A new report on the state of the private rented sector reinforces the need for Government, landlords and letting agents to take stock if they want the future to be bright and startling figures reveal the extent of bad practice among letting agents.
Parts of the analysis from Kent Reliance, part of One Savings Bank is stark. It states the obvious in a way that should not be ignored and that is that Government intervention and Brexit is slowing expansion of the private rented sector.
The PRS has grown by just 0.2% a year, that is by only 11,000 properties. This is in contrast to 2012 when it grew by 5%, adding 240,000 homes to the sector and to the 3.3% or 170,000 homes expansion recorded in 2015.
It also reveals that tenant demand has moderated in the short term, following a modest improvement in first time buyer numbers. However, it points out that improving first time buyer numbers are heavily dependent on the Help to Buy scheme, which is due to end in 2023.
And it is no surprise that landlord confidence has fallen to its second lowest level, hitting landlords’ purchase intentions. In particular regulatory changes on top of recent tax reform, has deterred amateurs from entering the market. Importantly, it has also undermined current landlords’ confidence. But it is not all doom and gloom as rents are still rising and yields too.
Now to those figures relating to letting agents. London Trading Standards (LTS) released figures showing that letting agents were fined over £1.2million for breaking the law over a 15 month period, either for not displaying fees and charges or for not being members of a redress scheme.
The data reveals that more than 46% of 1,922 agents inspected in the 15 months up to June 2019 by local council trading standards officers were non-compliant with either the Consumer Rights Act and/or the legislation on redress scheme membership.
As well as the fines, London boroughs instigated 14 criminal prosecutions for a range of offences including breaches of unfair trading rules. The enforcement survey by London Trading Standards shows that there were over 6,000 letting agents operating across the capital and over 1,000 complaints about them.
It is a worrying read at a time when the lettings sector is aiming to be more professional. The LTS report has been welcomed by the industry. David Cox, chief executive of the Association of Residential Letting Agents (ARLA), believes that the prosecution of bad practice is the only way to clean up the sector.
He said tenants and would be tenants should remember that if they can’t see an agent’s fee template, CMP certificate and redress scheme membership prominently displayed in their office, that’s three laws that they have already broken.
Meanwhile, the latest index from Hamptons International shows that the average rent of a newly let property in Britain rose to £998 per calendar month in August, some 2.3% higher than the same time last year.
Two regions, the South East and South West recorded strong annual rental growth of 5.6% while in Scotland rents were down 0.7%, in the Midlands they fell by 0.6% and in Wales there was a more substantial fall of 3.5%. Average rents in London grew 2%, in the East of England they increased by 2.8% and in the North of England they were up by 1.2%.
So it is still a mixed picture in terms of rental growth. It means that landlords and lettings agents will really have to be sure of their business model and strive to increase professionalism in the sector. There will continue to be ups and downs. One of the unknowns is what the Government will do post Brexit in terms of potential further reform.
Ray Clancy
Editor Property Wire
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