There is a quiet and emerging issue in the private rental sector that has received very little public attention, despite all the talk surrounding rent increases, housing shortages, and the Renters’ Rights Bill.
Trust.
Or perhaps more accurately, the lack of it.
The relationship between landlords and tenants is primarily founded on an exchange process. The landlord’s primary interest is in knowing they can expect regular payment from the tenant for use of their property. Similarly, the tenant’s desire is to feel confident that the landlord will respond promptly and efficiently should problems arise with the rented dwelling. Both parties may also approach the agreement with some level of doubt as to how either party will act under various circumstances if expectations are not met.
This does not appear to be overly negative. However, it illustrates the nature of today’s rental housing market. It could be said that the last ten years in terms of the private rental sector were largely a story about trust. The legislation, the compliance requirements, the growing number of checks and procedures all point back to the same fundamental issue.
When trust breaks down, new systems emerge to replace it.
The question is whether these alternative systems are resolving problems or merely masking symptoms.
Every New Rule Is Really About Trust
Consider many of the major reforms introduced into the rental sector over the past decade. Deposit protection schemes, licensing requirements, Ombudsman services, electrical safety regulations and the Renters’ Rights Bill are often discussed as separate developments. In reality, they all have something in common.
Each emerged because, at some point, trust alone was no longer considered sufficient.
Deposit protection was introduced because tenants worried that deposits would not always be returned fairly. Licensing schemes expanded because standards varied dramatically across the sector. New tenancy protections appeared because policymakers believed tenants needed greater security.
Whether you support every individual reform is not really the point. The broader pattern is difficult to ignore.
When trust declines, more regulation follows.
Many aspects of modern property management can be looked at as ways to eliminate or reduce uncertainty. As opposed to being based on personal relationships, the majority of this activity is documented through forms, processes and oversight.
Professionalism, transparency and accountability are important values.
It is, however, worthwhile recognising that a number of the mechanisms currently operating within the rental environment came into existence because trust was no longer deemed sufficient by itself.
The Rental Industry Has Become Exceptionally Good at Avoiding Trust
Step back and examine the renting process objectively.
A prospective tenant will likely provide references, work verifications, an assessment of their ability to afford rent, ID’s, bank statements and/or a guarantor prior to receiving a key to enter the rented space. Tenants also now commonly do their own background checks on estate agents and compare reviews and past tenant experiences before making a decision regarding which property to rent.
Neither side is behaving irrationally.
Each party is trying to minimise the potential risks.
The interesting thing is how much effort the industry now puts into verifying people before any relationship has even begun. Entire industries have emerged around helping landlords and tenants assess one another.
Referencing companies. Credit agencies. Inventory providers. Deposit protection schemes.
When you think about it, that is quite remarkable. Few industries rely so heavily on mechanisms designed to reduce the need for trust in the first place. The irony is that despite all of these safeguards, trust still matters enormously once the tenancy begins.
Because no amount of paperwork can completely eliminate uncertainty.
Sooner or later, every tenancy encounters a situation where trust becomes important again.
The Boiler Test
At some point, each tenancy will reach a tipping point.
Not necessarily a boiler, despite its remarkable ability to break down during the coldest week of the year.
Sometimes it is a leak.
Sometimes it is mould.
And sometimes it is a contractor who says he will arrive at any time between 9 am and 5 pm, but never does.
Regardless of the actual issue, it is very rare for this to define how you perceive your tenancy.
What matters is what happens next.
Imagine two tenants wake up to discover their boiler has stopped working. On paper, they’re dealing with the same problem. In reality, their experiences couldn’t be more different. With one house (let’s call this House A), there are regular communications from the landlord/agent regarding the work schedule, who has been assigned to fix it, etc. The tenants are aware of the work in progress and know that the landlord/agent is taking an active role in resolving the problem.
With the other house (House B), the tenants receive no response to their queries regarding when the boiler will be fixed, nobody appears to have a clue about the status of repairs, and communication starts to become irregular.
The maintenance issue is identical.
The experience is completely different.
One situation builds confidence. The other erodes it.
This is why many disputes within the rental sector are not really about the problem itself. They are about uncertainty. Many individuals will tolerate a certain degree of difficulty, even if it is annoying, if they believe progress is happening. It is the sense of being ignored, forgotten or left in the dark that breeds frustration.
To a certain extent, good property management is not just about solving all the problems with your tenancy, but also maintaining confidence whilst those problems are being resolved. Unfortunately, this distinction is often lost.
Build-to-Rent Has Spotted Something Traditional Landlords Sometimes Miss
The largest development in real estate over the last few years was the rise of build-to-rent (BTR), with one of the primary reasons being the ability of BTR operators to provide predictability.
While some would say that providing new units, developing larger projects, and adding new amenities were key factors as to why BTR operators have seen such large increases in occupancy rates. I believe it can be said that while these all play an integral part, the biggest factor is actually predictability.
Predictable communication. Predictable maintenance processes. Predictable service standards. Predictable experiences.
In other words, certainty.
This matters because modern tenants increasingly value knowing what to expect. They want transparency around repairs. They want clear communication. They want confidence that issues will be handled professionally.
The property itself remains important, of course. Location, price and quality still matter. However, the experience surrounding the property is becoming increasingly influential.
This is where many long-time landlords miss out on this trend. Historically, landlords primarily competed based on location and rent. With the increased importance placed upon the experience related to a landlord’s rental properties, many may now find themselves competing on professionalism, responsiveness, and credibility. This represents a substantial change in the way the rental market operates.
Social Media Has Made Trust More Complicated
Trust in the rental market has always been important. It’s just the speed at which perceptions have been altered that has changed.
In the last ten years, if you had a terrible time renting, you could share your story with a few dozen friends, relatives, etc. But now, in just a matter of hours, your bad experience can be told to tens of thousands of other people online.
Both negative stories (difficult landlords, no maintenance, no response) and positive stories (great tenants, helpful landlords, prompt responses) will travel through social media at the same speed. The difference is that negative experiences usually travel faster and farther than good experiences.
No one puts up a viral video when their landlord responds promptly to an e-mail. No one creates a dramatic thread to post about a maintenance request that gets completed in the timeframe they were promised.
Great management is rarely noticed.
Bad management is extremely visible.
As a result, both landlords and renters now enter into rental agreements based upon what they’ve heard from others who have rented. Tenants may worry about getting “ignored”. Landlords may worry about being taken advantage of. Neither is likely to create these concerns based upon past experiences. Rather, they’re basing them upon larger societal views that have developed over time. This makes building trust even harder since it needs to combat not only individual experiences, but also general assumptions.
Renting Is No Longer Temporary
Another factor that is making it so much more critical that we develop trust with our renters is that the way most of us rent is evolving.
Renting used to be viewed by many as a “temporary” phase; an individual would rent until they could save enough money to get a down payment for a mortgage, establish themselves in their chosen career, etc. This thinking is no longer valid.
More people are now renting properties for extended periods of time. The rising cost of houses, changing lifestyle choices, and increased flexibility in terms of employment arrangements make it possible for renters to continue to rent for extended periods of time.
This significantly changes the way that landlords and tenants relate to each other.
As tenants consider a rental property their home for at least several years, the importance of consistent communication and trust increases.
Tenants are not just renting a physical space but are using the space as part of their lives.
The longer that renting continues, the more important the quality of the landlord/tenant relationship will become.
It is for this reason that tenant expectations regarding rentals are continuing to evolve. Tenants today are making larger emotional investments in their rented homes compared to what they were doing in the past.
The marketplace is beginning to recognise these changing expectations and adjust accordingly.
The Best Letting Agents Are Really Trust Managers
Property management is often described in practical terms.
Collect the rent.
Arrange maintenance.
Manage compliance.
Handle administration.
All of these things are important. Yet the most effective agents often perform another role that receives far less attention.
They manage trust.
Consider how many situations involve competing expectations. A tenant wants a repair completed immediately. A contractor has limited availability. A landlord wants to understand costs before approving work.
Without communication, these situations can deteriorate surprisingly quickly.
With the right communication, they often remain manageable.
The best property managers spend much of their time creating clarity where uncertainty exists. They explain processes, provide updates and help people understand what is happening.
The most valuable aspect of what they can do in many situations, however, is preventing loss of confidence during the process of solving a problem. This may seem like an unglamorous thing to accomplish, but it has grown increasingly important.
Trust is a critical component of effective property management as regulations grow and expectations from tenants continue to grow.
Looking for more landlord insights? You may also find these articles useful:
The Unintended Consequences of the Renters’ Rights Bill
The Airbnb Effect Is Coming to Long-Term Renting
Why Some London Rental Properties Sit Empty Longer Than Others
The Benefits of Fully Managed Lettings
Want a more experienced and effective way of letting your London rental property? Contact the Letio team to learn how we can provide an expert level of property management service so you can free up more time to focus on what matters most to you, minimise risk when renting out your home and maximise its potential.
