The sustained growth and evolution of the private rented sector (PRS) over the last two decades means both lettings and estate agencies must keep adapting to a consistently developing market.
With a greater proportion of private rented housing, sales-focused estate agencies are under pressure to adapt their business models to cater for shifting revenue streams, and lettings businesses are having to adopt technology solutions to improve administrative efficiencies.
Letting agents and property managers also need to ensure compliance with a growing range of regulations, and increasingly need to cater to changing tenant demographics, according to PayProp, the automated rental payment provider.
Huge PRS growth since 2002
Ongoing growth of the lettings sector is evident from the findings of the English Housing Survey (EHS) 2017-18, published in January.
EHS figures show that the PRS accounts for 4.5 million (19%) households, having doubled in size since 2002 after remaining steady at approximately 10% of total households during the 1980s and 1990s.
In London, private renting is the most popular tenure at 29% of all forms of housing – up from 19% ten years before. Outside London, the PRS makes up 18% of households, up from 10% in 2007-08.
“Rising home buying costs have attracted more people to the PRS,” says Neil Cobbold, chief operating officer of PayProp UK.
“This has created more rental business for estate agents, who will have felt pressure to adapt their business models accordingly, to deal with this shift.”
The changing demographics of the rental sector
While the PRS has grown significantly, its makeup has also evolved. Renting privately has become more widespread across different demographics and is no longer seen solely as an option for people saving up to buy a property.
The EHS shows that 795,000 families with dependent children entered the PRS between 2007 and 2018. Over the same period, the proportion of 25-34-year-olds renting privately jumped from 28% to 44%.
Previous government data has also identified a spike in the number of middle-aged and older private renters in recent years.
“Although renting remains hugely popular with young professionals, it’s important that agents and property management businesses offer services which are also suitable for family tenants and older renters in order to reflect the more diverse nature of the sector,” Cobbold adds.
How can businesses adapt in a developing marketplace?
As rental volumes continue to increase and demographics become more varied, letting agencies and property management firms need to focus on increasing efficiency and saving time.
“Streamlining can be achieved by using technology to reduce administration tasks or automating repetitive daily processes,” Cobbold explains.
“That’s not to say a personal and human service is no longer necessary,” he adds. “Automating repetitive tasks can have the effect of enhancing the value of certain job functions.”
Rental sector growth has also led to increased government regulation.
“Remaining compliant with increasing legislation is one of the most important requirements for estate and lettings agencies, particularly if they want to stand out as a professional and reputable operator in a very crowded marketplace,” Cobbold concludes.