Autumn market review 2017 - an ever-changing industry
When it comes to lettings industry changes, the last 12 months have demonstrated just how quickly the market is evolving.
Regulatory framework continues to change
As the private rented sector (PRS) continues to grow and accounts for a higher number of households each year, politicians and policymakers consistently review its makeup and the regulations which allow it to operate smoothly.
Published in early November, the draft Tenants' Fees Bill confirms the intention to ban all upfront letting agent fees charged to tenants and cap security deposits at six weeks' rent and holding deposits at one week's rent.
The draft Bill also reveals that agents who continue to charge fees after the ban is introduced could be fined up to £5,000 for a first offence and then £30,000 for any further breaches over a two-year period.
Meanwhile in Scotland, starting on December 1, every tenancy agreed north of the border is now known as a Private Residential Tenancy (as opposed to an Assured Shorthold Tenancy).
These new agreements will include no fixed-term or end date and the legislation is aiming to encourage more protection for tenants, while introducing rent caps and more stringent repossession processes.
Consultations, consultations, consultations
It's become the norm for the Government to consult on new proposals for the lettings industry but over the last few months the number of active consultations has peaked.
- Independent Review of Building Regulations and Fire Safety (ongoing);
- Universal Credit Experiment Statistics: Future Developments (closed on: October 24);
- Planning for the Right Homes in the Right Places (closed on: November 9);
- An Inspection of ‘Right To Rent’ (closed on: November 10);
- Call for Evidence on the Green Deal Framework (closed on: November 23);
- Protecting Consumers in the Letting and Managing Agent Market (closed on: November 29);
- Homelessness Code of Guidance for Local Authorities (closed on: December 11);
- Mandatory Client Money Protection Schemes for Property Agents (closed on: December 13);
- Improving The Home Buying And Selling Process (closed on: December 17);
- Review of the Smoke and Carbon Monoxide (England) Regulations (closes on: January 9);
- Building A Market for Energy Efficiency (closes on: January 9);
- Breathing Space (closes on: January 16).
There are currently numerous outstanding consultations which affect the PRS, some of which are listed below. On top of this, in the recent Autumn Budget Philip Hammond announced that the Government would next be consulting on introducing long-term tenancies.
Industry trends and statistics
The lettings industry is one built on figures and calculations so it comes as no surprise that there’s no shortage of useful statistics being publicised at any one time.
Here’s a selection of ten interesting figures which have been released over the last few months:
- In 12 local authority areas, a tenant on an average salary would have to spend 60% or more of their income on the average private rent. (Full Fact/Office for National Statistics).
- The average letting agency branch managed 182 properties in October, down from 189 in September and representing a 12-month market low. (ARLA Propertymark)
- Some 31% of renters aim to move into their new property less than two weeks after they first make an online enquiry to an agent or landlord. (TheHouseShop.com)
- Just under 70% of landlords are being put off expanding their buy-to-let portfolios due to the 3% stamp duty surcharge on additional property purchases. (The Residential Landlords Association)
- The fledgling Build to Rent sector now consists of over 95,000 units, either completed, in construction or planned. (The British Property Federation)
- By 2035, the number of households of retirement age privately renting could almost treble from 370,000 to just under 1,000,000. (Generation Rent/David Alder, Oxford University)
- Almost two thirds of landlord property purchases made in the 12 months to November were made in cash, accounting for £21 billion in sales. (Countrywide)
- Almost half of survey respondents don't have a carbon monoxide alarm fitted in their home, and 58% admit to not being able to spot a leak. (Certas Energy)
- A 58% majority of respondents to the official consultation on the planned ban on up-front agent fees charged to tenants said they were in favour of the proposals. (Department for Communities and Local Government)
- The total cash value of cash held in the three deposit protection schemes reached over £4.1 billion at the start of this financial year. (Department for Communities and Local Government/Dlighted)
Lettings industry highlights
Other news and industry highlights to take place over the last few months have included the first prosecutions for a letting agency and landlord under the Rent Smart Wales licensing scheme, the Association of Independent Inventory Clerks' launch of a campaign urging the Government to consider compulsory inventories, the BBC investigation which revealed that the Right to Rent scheme could be fuelling a black market for fake identification documents and the latest changes to the buy-to-let mortgage market enforced by the Bank of England's Prudential Regulation Authority.