Last month saw the launch of the London Rental Standard, a set of minimum standards expected of landlords and letting agents operating in the capital. This was met with a mixed response, and understandably so.
London's private rental sector is growing at an unprecedented rate - up 38 per cent since 2009 with no signs of slowing down. More and more of the capital's workforce and young families are renting, as for the majority the cost of buying their first home is far out of reach. The London Rental Standard scheme will look to improve the experience of renting for everyone while trying to combat rogue landlords and agents who show little interest in the wellbeing of their tenants.
No one can argue that the scheme isn't needed or wouldn't work. However, as the scheme is voluntary, no formal governance is in place to enforce it and this will lead to issues.
To gain the relevant scheme accreditation, landlords will need to attend a one-day course to learn about renting property, sign a code of practice and declare they are a fit and proper person. If landlords subsequently fail to comply, tenants can report them which could lead to them losing this accreditation.
Benefits are clear for both landlords and tenants
The scheme has benefits for both landlords and tenants; with tenants able to vet potential landlords to see if they are accredited and therefore more trustworthy, while landlords will gain recognition for their hard work. This will ultimately result in those acting in the right way renting their properties more quickly to trustworthy tenants, who are likely to use the standard as a benchmark for judging landlords.
With the average tenancy in London continuing to increase due to it becoming increasingly difficult to buy in the capital, when tenants are happy they are more likely to stay put, resulting in less void days for the landlords and less time (and costs) taken up finding new tenants.
Although it is important to get behind any initiative that supports the interest of both tenants and landlords, the scheme will only be successful if a sufficient number of landlords and agents commit to it. Without governance forcing all landlords to take part, there may be a large portion of the market that simply won't get involved.
Also, if the scheme isn't actively promoted and supported by the industry then the landlords who might consider taking advantage of the annuity changes to buy properties as pension investments will feel disinclined to get involved and a real opportunity will be missed.
Landlords must be incentivised
There are a number of suggestions of how landlords can be encouraged to get involved. In my opinion offering incentives to private landlords to encourage them to sign up is the strongest. Indeed the Government is already working with Endsleigh Insurance Services and mydeposits to offer discounts to those landlords joining the scheme but more must be done, particularly through the growing sector of online letting agents that work directly with private landlords. The hope is the incentives will spark initial interest in getting landlords involved in the scheme and then as it grows and evolves the benefits will speak for themselves leading landlords to prioritise joining the initiative and not treating it as an after thought.
At Rentonomy we are looking to reward landlords that join the scheme by clearly publicising their accreditation, offering reduced premium listing fees alongside greater exposure of their property on our portal - we hope that many other online letting agents will follow suit.