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By Simon Shinerock

Owner, Choices Estate Agents

OTHER FEATURES

The PRS is broken - here’s how to fix it

The pandemic and the way the government has reacted to the private rental sector (PRS) has got me thinking about the wider issues affecting the market and whether a simple solution can be implemented that would resolve many of the competing interests in a fair and reasonable way.

The big problem with the PRS from a landlord’s point of view is the risk, stress and uncertainty that goes with the role, which may only become evident when things go wrong and you need to evict a non paying anti-social tenant.

While there has been insurance available to cover non-paying tenants and legal costs, as we have seen, these can’t always be relied upon, are not available to everyone and are optional.

Right now, if you take a social tenant, things are exacerbated by the long-running practice of allowing tenants to claim housing benefit and not pass it on to their landlord.

This is made even worse when they are then advised by the council that paid them the money to wait to be evicted before the council will rehouse them. Landlords can’t insure against this class of tenant without a guarantor.

Outside of the social sector, private tenants come in all shapes and sizes and their situations can change. The thing that won’t change is their need for somewhere to live. It therefore makes sense for there to be a framework that protects both the tenant’s right to have a home and the landlord’s right to receive their rent and, in reasonable circumstances, evict their tenant efficiently and effectively, without suffering unfair losses.

As things stand, the risk is that landlords leave the sector in droves. Even corporate landlords who currently receive more favourable treatment than their small private competitors may end up leaving the sector if they can’t get a reasonable return on their investment.

The current situation is not like the decapitating rent acts, more like a death by a thousand cuts. This outcome serves no one, not the landlords, the tenants, the government or society.

The benefits of a healthy, vibrant PRS are legion. Tenants get a choice of high-quality accommodation, landlords get a sound place to put their money, builders have the incentive to build and society benefits from a more mobile and agile workforce.

My way of looking at these complex issues is reductionist. I try to apply a lowest common denominator in order to establish the simplest and most effective way forward.

Most great solutions are simple - a principle that applies to engineering and software as much as it does to social systems, structures and regulations.

If you take the example of deposit protection, you already have a framework in place that can be extended and applied to rent protection for landlords which, after all, is the other side of the same coin. Society does not tolerate tenants losing out on their rent or deposit, so the same should apply to landlords when tenants default.

With tenants’ deposits, there is a government scheme and several private ones, giving much-needed choice to landlords and agents.

I am proposing there should be a government scheme to protect landlords against lost rent and evicting problem tenants as well as the private schemes that are already available.

I believe it could then be made mandatory to join one of the schemes. The government offering could be basic, limited and accordingly priced - say 2% of the rent. Private schemes would offer additional protection but cost more.

Although there are many other issues and anomalies that remain outside of this one, I believe it is the most important one to resolve. If we resolve this issue in a simple, straightforward and pragmatic way, perhaps it will open the way for a similar approach to be taken to regulation, licensing and all the other bits of the puzzle.

You never know, we could even end up with something to be proud of rather than constantly fight about. As an industry, it’s hard to speak with one voice and despite the advances that have been made with interactive communication, doing so continues to be a challenge.

However, on an issue as important as this one I feel we owe it to ourselves and to others in a similar situation to at least try. I realise I am in a privileged position being able to speak out in this way but egos aside - and I admit to having a big one - I would really welcome your genuine feedback on my suggestion, good and bad.

You never know, it may even be possible to make a difference...

*Simon Shinerock is Owner of Choices Estate Agents. For more information on Simon, see his blog or his LinkedIn profile.

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    A good article with points well made, but it’s politicians who would be involved in deciding whether to introduce a rental guarantee scheme to benefit the PRS generally and LL In particular who, as we know, are generally perceived to be the ‘Devil Incarnate’. I fear we are unlikely to see this come to pass although it would be good to see some high-level debate on the proposal.

  • Paul Barrett

    Govt seeks to eradicate LL not facilitate their survival.

    Of course it is a ridiculous ideological stance to take.
    Govt does this as it believes it will garner more votes from GR.
    It couldn't be more wrong of course.

    But Govt doesn't care as it seeks to get rid of small LL to be replaced large corporate LL.

    All hopelessly unattainable.
    But hey that is currently where we are.
    LL will be selling up.
    They have little alternative



    Simon Shinerock

    I guess my point is it doesn’t have to be this way but I agree the odds don’t look good

     
  • icon

    Good summary of the farce that is the PRS. The route cause is THAT THERE ARE TOO MANY PEOPLE...its that simple.

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