"While sweeping changes of this scale are often great for driving change, the downside is policies and processes need to be unlearned and then relearned by the mass market, adding more confusion before it can gain traction"
The much-awaited Renters Reform bill was an unfortunate casualty from the dissolution of Rishi Sunak’s parliament during the last election. However, the silver lining is there’s now an opportunity for a fresh start on a new, better policy.
While it's exciting for tenants, for investors it paints a different picture, adding more uncertainty to the residential rental market. Charlotte Armstrong, director of operations at leading BTR specialist Wise Living shares what the previous bill got right, and how it can learn from examples in BTR to make the new set as effective as possible for renters, landlords, and investors alike.
It’s no surprise housing was a key point in Labour’s manifesto titled ‘Change’. The UK has a housing deficit in the millions, with planning reforms and mandatory targets being one of the first announcements the party made once coming into power. It’s promising to see this commitment so early on.
Yet, in the meantime, and while people try to get on the homeownership ladder, there remains a growing and scary gap in the quality offered between the standards of private landlords and professionally managed Built to Rent (BTR) schemes.
It’s reassuring to see that many of the key themes presented in the previous Renters Reform Bill aren’t new to those of us in Single Family BTR. Indeed, offering stable, high-quality, affordable places to live for families has been our area of expertise for years.
A recent Home Views Build to Rent report even found that people living in a Single Family BTR home rated their experience higher than those in a ‘for sale’ development for the fourth year in a row. So, whether a new bill or new legislation is passed, there are a number of key takeaways that can be applied.
Breaking down barriers
The Renters Reform Bill was set to be the biggest piece of legislation for renters and landlords since the Deregulation Act almost ten years ago. While sweeping changes of this scale are often great for driving change, the downside is policies and processes need to be unlearned and then relearned by the mass market, adding more confusion before it can gain traction.
Above all, any new and improved bill needs to be simple and digestible, not hiding behind convoluted wording or classifications to make the changes it aims to. Additionally, literature breaking down the changes and what they mean to renters should be created and disseminated.
Another issue is when the court becomes involved. Re-enforcing speedier repossession for landlords when there is no other choice but to serve notice whether for arrears or anti-social behaviour. New legislation unavoidably comes with a settling-in period, it’s just up to us how short we make this.
A change in dynamic
The most productive, and the most profitable relationships between landlords, tenants – and in our market, investors - are long ones with mutual boundaries placed on either side. A landlord that evicts and replaces tenants in a regular pattern loses more in the long term through the cost of re-preparing their property for the market, in addition to the rent missed out on.
Likewise, a tenant who stays in one rented property for a long time takes better care of their home and provides a steady and reliable income. We see it a lot with people who opt for BTR developments. They are looking for the high-quality service that comes with a high-quality offering. Those who use BTR properties are looking for accommodation that is more permanent than temporary – a proper home rather than a stepping stone towards one.
This is primarily why more and more across the BTR sector we’re seeing the introduction of flexible payment plans to keep tenants in their homes for longer. In anyone’s life there are ups and downs, and should our tenants fall into bad times and have difficulty paying, we will work with them closely to help them get back on top by offering flexible – and realistic – payment terms, made possible thanks to our agile operational infrastructure.
In practice, this works by sitting down with tenants, discussing their situation and creating a viable timeline of what they can pay and when. This promotes a relationship between us and them of trust and reliability and encourages tenants to stay with us longer. This would be difficult to make mandatory across the sector, but where possible legislation and guidance should direct private landlords toward following this path as well.
A stable alternative
The UK’s current housing crisis is unfortunately a severe one which, at the very least, will require a significant amount of time to solve. Renting is the only viable option for a lot of people and because of this, many investors are making the most of the BTR offering and its rising popularity.
Compared to the private rental sector and the upheavals occurring in that market - with four in ten households seeking council help because their property is being sold – BTR as an investment opportunity has become tenfold more attractive as it rises to the challenge of keeping the UK in housing.
Ten years ago, there were roughly 3,500 purpose-built BTR homes in the UK. Now, in Q1 of 2024, there are more than 100,000, with a further 54,000 under construction. Moreover, while this is a big difference, the potential for even more investment is also huge, with many developers and investors slowly waking up to this opportunity.
This massive rocket rise is due to the value of the offering which is carving itself out a place as a main method of living in the UK and isn’t set to slow down any time soon.
The Renters Reform legislation in its latest form wouldn’t have greatly affected the BTR sector as many of the changes it looked to implement were already common practice.
The new Labour government needs to use the expertise of the single-family BTR sector to bring renters and landlords together to meet halfway - or consider placing more focus on other areas of the rental sector that are leading by example.
