented accommodation the government thankfully changed the rules for getting tenants out and created the Assured Shorthold tenancy in 1988, making the PRS a viable renting option again, for short term lets, as opposed to “life & beyond” tenancies.
However, over the latter part of the century our work force and outlooks changed. Properties became too expensive for the masses to buy again, the workforce has become more mobile, no longer relying on “Jobs for life” and the younger generation are much more a “now” society, wanting to spend their money now rather than save for the future, mix that with people staying single longer, getting divorced more and the age of the first time buyer increasing from an average of 25 to 35, in 10 years, we have now again seen rapid growth and the market is now back to 17% and rising.
The problem with the Rental Market is that the whole set up nationwide, is now based on “short term lets”. If you are a family looking to find schools for kids, build a home, get involved in the community and put down roots, then this is hard to do when your landlord will only grant you a 6 month tenancy and then you are on SPT (statutory periodic tenancy) with 2 month notice to get out looming at any time. So should we consider longer lets, perhaps 5 years or beyond?
Some of the properties we deal with on country estates, let their properties on 5-20 year terms, the tenant takes on an element of “property maintenance” and has an opportunity to make the property home, make minor changes and put down roots, the landlord knows where he stands and that he has a tenant for the long haul, and is this any different to taking out a mortgage? So why can’t the private sector make this more the norm? It won’t be suitable for every landlord and property, but I expect that it would be welcome to a few.
I think one of the issues is that we have many “new” and “inexperienced” landlords, those themselves, are not sure how long they are “in the game” for, so they will not be able to agree to a 20 year lease, but they may be able to consider a 5 year? But would the mortgage companies agree to this? Maybe not, it might only be an option for mortgage free properties.
So what can we do? We need to look at the conversations we have with prospective tenants and landlords, identifying whether they are long term lets or short term tenants, when taking on a property to rent, we should already be asking if they have a mortgage or not, but also whether they would consider long term lets as opposed to short term lets and the benefits of doing so, making a way so that these are described as available for a long term let and therefore matched with appropriate tenants to suit. Looking at it long term lettings from a letting agency owner and a landlord perspective, doesn’t it give us both a much better business model, if a tenant moves in and stays for 10 years or so? I believe it does, what do you think?
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 and www.concentriclettings.co.uk