Never knowingly underhoused

From Dot Dot Dot founder, Katharine Hibbert

At Dot Dot Dot, we know from our own experience and from our guardians that finding a home to rent in the private rented sector is a gamble.  Some landlords are considerate and diligent, and some homes are well maintained and in good condition, but many aren’t.  Creating an alternative to this uncertainty by providing well-managed, inexpensive homes is part of our reason for existence.

New entrants into rentals market

So it’s good to see household names entering the market for private rented homes on a large scale, with an intention to provide a consistently good quality experience for residents and a long-term commitment to the sector.  John Lewis has announced that it will build around 10,000 homes for private rent, and Lloyds Banking Group plans to become a large private landlord too, through its new brand, Citra Living, which it launched this month.  Citra is making 45 flats in Peterborough available over the coming weeks, with 400 more to follow this year and 800 expected in 2022.  

The homes will provide the businesses with a reliable rental income, making up for earnings both are seeing disappear elsewhere as John Lewis stores lose out to online shopping and Lloyds’ profit margins on lending are hit by low interest rates. 

Given the size of both businesses – and the value of their brands as signifiers of reliability – they can’t afford to provide a poor service through these new offshoots, since to do so would tarnish their reputation as a whole.  Also, because they will be planning to own and manage their buildings for the long haul, they may be able to offer greater security of tenure to their tenants, giving confidence that residents can stay in one place for as long as they like, unlike many private sector tenants who have to relocate every year or two.

The growth of “Built to Rent”

It is likely that they will be followed by more well-known businesses into this ‘Built to Rent’ (B2R) market.  Research by Savills suggests that there is huge scope for growth here.  It estimated that there were already 30,000 completed B2R homes in 2019, with 37,500 under construction and 72,200 in planning.  While these are large numbers, the completed homes so far make up only 1% of the total value of privately rented housing in the UK, dwarfed by the millions owned by individual landlords.  

Savills predicts that the proportion of homes rented out by large businesses will rise to 35% of the private rental market, worth £544bn, when the B2R sector reaches maturity, though this will take decades.  Even at the predicted scale, the B2R sector in the UK would be smaller than that in the US, where 47% of rented homes are managed by institutional investors.

At Dot Dot Dot we welcome this shift, not because it is a perfect solution but because it should incrementally improve the experience of private tenants.  This should occur directly, through B2R landlords offering a better service, but also because high-street estate agents and small landlords will need to up their game in terms of quality and reliability to compete.   

Pushing up standards

In the same way, we want to make sure that property guardianship is a reliable option for people who want flexible housing that is also great value.  That means all property guardian companies need to reliably meet basic standards, so that would-be guardians can choose the company whose approach and properties they like best without worrying about safety or professionalism.  We work towards this by delivering our own work to high standards so that others have to improve to remain competitive, and also by publicising the legal minimum standards all guardians are entitled to.

Improvements for tenants and guardians are particularly important since the government’s current focus on supporting homeownership alone isn’t a complete remedy for Britain’s housing problems.  Given the levels house prices have reached, many people – including many of our residents – believe they will never be able to afford to buy even with help from government schemes, which in any case often only serve to push up prices even higher.  Large numbers of people will be renting in the private rented sector – or living as property guardians – for the foreseeable future, so pushing up standards here has got to be part of the solution.