Most, if not all, tenants renting a property are referenced - and this means referencing companies have a front row spot to see market trends as they play out. Here's Liz Lloyd, Account Management Team Leader at Vouch, to share some insights.
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In 2020, the lettings market was reeling from the closure of branches and restrictions that only allowed essential moves to take place. Many agents scrambled to set up virtual viewings and move their traditionally office-based processes to a remote working set up. Now, both agents and tenants are taking lockdown in their stride. While the first one saw limited tenant movement, the market's now busier than ever - with new and interesting trends emerging.
Tenant preferences
Our data shows single person households renting have grown across all regions in the past 12 months. Many families, flatmates and couples found themselves living in tight quarters and relationships have been tested over this period - but that's just one possible explanation.
Some tenants have saved money, staying with family rather than paying rent and therefore have had more financial backing to move out earlier than planned, to start renting on their own. Others will have rented their own space out of necessity, because of the nature of their jobs. At the beginning of last year, we saw a lot of movement from people that work in hospitals, for example, moving into alternative accommodation to protect their family.
Tenants are also looking for longer contracts; we're seeing fewer tenancies starting on a short, six-month contract than back in 2019. They're happy to ensure they have some stability in the long term - and that security extends to landlords and agents as well, who deal with fewer void periods and less hassle in the short term.
The international market
We're also seeing a dip in international tenants moving through the referencing process. Is this due to Brexit or simply down to the pandemic? At this early stage, it's difficult to say, but we do know that it has been primarily skewed by the student market.
A lot of our agents working in student lets normally welcome many international tenants. However, they've been much quieter than normal during September as virtual teaching took hold in the past year. Once we move back towards in-person learning, we'll have a clearer picture of whether this is a long-term trend, or if the pandemic is simply restricting the movement of international students in the short term.
Furlough effect
Furlough and how it impacts referencing - and therefore Rent Protection policies - is a topic that keeps cropping up in our conversations, so we know that it's a concern for agents.
The scheme's clearly being used by a lot of employers. So far, it hasn't had a negative effect on referencing pass rates; the 80% covered by the government until June 2021 is enough for tenants to continue paying what's required to their landlords, and still meets insurance affordability criteria in most cases, meaning brokers are still providing cover. For any borderline cases, agents can adjust rent share between tenants.
However, as time passes, letting agents are becoming more cautious. The scheme will stay in place until September - barring any further extensions - and, when that ends, there will be redundancies. The closer we get to September, the more caution will be applied - and whether the insurance stance will change remains to be seen.
A faster process
Vouch's referencing service has a digital application process, something agents have embraced in their droves the past 12 months, as they've moved many of their systems online. Most agency offices have stayed open during this lockdown, but they're continuing to minimise visits to the office and face-to face appointments as much as possible, simply maintaining the essential meets that they need to do in order to keep letting and making good use of virtual viewings for others.
This combination of different virtual tools has sped up their whole process. Agents are working more efficiently, referencing tenants more quickly, and have found that, while the first lockdown was all about moving around the key workers that needed to be moved, this time the scope is much wider to continue letting - with capacity now to move more tenants than ever before.
Goodlord and Vouch are part of the Goodlord group. Goodlord also offers a referencing service within its pre-tenancy lettings software for agents. Learn more.
