Could letting agents be the missing link to fix Britain’s rental crisis?
Safe and secure housing is the foundation of a stable life. We rely on our homes to support our happiness, our wellbeing and our ability to thrive. But for millions of renters across the country, this foundation feels fragile. Uncertain tenancies, unaffordable rents and unfair practices instead perpetuate the stress and hardship from which their homes are meant to shield them. 23% of homes in the private rented sector do not meet the Decent Home standard – that is around one million homes – compared to 13% of owner-occupied and 10% of social-rented homes. Yet, private renters spend 33% of their household income on rents on average – compared to 27% for social renters and 22% for mortgagers – and a quarter of those in full time work find it fairly or very difficult to make rent.
There has been significant focus in addressing these challenges, most explicitly through expanding the housing supply or regulating landlord practice. These are important. But so far, we have continued to miss a key touchpoint for most landlords and tenants, the mediator that governs much of our interactions with our rented homes – letting agents. 43% of all landlords use letting agents, and 18% use agents for property management services.
Unpacking the influence of letting agents
Letting agents are often the first and last port of call for tenants. From initial viewing to moving out and beyond, many tenants have agents managing the bidding, contracts, rental payments, housing conditions, safety procedures, deposits and even their future tenancy references, defining their experience of the private rented sector. Many tenants face continued challenges with letting agents throughout their rental periods, with reports of repair delays leaving properties with serious safety hazards. Yet, despite their importance, surprisingly little attention has been paid to how they work and influence the letting market.
The impact of letting agents on the Private Rented Sector (PRS) is not just limited to their engagement with tenants. Agents also have a significant sway over the decisions of landlords. Research by the UK Collaborative Centre for Housing Evidence, for example, found that 85% of landlords reported that their agents influence who they rent to either somewhat or a lot and 91% said they influenced the amount of rent they charged either somewhat or a lot. This matters because certain groups already face structural barriers in their ability to access housing. For example, 42% of landlords said they do not rent to people receiving Local Housing Allowance (LHA) with another 21% admitting that they would prefer not to. This has contributed to the low level of customer satisfaction in letting agencies. Research by Which? in 2012 found letting agents ranked second from the bottom in a ranking of 50 consumer markets, second only to financial comparison sites.
Addressing the policy gap
Whilst the evidence suggests letting agents have the power to either drive or change these dynamics, policy has been slow to catch up and tap into this potential. There have, however, been encouraging signs. The 2019 Tenant Fees Act banned landlords and letting agents from charging tenants most upfront fees and capped tenancy deposits. The Renters’ Rights Bill will also have some important ramifications for letting agents – for example through abolishing ‘no fault’ evictions. However, policy can, and must, go further. Without addressing how letting agents work and deliver for tenants – improving culture and standards, information and data in the market, and engagement with tenants, landlords and local authorities – we leave a critical gap in our efforts to improve the private rented sector.
That is why new Demos research looks to delve into the role of letting agents: who they are, what they do, and most importantly what impact they have on tenants. Demos strive to put people at the heart of our research and policymaking. By listening to tenants, landlords and letting agents we hope to drive forward reforms that are bold, grounded in reality and work for all in the sector.
In partnership with the Nationwide Foundation, we are shining the light on this under-explored area of the housing system to ask how letting agent practice can be made fairer, more transparent and more impactful. If this sounds interesting to you, then please get in touch.