The ever-changing landscape of letting property
The letting market is changing as technology takes over, policymakers legislate and types of tenants are changing. Are you keeping pace with these changes to secure the best rental income?
The letting business has seen some considerable changes in recent years; there really has been no let-up. Landlords have been grappling with reforms ranging from the imminent halt on tenant fees, tax changes and digital disruption among estate agents to changing demographics, new legislation and the impact of the Government’s decarbonisation agenda.
Until 2014, the process of letting a property hadn’t changed much. Over the past four years, however, upstart online-only agents such as Purplebricks and Upad have thrown open the market, disrupting the status quo. But who has benefited the most, and has it changed for the better?
Mobile apps and the internet have potentially transformed the letting process for both tenant and landlord. The profile and needs of the average UK tenant have evolved, while that of the landlord has remained relatively similar. Today, the vast majority of renters are millennials – born between 1981 and 1996. According to the latest English Housing Survey published in January last year, 46 per cent of 25 to 34-year-olds now live in private rented accommodation, compared with 27 per cent in 2006-07. This generation grew up with the internet; they are the digital generation. This could explain why more and more are using technology to find their next rental property - work and everyday lives are run via mobile apps, and there is an expectation that the professionals they interact with should provide a digital service. You can see this in the popularity of online-only letting and estate agents among millennial-aged tenants.
Ninety-two per cent of tenants look online for rentals, according to Upad’s CEO, James Davis. Of that figure, 60 per cent search through an app where consumers can compare thousands of properties at the touch of a button wherever they may be.
Davis says there is a disconnect between landlords and 20 to 30-year-old renters. Most landlords, who are predominantly aged 45-plus, continue to transact in a similar way to how they did 20 years ago, with many prefering to walk into a high street agent. Yet, most tenants have migrated to the new digital world.
Interestingly, it seems many landlords still want a face-to-face relationship with a high street agent. Richard Blanco, a London-based landlord and London representative for the NLA, says he doesn’t use online agents because he still values the local knowledge of high street agents. He also doesn’t want the hassle of arranging and conducting viewings at his properties.
Nowadays, many other landlords use companies like Upad, and OpenRent is increasingly popular. Many of the NLA’s Telephone Advice Line experts use online letting platforms for research and to advertise for tenants. The management they do themselves.
Student lettings have undergone a transformation few could have imagined 30 years ago. Today, student accommodation is more akin to boutique-style hotels with concierge services. Because of the costs of university education, students take a more serious approach to their studies and their lifestyles while at university, meaning students tend to be a very good bet as tenants.
The rent is guaranteed - most students use their parents as guarantors because they have no income to secure the rent. Student rentals are arguably more lucrative, too, because you are renting to four or five individual tenants. That said, you might have to offer cheaper or free rent for the three summer months that students do not typically live in their rental accommodation. You may also have to do a bit of hand-holding, particularly for first-year students, who may be living away from home and their parents for the first time.
Most students will want their tenancies to start in September, but student landlords will likely be looking to secure a tenancy in the spring. Springtime typically marks the start of the housing hunt for many UK students. Some students even book their accommodation as early as a year in advance.
While landlords are dipping their toes into technology for lettings, it seems most haven’t yet fully embraced apps and mobile tech. But with tenant demographics continually changing, it is evident that landlords could benefit more from a greater use of technology in their business.
How to advertise your property online
- Photos are critical. Most tenants will begin their search online at Rightmove or Zoopla. Today’s time-short, tech-savvy tenants will be scanning dozens of properties, looking for well-shot photos.
- Use snappy, succinct descriptions. The description should include not just of the property, but also the surrounding area. “Lose the estate agent speak,” says Upad’s Davis. “We are not in the 1980s any more. Landlords need to write their advert in more of a blog-style narrative. They should describe the property as if they are talking to someone.”
- No photo albums, please. The optimal number of photos to upload to your advert should be between eight and 12. “You don’t want to trawl through 50 shots, but neither do you want to see just one or two,” he says.
- Build a back-up list of tenants. NLA member Vishal Vyas suggests building up a list of tenants interested in an area via online adverts on local Facebook groups and other social media platforms, which can attract a lot of interest.
Make sure you're covered
With a new age of tenant comes a new standard of expectations. Should anything go wrong in your property, tenants expect good quality alternative accommodation, which can be expensive it you've not got the right insurance cover in place.
Steve Barnes, Associate Director, NLA Property Insurance says “Landlord insurance is not a legal requirement, but if you don’t have it and anything goes wrong you won’t be covered by standard home building and contents insurance. You’ll need landlord insurance which protects you against additional risks involved with letting out a property, for example loss of rent or alternative accommodation in the event that your property is uninhabitable".
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