A senior lettings agent has raised the spectre of rental properties in future being German-style ‘empty shells’ - without even white furniture - and left to tenants to fit out completely.
Josh Sagal, from the lettings division of London agency Glentree Estates, says this could ultimately be the kind of rental accommodation if landlords and agents continue to be hit by costly tax and regulation changes, including the proposed scrapping of Section 21 evictions announced this week.
Sagal says the long-term tenancies resulting from scrapping S21 may benefit renters in one way, but could also end up disadvantaging them - and they could lose out on many other benefits that they have been used to getting.
“The current UK rental system is very different from rental systems in other countries. Even in an ‘unfurnished’ property there is the expectation that the basic white goods including oven, fridge freezer, even light bulbs, are all included in the property” he says.
“Light bulbs aside, during the tenancy it is the landlord’s responsibility to maintain these appliances. Often, people don’t appreciate this but it is a massive saving for the tenants and something they have just come to expect” he adds.
Sagal then ponders whether the UK approach to rentals could begin to echo that of Germany.
“With all these changes in regulations, the model is going to move more towards the alternative one - for example in Berlin - whereby tenants essentially move into a four wall shell and are expected to bring in their own appliances, light fittings etc. The walls are freshly painted when they move in and the tenant is expected to leave them in the same way” he suggests.
“Imagine you are renting a £1,000 per month one bedroom flat. The cost to provide the basics (an oven, hob, fridge, freezer and washing machine) could easily be in excess of the first month’s rent, so as well as having to put down the initial rental payment and security deposit, there is a further lump sum that is required before the property even has a bed to sleep in.”
He also echoes views put forward by other agents since the Section 21 consultation started earlier this week - namely that without the powers to use a S21 eviction, what is the incentive for rogue landlords to rectify problems, instead using this as a method of cajoling tenants to leave?
“Between this and the incoming tenant fee ban, I believe landlords and agents will be much more selective with tenants they rent their properties to. It also means that extra checks will be taken on the properties, which is going to cost the landlord, or the agent, even more money” says Sagal.
“This could see many agents not being able to sustain their businesses, or of rents increasing”.
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Following the war Germany needed to rebuild and the Private rental sector was one of the fastest ways of getting new homes built. As a result you tend to have landlords with very large portfolios.
In the UK it’s very different and until recently the PRS mostly catered for transient tenants as long term was for social renting or people buying there own homes.
It is the fact that social tenants and priced out tenants are now being housed in the private sector that has attracted the attention of Shelter.
Shelter destroyed the social sector and are not trying to do the same to the private sector.
In Scotland rents are now unaffordable and this will no doubt lead to rent control and the problems this will cause whereas before their involvement rents were rising at below inflation.
That was one way we were going to go after the fee ban which is not going to go well with tenants But unfortunately to cut costs for landlords we have to advice them not to put these in.
Why have estate agents being hit for fees, how about hitting Solicitors, finance companies with these bans too as surly they fees are higher and do have affects on new first time buyers.
The fee ban mm how about an acceptance fee like they do on finance or even a final exit fee payment, this government is just for the out there to make the rich richer and the poor poorer its disgusting
Of course the other MAJOR facet of the German PRS is LL may sell their rental properties free of CGT after 10 years of ownership.
Now WOULDN'T we all like that!?
I would even offer to fully fit out a property if I knew I could sell up after 10 years with NO CGT!!
Yes bring in the German rules, government are you listening, sorry what was that, o a No, of course, silly me for thinking we had sensible thinking government bods.
Shell accomodation with no white goods is not a vote winner for Generation Rentflake so it won't happen.
Surely to let out shell accomodation is for the landlord to decide , not the MPs. There are shell rented accomodation but these are the minorities. It seem sensible enough if its just for couples or families but not for hmo
Jeremy is absolutely correct, have this type of things daily. Merban I also totally agree. Why are lenders charging reservation fees? They make money on their margins. This is downright robbery but legal?
The Labour Party hierarchy is full of rich privately educated multi property owners. Not that they wish to appear other than on the side of we ( well me at least) the proleteriat! Wonder how X and Y will handle tenants who in fact might become de facto squatters ?
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