Rental market reform is a political no-brainer.
FROM 1 June, it will be illegal for tenants in England to be charged letting fees, with deposits capped at six weeks' rent. Anyone who rents their home will see the benefits in the tenant fee ban, with tenants expected to save an average of PS400 per move.
More importantly, this policy marks the beginning of a dramatic shift towards the increased professionalisation of the rental market.
Scotland, which banned tenant fees in 2012, gives us an idea of what's to come. While critics of Scotland's ban claimed that costs would eventually be passed back to tenants, only two per cent of landlords actually increased rents because of the ban.
Several more pro-tenant laws have followed in Scotland, including ones forcing landlords to give tenants three months' notice, while also preventing rent being increased more than once a year. With Generation Rent growing as an electoral force, we expect to see a similar direction of travel in England.
Already this year, the government has moved to ban no-fault evictions - an obvious win for tenants, provided that it is implemented properly.
Anyone doubting the trajectory of the rental market would do well to remember that this is a policy from a Conservative government, during a time of particular political upheaval.
Any new government is likely to be even more pro-tenant.
Labour has broached enforcing three-year tenancies as standard, with rent rises capped to inflation during the tenancy.
Renters would value the extra stability, but what about landlords? Forward-thinking landlords have been offering three-year tenancies as standard for a while.
Providing security for tenants is not only the right thing to do, but also improves returns by reducing voids and ensuring that the property is kept in a better condition. Fairness to renters and commercial returns are not mutually exclusive.
In fact, some policies are political no-brainers, such as improving standards of living for the growing base of renters, without detriment to landlords who are prepared to professionalise.
But what of landlords who aren't willing to adjust? There is already significant opposition to the changes on the table, with many arguing that this is a further attack on an industry that has already been hit with a series of tax penalties in recent years.
Even some landlords providing a good service to their tenants hold these views. That said, the unfortunate reality is that the amateur buy-to-let market has shown itself incapable of providing a service to tenants that is fit for purpose.
Many landlords will find that the increased effort, with decreased payoff due to tax changes, means that it's time to exit the market.
Their places will be filled by those prepared to do the work to fit in with the new normal in the rental market.
What we all gain in return is a rental market that provides security and stability for those who rent, in professionally managed homes. This would be a transformation from the situation today, but one that is looking increasingly inevitable.
In the long run, we may even create a healthier rental market in which more people rent by choice rather than necessity.
Regardless of whether landlords support these changes, the move towards a more professional rental market is inexorable. Any landlord who does not adapt to this new environment will quickly find themselves left behind.
PS Simon Heawood is chief executive of Bricklane.com.
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|Publication:||City AM (London, England)|
|Date:||May 28, 2019|
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