The rental revolution: changes in the private rented sector
The UK’s rental market is undergoing a transformation as it continues to grow
New investors including pension funds Legal & General and M&G are entering the sector, promising to add scale through major new apartment developments. And the government is backing the private rented sector as a key provider of new homes.
Alongside UK developers active in the sector are North American arrivals including Realstar and Greystar. And with them, they are bringing a quiet revolution in the way that residential tenants are looked after.
Speaking at the recent London Real Estate Forum, housing minister Brandon Lewis said: “We want to see much more investment in London’s private rented sector – and the last thing we will do is deter good landlords and investors by increasing red tape and unnecessary regulations such as rent controls.”
Thanks to the development of a Private Sector Taskforce in 2013, the government has been encouraging planners and developers to move on projects. A Build to Rent fund was established, to help meet a lack of bank lending in the sector, and so far has supported dozens of new developments around the UK.
Development hotspots for the new private rented developments include Ealing, Acton, Stratford and Croydon. One leading project is Get Living London, where more than 1,000 apartments for rent were created in Stratford from the former Olympic athletes’ village. Today, apartments rent there from £395 a week.
While the new private rented sector developers are building new flats for long term rent, there is still a growing place for the smaller landlord and buy to let investor in the market. A recent report by Kent Reliance suggests the private rented sector currently accounts for 18% of all housing stock, a figure that will rise to 20% by 2020.
As a result, it is reckoned around 700,000 new rental households will be needed over the next five years, a figure the new investors will not meet alone. Thankfully, mortgage rates for buy to let mortgages continue to remain low, while rising real incomes will support an increase in rents.
One positive from the new brands in the market will be a focus on better management, with many of the developers promising to offer a concierge service and fast attention to any problems in rental apartments. Some even promise to fix a defective washing machine the same day a problem is reported, or otherwise replace it immediately.
While this is great news for new tenants, it will put pressure on existing landlords, who will need to think about how to provide a streamlined service. Linking with a reliable handyman service or local tradespeople and agreeing service response times and pricing will be a key consideration, to meet tenant expectations.
There are several ways landlords can help themselves to ease the burden of managing a small property portfolio, and one of those is to use an organising app such as Direct Line for Business Mobile Landlord app. This free to download app has been designed to help landlords keep all their records in one place, and provides reminders about key dates to ensure deadlines don’t get missed.
Building on the company’s experience of insuring more than 220,000 landlords, the Direct Line for Business app provides helpful advice and updates on legal developments in the sector. It also stores key contacts such as agents, repair specialists and handymen, and provides a calculator that allows landlords to track income and expenses and calculate their return on investment.
LANDLORDS WILL FACE MORE REGULATORY CHALLENGES
Being a landlord is not as simple as it seems. As well as looking after tenants and ensuring rent is paid, there is a growing burden of regulations that must be dealt with, in order to stay on the right side of the law.
Tenants are more likely than ever to hold landlords to account. Last spring, the government published a new guide for tenants to make them aware of what they should look for when renting. The tips contained will mean tenants are likely to ask more questions about the property they are looking to rent; the guide also explains how tenants can complain to a local authority, should a landlord not attend to defects.
A deadline has just passed for older tenant deposits to be correctly registered with a deposit scheme, and landlords are now liable for fines if they do not account for such deposits correctly.
This autumn, there will be a new legal requirement in place that means landlords will need to install smoke and carbon monoxide alarms in all rented properties. After the cost of installation comes the responsibility for ensuring they continue to operate.
And changes are afoot with tenancy agreements. The government has said it will amend model short hold tenancy documentation in the coming months, to clarify circumstances under which a tenant is permitted to sublet or share their home with others.
These changes should address issues arising from the new “sharing economy” which has seen more people renting spare rooms on a short term basis through websites such as Airbnb. Such developments can, it is argued, help tenants ease the burden of paying their rent each month.
DIGITAL SOLUTION: DIRECT LINE FOR BUSINESS MOBILE LANDLORD APP
A complete service at your fingertips, allowing you to keep tabs on all your investments
Direct Line for Business provides flexible cover for landlords. It’s easy to add properties to an existing policy and, along with the Mobile Landlord app, will help you manage a portfolio more easily. Search Mobile Landlord on AppStore or Google Play. For more information go to directlineforbusiness.co.uk/landlord or simply scan the QR code below.
The Mobile Landord app can:
▀ Keep all your records and information in a single place
▀ Calculate your rental yield and track income and expenditure
▀ Set reminders and schedules so those ‘little jobs’ don’t fall through the gaps
▀ Store photos so you can keep records of any damaged inventory
▀ Keep important agent and handyman contacts all in one place
▀ Receive valuable news, advice and updates on e.g. legal developments