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Private Rental Sector - Recent Developments
Period 1981-2011
The second bout of deregulation since the war began on 15th January 1989 in the form of the Housing Act 1988. The Rent Act regime was substantially curtailed, and a new scheme introduced based on tenancies at market rents. Nearly all new lettings were to be assured or assured shorthold tenancies (ASTs), the latter combining market rents with an easy route to possession for landlords.
This Act proved to be a breath of fresh air to both landlord and tenant alike. The almost immediate, and indeed intended effect of this legislation was to relieve the shortage of accommodation, by encouraging the many individuals and companies with investment in property to place them on the open rental market. The scales immediately began to balance better, with renewed investment both by companies and individuals in the private rental market meeting a corresponding steady increase in demand by tenants.
In 1989, for the above reasons, we launched Southcourt Property Management as a letting agency in South London, having recognised the tremendous opportunity that had been created by this new legislation to build a business offering a quality service to landlords and tenants.
It was not until 1995 that the term 'Buy to Let' was invented. This expression referred to a new breed of mortgage becoming available to buy a property with the specific intention of letting it out as an investment. Prior to this period building societies and banks were very reluctant to lend for this purpose due to the risk of unrealistically low controlled rents, and of sitting tenants, compromising the viability of the investment property.
The 1990s saw a considerable number of people setting up a letting agency business, realising the benefits of becoming a letting agent at a time when demand was increasing for such services.
The icing on the cake arrived in the form of the new Housing Act 1996, which had the effect of consolidating and simplifying the provisions of the 1988 Act, making letting even safer for landlords, and repossession more straightforward, with the result that even more properties began flowing into the private sector.
The latest major legislation affecting the private rental sector was the Housing Act 2004, the provisions of which were introduced through 2006 and 2007. This Act represents a major shake-up of the private housing sector, with regard to both sales and rentals. The main provisions affecting rentals are those relating to HMO's (Houses in Multiple Occupation), tenancy deposits, and housing fitness standards (The HHSRS).
The current scenario is that tenant demand continues to increase, for a combination of reasons:
- Our population is becoming increasingly fluid and people move around the country far more than they used to due to increased job mobility, training, studies etc. They all need somewhere to live, but are not able to consider buying unless they plan to settle long term in the area
- Recent events in the property market have deterred many from buying their own property at all, and there are many others who always have, and always will prefer the rental option with the flexibility, and absence of long term commitment that it brings
- The number of council houses has diminished as a result of the 'right to buy' policy
- Recently published DOE figures estimate a need for an extra 4 million homes in the next 20 years, due to factors including a rising divorce rate, greater life expectancy, growth in single parent households, and EC immigrants, all swelling the demand for rented accommodation
- Closer ties with Europe mean that we are increasingly influenced by continental attitudes, where renting has always been more popular than buying.
© Southcourt Property Services 1997-2011
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