PRS: The Tenant's Prerogative
Lessons for the Private Rented Sector
The last few years have seen increased focus on the residential private rented sector (PRS). The reason for this has been an improved understanding of the potential of the sector to contribute to increasing housing supply; both in absolute terms and in terms of flexibility.
Critical to the government’s policy response has been the desire to encourage institutional investment into the sector, in order to bring the benefits associated with large scale commercial provision of residential tenancies, as evidenced by international experience. The Montague Review for DCLG in 2012 probably did the most to bring the potential for the PRS in the UK into the consciousness of the wider property sector.
The government’s policy response has included the setting up of a PRS taskforce, headed by an alumni of Cluttons, which has continued to promote the potential of PRS to the property cognate and will do so until its term date in April 2015.
The residential teams within Cluttons all have experience acting for London’s Great Estates. This, together with our consumer facing residential agency branch network, has given us a real insight into the London residential market.
We have seen three parallel themes emerging as the PRS evolves in London:
- Increased institutional appreciation of and interest in the PRS
- Increased consideration of brand on the part of our Estate clients in order to understand market drivers for investment into their Estates in terms of: product design and quality, management response, responsiveness and professionalism, as well as investment into their communities and urban environment
- Anecdotally a limited understanding on the part of applicants of what makes the Estates; London’s longest standing institutional investors, different from the single asset (or small portfolio) investors who make up the largest part of the market in terms of scale.
We saw an opportunity to add to our Estate clients’ understanding of their tenants’ experience and drivers by identifying an answer to the question: What are the characteristics that determine
tenants’ decisions in the PRS?