"Neither short-term nor long-term will ‘dominate’ the market, instead we will see a diverse mix of rental options, tailored to meet the needs of different tenant groups"
The past decade has seen significant changes in the private rented sector. The sector has grown substantially, now housing approximately 20% of the UK population.
Alongside this expansion, there’s been a heightened emphasis on elevating standards within the sector, offering improved protections for tenants and recognising the continued commitment to professionalism from landlords and letting agents. But what does the future hold?
Regulation and Compliance
Regulation and compliance are critical areas for the sector’s future. Changes in legislation are increasingly likely, as policymakers seek to balance the needs of landlords, tenants, and the wider community.
One such change involves the regulations related to Energy Performance Certificates (EPCs). The dates for these regulations have been frequently altered, causing confusion and uncertainty for landlords. The current mandate states that, by 2028, all privately rented properties must have an EPC rating of C or above. This is a major shift, demanding significant investment from landlords to improve energy efficiency.
This becomes particularly pertinent when considering that about two-thirds of homes in the PRS currently have an energy rating of D or below. In numerical terms, this implies that over three million privately rented properties in England and Wales need enhancements to meet government targets.
But the drive for energy efficiency transcends mere compliance; it also elevates the attractiveness of properties to tenants. Higher-rated energy-efficient properties generally command higher rents and witness lower vacancy rates.
To navigate this dynamic landscape and ensure regulatory compliance, landlords and property managers must stay updated. Proptech solutions, such as Helpthemove, are well-equipped to facilitate this, offering easy access to current legislation, guidance and best practices.
The Cost of Living Crisis
The cost of living crisis has been a significant talking point, with inflation, energy price hikes, and wage stagnation hitting tenants hard. This is a significant concern for the lettings market. While landlords must cover their costs, there is a risk that rent increases will push properties beyond the reach of many tenants.
This, in turn, could lead to higher vacancy rates and lower returns for landlords. It’s a delicate balancing act, but one that the sector must navigate carefully, to protect both landlords and tenants.
Short-term vs Long-term Lets
Looking to the future, we can expect to see a shift in the balance between short-term and long-term lets. The COVID-19 pandemic changed the way people work and live, sparking a rise in remote working and a desire for more flexible living arrangements, which has boosted demand for short-term lets. However, the stability and security of long-term lets are still vital for many tenants, particularly families and older renters.
Neither short-term nor long-term will ‘dominate’ the market, instead, we will see a diverse mix of rental options, tailored to meet the needs of different tenant groups. This diversification presents opportunities for landlords and letting agents, who can differentiate their offerings and target specific segments of the market.
Technological innovation will continue to shape the lettings market. Proptech has already revolutionised many aspects of the sector, from property searches to contract signings. The future will bring further innovation, as AI and machine learning are increasingly harnessed to predict market trends, optimise property management, and improve tenant experiences.
Forward-thinking landlords and letting agents will embrace these changes, leveraging technology to improve efficiency and service.
We should also consider changing tenant expectations: The millennial generation, accustomed to the convenience of the digital world, is now a significant portion of the tenant population. They expect seamless online experiences, rapid responses to queries and issues, and a high level of service. Landlords and letting agents will need to adapt to meet these expectations, investing in systems and processes that deliver a modern, customer-centric service.
The lettings market is always evolving, shaped by changes in regulation, social trends, and economic conditions.
At Helpthemove, we are committed to helping landlords and letting agents navigate these changes, promoting best practice, and supporting the development of a vibrant, fair, and sustainable private rented sector.