The Future of the Private Rented Sector
As the Summer begins to unwind, so will Parliament. Both Houses will "Rise" on the 20th July and return on the 5th September. In the meantime we will ruminate over the latest announcement from the Secretary of State, James Brokenshire that tenancies should be an average of 3 years.
The thinking behind this proposal is that it will give renters more security and will bring benefits to tenants and landlords alike. As result the Ministry of Housing has opened an 8 week Consultation to allow those who have a vested interest in the proposal, to have their say.
With the publication of the Tenant Fees Bill 2017-19, there is an awful lot to think about. The next 12 to 18 months will see a very different Private Rented Sector. The industry will experience drastic change - landlords will no longer be pitching letting agents against one another based on price. It will be very difficult for a letting agent to offer a fully managed service at 5%. Currently this is possible because they are pushing higher administration fees on to tenants, this of course will stop. We will be moving towards a much more regulated industry, Wales and Scotland already having taken the leap of faith to regulate / licence both landlords and letting agents.
The first step for letting agents will be Mandatory Client Money Protection. How many letting agents will be able to jump through the hoops put before them? The cynics suggest that the change is not about ensuring a more professional and better regulated industry, but more so about the Government appealing to 9 millions tenants who could potentially be on side for the next General Election. What they are forgetting is that they also need to appeal to the small businesses owners who they have not considered when formalising legislation. I have worked within the sector for 13 years and the legislation has been never ending - most of it introduced for landlords, however, it is the letting agent who manages properties that has to be sure that their landlord is compliant.
Everyone seems to be forgetting that letting agents have an unwritten commitment - Duty of Care to both landlord and tenant. The majority take this responsibility very seriously, it is the minority , as per usual who are giving the industry a bad name. So one must ask that as more and more legislation is introduced, who will enforce and police those who are flouting the law? Nirvana will be a level playing field where excellent letting agents are allowed to be paid for offering an exceptional service without having to continuously cut their fees to survive, but we are all very much aware that Nirvana appears in fairytales, so it will be interesting to see how this particular fairytale ends.
Do not forget to consult on the proposed 3-year tenancies. https://www.gov.uk/government/consultations/overcoming-the-barriers-to-longer-tenancies-in-the-private-rented-sector//