Future of rentals in 2007

Adrian Turner, ARLA, December 2006

Only “Function Creep”, the process where national and local government find new ways of widening the imposition of existing legislation and regulation, can dampen the current optimism in the private rental sector.

"If a landlord has worked through the class of 2006 in HM0s, EDMOs, HHSRSs and DDAs, he should look forward to 2007,” forecasts Adrian Turner, Chief Executive, ARLA.

However some change in the market may be expected. Last summer, as soon as the grace period elapsed for landlords of HMOs, Houses in Multiple Occupation, significant numbers left the sector. Should this trend continue, next year could prove difficult for tenants on low incomes.

EDMOs, Empty Dwelling Management Orders, were widely misunderstood by the public and the press after a classic example of Function Creep by a local authority. A misguided attempt was made to attach an EDMO to a property under probate, but after this it became understood that EDMOs are designed to retrieve empty or derelict property help lessen housing shortages.

HHSRs, Housing, Health and Safety Ratings have arrived without disruption. They were introduced to ensure that all housing leaves the 19th century and enters the 21st century as homes fit for habitation by the standards of 2007.

2006 was rounded off with the arrival of DDA, the Disability Discrimination Act. This has also arrived without causing disruption, undue cost or upheaval. The rumours were untrue and landlords will not have to alter physical features in their properties, like widening front doors or installing chairlifts when it would be obviously uneconomic to do it.

Professional bodies serving the private rented sector will continue to spend a considerable amount of time pleading with government to licence all lettings agents as the surest way of abolishing the cowboys and the rogues.

“Although ARLA membership soared during 2006 and is set to continue growing next year, we cannot regulate the whole market. We need government help with this one.” Commented Adrian Turner.

Next year, landlords will still have some learning to do. All recent surveys show that they have yet to absorb the requirements of mandatory tenancy deposit protection. However, they have until April 2007 to decide whether to comply through insured schemes or to use the custodial scheme, where deposits have to be banked with a government appointed agency.

With the implementation of all the parts of the Housing Act 2004 that cover the rental market, both landlords and tenants should look forward to continued and steady growth in rental housing. ARLA research predicts an average growth in tenancies of 20-30,000 per year for the next ten years.

For tenants in 2007, Buy to Let will continue to increase the range and improve the standard of housing available while young households will not be faced into owner occupation at a financially precarious time of life.

Adrian Turner believes 2007 augers well for landlords, tenants and letting agents within the self-regulated sector. “We now have the framework of ethical standards, consumer safeguards and good quality property.” He said.

However he warned that only vigilance and strong lobbying will contain the progress of Function Creep in government. “We have to be very aware that only a strong, competitive market will keep standards improving. And we must be very aware that these positive market forces can be quickly destroyed by over-legislation and by over-zealous, empire-building administrations at all levels of government, local, regional and national” he added.

Manning Stainton Lettings feels that the new housing legislation may mean that 2007 is a year of “adjustment”. However, demand from young professional tenants seeking good quality accommodation to let in Leeds shows no signs of abating leading to a feeling of optimism within the firm for 2007.