Professional report suggests ways to improve rental sector

January 9, 2017

Posted by Sarah Marshall

An interesting paper has been prepared into the rental sector in the United Kingdom, which would bring about best practice, regulations for letting agents and statutory minimum standards for residential letting agents. These recommendations, in the Royal Institute of Chartered Surveyors Rented Sector Policy Paper for England, would improve the lives of landlords and tenants alike. The report points out that people are living longer and that the incomes of younger people have not risen much in the past few years, while property prices have gone up. The upshot is that more people will be renting property, while homelessness is also expected to increase in the next few years.

Although home ownership remains a key factor in British society, more people are renting through either personal circumstances or choice, and it is no longer seen as a stop-gap on the way to home ownership. RICS argues that ministers need a strategy to build across all housing tenures, with affordable home ownership and rented properties being a key part of government strategy in the Housing White Paper. It is not just about providing sufficient houses in the right place, but also about providing the right type of accommodation options for residents. RICS feels the private and social rental sectors can play a very significant role in this. The UK’s housing market is changing, with a decline in owner occupation, along with the number of private rentals increasing. The lack of affordable and social rental homes, coupled with the high price of buying, has meant more people, including older households and families, are moving into privately rented properties.

RICS forecasts that capital growth will slow down over the next five years at least, which will mean a huge lack of future supply of private rental homes. This will lead to rent rises, as demand outstrips supply.

In the report, RICS has put forward several recommendations for the private rental sector. These include repealing the stamp duty land tax charge on second homes and reconsidering the proposed mortgage relief changes, in order to stop small-scale investors leaving the sector. RICS also wants letting agents to be obliged to join a recognised professional body and to have to comply to the same regulatory requirements as estate agents in the Estate Agency Act 1979. Another interesting suggestion is that tenants hold passports including their background and finance checks. This would be a way around the new ruling that means letting agents cannot charge tenants for such checks, and would therefore save money and reduce the administrative overheads for agents or landlords.

The organisation also suggests setting up a low-cost property registration scheme, so that all let properties across England are held on a centrally-held register, with HMRC and the Home Office having access to the register. Using information extracted from Tenant Deposit Schemes, this registration scheme would help with risk-profiling and the identification of illegal immigrants.

The RICS proposals seem to be good news for landlords, agents and tenants, as they will create more confidence in the sector. It is hoped that the government will study the report and act on some, if not all, of the recommendations to help safeguard the private rental sector for the future.