Navigating the new Private Rented Sector
September 12, 2013
I am just over two months into my role as President of the Association of Residential Letting Agents (ARLA), and our members are reporting an exceptionally busy summer.
I began my career in commercial property, before moving into residential lettings in the early 80’s. In 1988 I founded Fitz-Gibbon Residential, a specialist Residential Letting and Property Management Company that covers West London. This experience has helped me to gain first hand knowledge of how the Private Rented Sector (PRS) operates.
The PRS is booming, due in part to tough lending conditions for prospective home buyers, the ongoing economic uncertainty and the lack of available stock for sale. The rapid growth of the PRS can be seen as both an opportunity and a challenge. Our industry is being taken more seriously than ever before by politicians and, as a result, I am absolutely committed to upholding the highest professional standards. This commitment stands alongside historically strong calls for regulation of the sector from my ARLA colleagues.
As the PRS continues to evolve, my varied experience has been vital in shaping my belief that professional standards should be at the heart of everything we do as an industry.
To further analyse the current situation in the PRS, I would like to consider more closely what it means for both tenants and landlords. While there are certainly differing experiences at both ends of the sector, there is also a good deal of common ground which will be understood by anyone involved in the PRS.
The expanding PRS: Tenants
With record numbers of tenants relying on letting agents and private landlords, there is increasing pressure on the PRS to provide homes like never before. ARLA research shows that the average length of a tenancy has increased from just over 16 months in 2006 to almost 20 months in 2011. The research also highlighted the fact that young families now account for almost a quarter (23.2%) of rented households. These findings confirm the general perception in our industry that tenants are taking an increasingly long-term view of their rental home.
In this situation, tenants must be confident that the service they are receiving from their letting agent is of the highest quality, especially if they are raising a family in a rented home. Unfortunately, rental ‘horror stories’ feature in the media all too often and, despite these incidents representing just a tiny proportion of our industry, we need to meet the reputational challenge posed by these unscrupulous agents head on.
My aim is for all tenants to recognise that speaking to an ARLA licensed agent should be a vital part of their search for a rental property. Our members are highly trained and experienced individuals who can offer best in class advice, and local market insight.
The expanding PRS: Landlords
The ability to trust letting agents is also crucial for landlords, many of whom may be entering the market for the first time. All of us have been new to the PRS at some point, and the professional advice that experienced agents provide is invaluable to those who may not yet have detailed knowledge of the sector. This is particularly true for three in ten (28%) of landlords who have entered the PRS ‘reluctantly’ because they couldn’t sell at least one of the properties that they owned.
While many commentators are quick to extol the virtues of the PRS as an investment opportunity, I do worry that too little attention is paid to some of the considerations that should be factored into any decision.
Our members will be able to offer prospective landlords the latest information that may influence their choice of rental property. Local information, like average area rents or the expected length of void period, can help a landlord calculate future returns on a property investment with confidence.
Beyond this initial advice, ongoing management support and tenant acquisition can be key agent services for landlords who want to take a more ‘hands off’ approach. Again, trust is a vital component of any working relationship, and professionalism can help reassure landlords that their property – and tenants – have been left in good hands.
Overall, a common factor that unites landlords and tenants is that many need advice on the intricacies of the PRS. Whether someone is a first-time tenant or an experienced landlord, there can always be some quirk of the system that they may not have come across before. It is at this point that a professional and experienced letting agent’s advice can be hugely beneficial.
Therefore, we must continue to work hard to ensure that consumers of all types know to seek our trusted letting agents’ who will be able to provide the best insight.
I joined ARLA because of its position to drive the industry’s agenda and to ensure professionalism permeates across all PRS activities. As President, I aim to further this work through a continued drive for greater regulation, which will see politicians and the public acknowledge residential letting as a profession equal to residential sales.