BTR and PBSA funding models “must shift in response to Renters’ Rights Bill”

The passing of the proposed Renters’ Rights Bill into law is also likely to impact demand for professional guarantor services, a market that Housing Hand has led for the past 12 years, maintaining a 100% payout record for all valid claims. MD Graham Hayward continues:

"Recovering rent from a tenant who has defaulted is time-consuming and costly for accommodation providers. By accepting tenants with guarantors, they can switch to a model with zero write offs instead – and at zero cost. Accommodation providers’ risk appetite is likely to change as a result of the proposed Renters’ Rights Bill, with more seeing riskier overseas personal guarantors as inferior to professional guarantor services. This looks set to drive up demand for professional guarantors – something that we’ve already seen accelerate over the first half of this year and especially for guarantors with strong pay out and settlement rates.” 

Accommodation providers are also under pressure from other angles in relation to the proposed Renters’ Rights Bill. Pressure points include the need to deliver both quality homes and value for money in an increasingly competitive market. Occupancy challenges are adding to the headache for some BTR and PBSA operators and investors, as well as HMO landlords, with shifting international student immigration patterns challenging both university funding models and local accommodation markets. 

“Either a revised model or some kind of relief is going to be required to protect investor returns,” concludes Hayward. “The Renters’ Rights Bill is coming home to roost, meaning operators and investors need to reposition their strategies to ensure their models remain workable and robust.” 

Housing Hand is providing a range of services to support the new normal that is anticipated to follow the passing of the proposed Bill into law. In addition to its range of guarantor services, it also provides identity verification, a house finding and a depositless renting service to help minimise providers’ occupancy challenges. Housing Hand also launched a new service – A-Void – earlier this year to help HMO landlords who rent to students deal with void periods over the summer break and in the event of a student giving notice mid-year. Where student renters leaving tenancies early are guaranteed by Housing Hand, and the landlord has served Ground 4A, the firm will cover up to three months’ rent at 50% of the value. This is at no additional cost to either the landlord or the tenant. This may also extend to PBSA given the current uncertainty regarding transition into the new tenancy structure.