Generation Rent: How the rental market boom is creating huge challenges for landlords and property owners around the UK
Natalie Crane is Marketing & Communication Manager at Total Landlord Insurance, and a regular contributor to www.letyourproperty.tv which launched in 2012 as an online TV channel and community that produces a mix of live & interactive shows along with video news updates. The show is aimed at Landlords and provides answers to any questions they may have regarding letting a residential property.
There’s no doubt Britain is fast turning into a nation of renters, so much so that a new term has even been coined to represent the huge percentage of young Brits who are now choosing to rent instead of buy. ‘Generation Rent’ is what those of us in the industry are now calling them and they’re a lucrative group.
While 10 years ago, young professionals were desperate to get onto the property ladder and usually didn’t have much of a problem doing so, these days it’s a vastly different picture with today’s younger generation left with little other option than to rent in many cases. This is obviously great news for those with properties to lease, but with such massive demand, many are finding it tough going and this boom is throwing up plenty of issues and challenges that weren’t there 10 years ago.
Recently we invited property experts onto the letyourproperty.tv live show to discuss ‘Generation Rent.’ One of our experts, Sean Hooker from my|deposits said the company now have 90,000 landlord members with a monthly growth of 1,300 new landlords. my|deposits have protected over £1,690,000,000 worth of deposits since April 2007. This figure alone is an indication that the lettings market is booming and this is being supported by a mixed bag of accidental and amateur landlords, as well as seasoned professionals.
This renters rise, is seeing tenants not just looking for houses to rent any more, but looking for homes to rent. Tenants’ rights campaigners are calling for longer tenancy agreements, in order to provide renters the security of longer term accommodation solutions.
While these developments call for landlords to adapt to the changing need of the market, the benefit of longer agreements for landlords is that the longer tenancy agreement is the more secure their rental income is for a greater period of time. However, agreements and approaches will need to be changed – for instance do you need to factor in maintenance clauses into your agreement, i.e. the tenant will steam clean carpet every 12 months? Have you factored in rental increases into your rental contract?
Robert Bolwell from Dutton Gregory Solicitors, who was also on our expert panel, pointed out that ‘at the moment we have an industry which is really predicated on the idea of relatively short term tenancies, six months or 12 months assured short hold tenancies. We also have mortgage companies out there who will put a condition on a loan that you can’t rent out long term. So if you are a landlord and you recognise that there is this demand out there… your tenancy agreements are going to have to change if you want to keep abreast of the times’.
Robert raises a good point, it is very important that finer details, like the clause on mortgage agreements, need to be considered and factored in. Other things I recommend considering when increasing the length of your tenancy agreement are:
* It is important to maintain good communication with your tenants. Good communications, built right from the start of the tenancy, can help to resolve any problem which may arise
* Make sure you have a robust AST in place. This will help to ensure that you can set market rents and recover possession so long as the correct notice is served. It is important to make sure your AST includes items such a as a repair, deposit and rent review clause
* Wear and tear will be more common in a longer term let, therefore it is important to take a 6 weeks deposits to cover any repairs
* With a longer term tenancy it is important to carry out a full detailed tenant reference check, including employment history. If you are going to issue a long term agreement make sure you have done your background research. In the current economic climate a tenant’s job may be safe now but will this still be the case a year down the line?
* Another consideration should be a detailed inventory. It is in the landlord’s interest to let the property fully furnished, which can prove better value and more convenient for tenants but if you do this you should make sure you conduct a full inventoryTagged in: housing market, landlords, renting
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