I am sure most private sector landlords with small portfolios will be open-mouthed with amazement that some corporate landlords are providing incentives to attract tenants; surely the incentive of a decent property would be enough for most tenants?
I spend a lot of my time telling landlords to protect themselves by getting guarantors and deposits, and in most areas properties are in short enough supply for tenants to need to prove themselves good tenants rather than a landlord needing to ‘sell’ their properties other than from the standard of the accommodation.
However, a recent story showed that this is happening with some large developers in London with properties built-to-rent. Get Living London’s standard deposit had been 6 weeks rent. With London rents, this must have been a very substantial sum for tenants to find. They have now abandoned this and from 14th June, those applying for accommodation will only have to provide references or a guarantor. The ‘or’ is perhaps an odd inclusion – would someone with a guarantor but dreadful references be accepted? Excellent references but no guarantor? It is obvious that those few words will cover stringent referencing of both the tenant and the guarantor and not everyone will be accepted for a tenancy.
Neil Young, Chief Executive of Get Living London said it was to make tenancies ‘more hassle-free’. In addition to this, at the end of a tenancy, if the rent account is up to date, they will waive any cleaning costs or damages if they total less than 1 weeks’ rent. This seems generous and the motive is obviously to obtain tenants who will be grateful for this largesse and therefore happy to remain long-term.
As they are landlords of East Village, the former Olympic Village, the largest single site private rented scheme with 1400 properties and 4,000 other properties planned across Britain, this is a brave step and means they will not have access to the huge amount of money in the deposits that would have been paid. Perhaps protecting such a sum in one of the deposit protection insurance schemes would cost more in the administration than the deposit itself was worth?
There have been strategies before intended to do the same which, whilst successful with some, have not worked with all. Perhaps the situation in London will make this a near perfect scheme. The return of deposits to the existing 3000 tenants over the coming months should enhance the reputation of Get Living London, though will leave no protection should rent arrears accrue or there are damages.
Moda Living, another build-to-rent developer, has its own incentives. It has come up with a novel answer to a shortage of parking spaces at their developments. If tenants agree not to have a parking space, they will receive £100 of Uber credits per month. This seems a sensible and practical answer to parking space issues in areas with easy access to transport links. They are backed by £1bn from Apache Capital, a Middle-East company which is developing 6,000 properties across England and Wales. As the aim is to rent out properties in developments which will give residents the feeling that they are living in a very high-grade hotel, with specialist apps to communicate with each other, control central heating, order food and other services. It is perhaps safe to assume that these properties will be aimed at the young professional, the sop for generation rent.
The big investors in build-to-rent may decide that they can afford to offer incentives to tenants. Landlords with small to medium-sized portfolios should continue to protect themselves, with deposits, guarantors, good credit referencing and references. Even then, there are no guarantees that the end result will not be rent arrears and then hassle as guarantors are taken to Court. But it does give some protection.
It will be interesting to hear whether the incentives model works for those that believe tenants should not be required to provide deposits.
For advice on buy to let issues – Ask Sharon