"Accommodation providers’ risk appetite is likely to change as a result of the proposed Renters’ Rights Bill, with more seeing riskier overseas personal guarantors as inferior to professional guarantor services"
- Graham Hayward - Housing Hand
UK rental services provider Housing Hand has warned that the proposed Renters’ Rights Bill will force changes in the funding models for Build to Rent (BTR), purpose-built student accommodation (PBSA), and houses in multiple occupation (HMOs).
“Larger accommodation providers and investors will be dashing for the strategy table as the proposed Renters’ Rights Bill moves ever closer to Royal Assent,” explained Graham Hayward, managing director of Housing Hand. “The Bill will have a significant impact on the number of those paying rent upfront. This will impact accommodation providers’ cash needs and mean that their funding models must shift in response to the Bill.”
Demand for guarantor services expected to rise
The legislation is also likely to affect the market for professional guarantor services, which Housing Hand has led for the past 12 years with a 100% payout record for all valid claims. Hayward added:
“Recovering rent from a tenant who has defaulted is time-consuming and costly for accommodation providers. By accepting tenants with guarantors, they can switch to a model with zero write offs instead – and at zero cost. Accommodation providers’ risk appetite is likely to change as a result of the proposed Renters’ Rights Bill, with more seeing riskier overseas personal guarantors as inferior to professional guarantor services. This looks set to drive up demand for professional guarantors – something that we’ve already seen accelerate over the first half of this year and especially for guarantors with strong pay out and settlement rates.”
Other pressures on accommodation providers
Providers are also facing other pressures under the proposed legislation. These include the need to deliver both quality homes and value for money in a competitive market. Occupancy challenges are mounting for BTR and PBSA operators, as well as HMO landlords, while changing international student immigration patterns are affecting both university funding models and local accommodation markets.
“Either a revised model or some kind of relief is going to be required to protect investor returns,” noted Hayward. “The Renters’ Rights Bill is coming home to roost, meaning operators and investors need to reposition their strategies to ensure their models remain workable and robust.”
