Call for rating websites with online feedback for UK’s private property sector

A ratings website for private renters with online feedback could help show bad landlords the door, according to proposals from a consumer watchdog.

In the UK private rented sector generates more complaints than almost any other and according to a new report from Consumer Focus, one of the biggest issues is that private renters often know very little about their landlords before signing a tenancy agreement.

Now the watchdog has written to some of the largest letting agents and deposit schemes in England calling on them to explore how online feedback could empower tenants by giving them a better insight into their potential landlords.

The new report, Opening the door, outlines the information imbalance which works against consumers in the private rented sector. Just 15% of tenants surveyed were able to find all of the information they wanted about a prospective landlord or letting agency. Over a quarter could find very little or even no information and a third who had found information obtained it from the landlord themselves.

By contrast, says the report, landlords or letting agencies can ask tenants for references, deposits, guarantors or other personal and financial information.

Almost nine in ten renters agree that a website to share experiences of landlords would help them to make better decisions before signing a tenancy agreement. Renting is one of the biggest financial commitments consumers make, with private sector renters paying an average of £816 a month for a one bedroom home and this rises to £1,406 in London.

Yet, Consumer Focus research shows that over a quarter of renters had cause to complain in the past two years, making the private rented sector the second most complained about market.  Many of the 1.1 million households who sign up for a new tenancy experience problems with their landlord which only become apparent after signing a legally binding agreement.

Reputational regulation has worked well in other sectors with commercial sites, such as EBay or Amazon, displaying consumer reviews and feedback to people have access to a range of information before they make a decision on what to buy. Consumer Focus believes that a similar site based on constructive feedback could help solve the information imbalance and help people seek out more reputable landlords and avoid the bad ones.

Research by the consumer champion has found that websites where consumers share experiences are influential and that, perhaps surprisingly, most people leave positive not negative feedback. The site would also reward and incentivise the better landlords in what is a rapidly growing market.

‘Currently the landlord is firmly in the driving seat despite rent being a massive outgoing for many of us. People often sign up with little more than a gut feeling after a cursory tour of the property, if they are lucky, they might have a word of mouth recommendation. The best way to help private renters is to ensure they have the information to know what they are getting into,’ said Claire McAnulty, policy expert at Consumer Focus.

‘There is huge potential for a feedback website to give tenants a better idea of whom they're renting from. Getting behind a feedback website could also help the industry establish a better reputation and build up much needed trust with renters,’ she added.

In 2008, the last Government published a review of the Private Rental Sector in England. The Rugg Review concluded that there is a supply and demand imbalance, particularly for properties affordable for tenants on low incomes. As a result, there will be a continuous demand for properties even if they are owned by landlords with a bad reputation.

Consumer Focus' report argues that for this reason market forces alone cannot be relied upon to ‘regulate the sector.
To help address consumer protection issues in the private rental market, Consumer Focus said it would like to see the introduction of a pilot tenant feedback website, ideally in conjunction with one of the tenancy deposit management schemes. With input from tenant and landlord bodies a successful pilot would ensure that a robust, balanced and large scale scheme could be taken forward in the long term. Initial support would be needed from a third party to fund and independently evaluate the pilot website.

It would also like to see a minimum common standard and quality mark to be introduced for all private landlord accreditation schemes. There are at least 80 different types of voluntary schemes operating in England, meaning the standards that landlords must meet vary considerably. A common quality mark would act as a benchmark to reward good landlords and offer assurance to their tenants.

Private property rented sector increasing in the UK, new figures show

Almost one in six residential properties now rent privately, making the private renting sector a growing and vital component of the UK housing market, according to a new report.

The Communities and Local Government’s English Housing Report, shows that the number of households renting privately has risen by one million since 2005/06, from 2.4 million to 3.4 million in 2009/10.

It means that the Private Rented Sector now accounts for 15.6% of all households in England, up from 14.2% in 2008/09 and 11.7% in 2005/06. The figures also show that there has been a decrease in the number of owner occupied households from a peak of 14.8 million in 2005/06 to 14.5 million in 2009/10.

The proportion of households in owner occupation has been in decline since 2003, falling from 70.9% to 67.4% during the period. And the proportion of social renting households is also in decline, falling from 19.5% in 2001 to 17.0% in 2009/10.

Overall, social sector homes were in better condition than private sector homes. In percentage terms, the number of non-decent homes in the private rented sector has fallen from 46.8% in 2006 to 40.8%.

Some 60% of all private rented households are living in decent homes, up from 56% in 2008, whilst the energy efficiency of homes in the private rented sector has improved more over the period than the owner occupied sector
  Couples with no dependent children are the most common type of household in the PRS at 26%, with one person households under 60 being the second largest household type at 23%.

Lone parent households are more common in the private rented sector at 12% of private renters compared with 3% of owner occupiers. While half of all private renters are aged under 35 with half a million, some 15%, aged16 to 24 and 1.2 million, some 35%, aged 25 to 34, the report also shows.

The PRS encompasses a wide range of economic status with 60% of households being in full time employment, 9% in part time work, 7% unemployed, 8% retired and 11% classed as ‘other inactive’.

Some 24% of private renters receive housing benefit compared with 62% of social renters. There are 3.4 million properties in the PRS, 60% of which are located in suburban residential areas compared with just 4% in the city centre.

Nigel Terrington, chief executive of Paragon, the buy to let specialist, says that the new Government data backs up Paragon's long held view that the sector is of growing importance in the UK property market. ‘The CLG's figures highlight the growing number of people relying on the private rented sector to provide their housing needs. The sector's importance to UK housing continues to grow as increasing numbers of people opting to rent privately rather than step on the housing ladder,’ he explained.

‘Demand for privately rented property is at an unprecedented level and far outweighs supply. The resulting rental inflation is leading to people, including the most vulnerable households, being priced out of the sector at a time when the supply of social housing is in decline,’ he said.

‘With Capital Economics estimating that the private rented sector will be home to nearly one in five households by 2015, it is crucial that adequate levels of buy to let mortgage finance are available to enable landlords to expand the number of properties in the PRS,’ he added.