One of the first UK companies set up to build and manage homes specifically for rent has welcomed moves by a campaign group to secure clarity for renters over tenancy lengths.
Essential Living, a London-based business funded by long-term institutional capital, agrees with Generation Rent that giving renters a better deal will “entail hacking through a thicket of special interests.”
In a blog post today, Generation Rent said:
“Where it’s not the landlord replacing tenants every six months, it’s letting agents who want their annual renewal fee, or mortgage lenders demanding easy access to the property if the landlord does a runner.” This is all true.
The reason why agents prefer shorter tenancies is because they generate more fees. In moves that will mirror Britain’s purpose-built student accommodation market, Essential Living will be dealing directly with customers. It will offer a choice of tenancy lengths with some properties designed specifically for families.
Last month, Creekside Wharf, a 249-home Greenwich project designed for rent, won a Sunday Times Homes award for best housing project. The scheme features a whole block of family rented housing – the first of its kind in Britain.
The blog also said that:
“Most renters want flexibility to move out when they want, but the whole point of the long-term tenancies that are being proposed is that tenants get both the knowledge that the landlord can’t turf them out with two months’ notice, and the flexibility to leave if their circumstances demand it.”
The key to offering this flexibility is for renting to be run more like a service industry where consumers have rights and standards are consistent across the board.
The reality is that the private rented sector (PRS) is dominated by individuals and mainly amateur landlords for whom renting is a personal investment rather than a professional service. PRS landlords on the whole provide a great service, but with demand soaring for rent, we need to focus on securing new money to build new homes.
If this happens, a more professional sector will emerge that will rectify many of the problems around security of tenure.
The reason for this is because long-term investors want to minimise void periods; are focused on maximising economies of scale; and, in the case of Essential Living, are creating a brand focused only on houses for rent.
Generation Rent is totally correct to say that there is a lot of misinformation and dodgy stats being thrown around. One fact everyone agrees on is that renting is the fastest growing area of the housing market.
Martin Bellinger, chief operating officer at Essential Living, said:
“By encouraging long-term investors to build new homes and keep them for long-term rent, councils can help shape a functional rented market with different homes at a range of price points all managed professionally.”
“With budget cuts and the fragmented buy-to-let, there is little way to regulate people into shape. The key to unlocking the government’s housing numbers game is to encourage funders to build the kind of professional market North America has. If it can get that right, more than £30 billion of new money could flow into the housing market.”