The RLA launched a collection of essays looking at the future of the PRS as part of its 20th anniversary celebrations.
Melanie Leech, Chief Executive of the British Property Federation was one of the contributors to ‘Private Renting: A Vision for the Future’. You can read the essay below.
Extrapolating a few years into the future, let alone 20 years, is a risky business. One’s first instinct is caution, but there are nevertheless some trends apparent in today’s Private Rented Sector (PRS) that should endure two decades.
1. Renting as a positive choice – some young people, about 15% of households in the PRS at present, depart from the traditional desire to own one’s home. They are more comfortable with private renting than their parents and grandparents. They want the flexibility that goes with renting, with less of their capital tied up in one building. That group will grow. Whether it is 20%, 30%, 40% is not as important as the message it sends that it is socially acceptable, even desirable to rent. That is not to say that percentage changes in tenures are not significant – they can signal profound economic and social impacts. Private renting will no longer be seen as Hobson’s Choice though, but a place where more people actively choose to make their home.
2. A more tech-savvy sector – the sector has not always been cutting edge and has destroyed many trees over the years with the reams of paperwork needed to complete a seemingly simple rental transaction.
These days however, the sector is modernising fast in how it advertises,
transacts, manages and adds value. Technology will have a huge impact
on the sector, in the speed of transacting, transparency and most
importantly how landlords and their agents interact with their
3. A greater emphasis on quality – information flows will ensure that tenants are more demanding. Word will get around more easily on whether a particular landlord is good, or not. Believing you can hide from tenants’ rating sites and be immune from social media noise will not be realistic. Landlords will need to have a closer eye on their tenants’ experiences.
4. A more regulated sector – inevitably, as the sector has grown over the past 20 years it has shown up more often on the radar of the nation’s politicians and regulators. More regulation has not always meant better regulation. Technology, however, may allow for better information exchanges and more use of self-regulation running alongside statutory regulation.
That may be an aspiration rather than a prediction but it is in
large part for the sector itself to determine whether it becomes a reality.
The RLA has often been at the forefront of promoting self-regulation and deserves to succeed. In a time of scarce local authority resources, it makes no sense, to regulate heavily those who seek to follow good practice and voluntarily make themselves open to scrutiny.
5. A more diverse sector – we talk about the PRS as if it is one sector, but it is already serving a wide range of customers and is also becoming more diverse in supply. We know from the BPF’s work with the nascent Build-to-Rent sector, that one name masks a variety of different business models, pitching at different parts of the PRS, with a variety of offers. Within the wider PRS itself, there is specialisation, with landlords who focus on students, or benefit recipients, or young professionals, or families. Such specialisation will increase.
The customer is king
The customer – representing the demand side of the sector – is always king. The single most important factor that will shape the future of the PRS, however, will be determined by one factor and one factor alone –its attractiveness as an investment. Whether you are the smallest orlargest landlord in the land, you have choices about where to invest, and what to invest in. It is investment that builds, converts, maintains and repairs homes. It is the fuel that drives the sector, and which will deliver the quality and quantity of PRS homes the nation needs. Cut off that fuel, and prices will rise, and quantity and quality will suffer.
Perhaps the great success of the PRS over the past 20 years has been to encourage members of the public, lenders, and more lately institutional investors, to invest in the UK’s housing stock. More investment has generally led to a sector that better serves those in need of housing. My most profound hope is therefore that politicians don’t deter investment in the sector through clumsy policies on rent control, taxation or regulation. I know the RLA will be at the forefront of seeking to ensure that is not the case, just as it has over the past 20 years.