Housing Hand, the UK rental services provider, has warned that the proposed Renters’ Rights Bill will force investors in build to rent (BTR), purpose-built student accommodation (PBSA) and houses in multiple occupation (HMOs) to reassess their strategies.
“Larger accommodation providers and investors will be dashing for the strategy table as the proposed Renters’ Rights Bill moves ever closer to Royal Assent,” said 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.”
The legislation is also expected to change demand patterns for professional guarantor services. Housing Hand, which has operated in this market for 12 years and claims a 100% payout record on valid claims, anticipates rising use of guarantors as operators look to mitigate risk.
“Recovering rent from a tenant who has defaulted is time-consuming and costly for accommodation providers,” Hayward said. “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.”
MARKET PRESSURES
The warning comes at a time when accommodation providers are already contending with tighter margins and volatile demand. The sector faces pressure to deliver high-quality housing at competitive prices, while shifting international student migration patterns are adding to occupancy challenges for universities, BTR operators and HMO landlords.
Hayward cautioned that “either a revised model or some kind of relief is going to be required to protect investor returns. 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.”
Housing Hand has moved to expand its service range in anticipation of the changes. Alongside its guarantor business, it now provides identity verification, house finding and depositless renting.
Earlier this year it launched A-Void, a service aimed at HMO landlords who rent to students, which covers up to three months’ rent at 50% of value during void periods or mid-year exits where a tenant is guaranteed by Housing Hand and a landlord has served Ground 4A.
The company said the initiative could be extended to PBSA as the market adapts to the new tenancy structures.
