Page last updated at 23:17 GMT, Thursday, 14 May 2009 00:17 UK

Changing times for the UK rental market

By Kevin Peachey
Personal finance reporter, BBC News

High value rental property
Most high value rental properties go to corporate clients

Sleek, stylish, attractive to those with expensive tastes, and currently undergoing a bit of a facelift - this is a property made for a supermodel.

For those who cannot commit to stay for more than six months, the A-list model's five-bedroom former home in west London - complete with nanny quarters and a three-berth garage - is yours for £6,500 a week.

This is the top-end of the rental market. At the other extreme, students house-share in run-down properties scarred by high-octane parties and low-interest landlords.

In between, thousands of people unable to sell their homes have become accidental landlords, with their tenants keen to trade up as prices fall.

"Because the market has been flooded prices have been driven right down - somewhere between 5% and 35%," says Emilie Dawes, area director at Marsh & Parsons estate agents.

Price split

It has become a tale of two markets in the rental sector, according to the latest survey from property website Findaproperty.com.

Let boards
Tenants have specific requirements and they want more for their money
Emilie Dawes, Marsh & Parsons estate agents

A growing supply of flats, often from property owners unable to sell, pushed down rental prices in April. The average rent in the UK stood at £819 a month in April, falling from £827 in March and £873 a year earlier.

But fewer large houses are available, which has driven up costs for tenants of these properties. These large houses include the plush west London house, soon to become home for a family moving into the area.

The rent for nine out of 10 of these high-value properties is picked up by corporate clients who then offer them as part of an employment package to senior staff often moving to the UK from overseas, according to Ms Dawes.

Oil companies, law firms and banks are regularly on this client list - even during the recession.

"Activity has taken a bit of a dent but there is still more than most people would think," she says.

Among homes with asking rents of more than £2,000 a week, rent tends to be more negotiable and has not seen prices fall significantly.

But below this figure - within the bulk of the rental sector - tenants have realised that the oversupply of properties in the market has allowed them to haggle on price and trade up from their current home.

"Tenants have specific requirements and they want more for their money. We've seen a particularly new trend in the last four or five months of people moving within the local area," says Ms Dawes.

Greater competition

With savvy tenants in a position of strength and having been more choosy over where they live, the emphasis has been on landlords to improve their offer.

GENERAL ADVICE FOR TENANTS
Tenants in England can expect:
A tenancy agreement
That deposits be held by a tenancy deposit scheme
That landlords should carry out repairs
That landlords should give notice of inspecting or entering a property
That rented properties should have a gas safety certificate
That they should not be harassed or illegally evicted
Source: Shelter England

This includes presenting the property in good condition, being aware of the state of the market and setting a competitive rent for new tenants.

Gone are the days when tenants would trawl around an area looking at homes on the basis of a three-line advert in the local newspaper or on the Post Office noticeboard.

Nowadays the local newspaper websites or specialist listings sites carry photos and fuller descriptions to allow potential tenants to browse on their home computers before viewings.

The responsibilities for landlords are also set to get stricter. The government commissioned an independent review into the private rented sector headed by Julie Rugg of the University of York.

Her recommendations, published on 13 May, are now being considered closely by people who, unable to sell their homes, have turned to letting when they move away from a property because of a new job or to move in with a loved one.

Many buy-to-let landlords remain from the numbers who flooded the market during the property boom throughout most of this decade.

GENERAL ADVICE FOR TENANTS
Tenants in Scotland can expect:
Private landlords to be part of a registration scheme
Different rights depending on the type of tenancy they have
Extra rights outlined in a written or verbal tenancy agreement
Landlords stipulate a notice period before visiting a home
That rented properties should have a gas safety certificate
That landlords should carry out repairs
Adequate fire detection equipment such as a smoke alarm
Source: Shelter Scotland

Anyone letting a residential property in England will have to register on a national database, under government plans inspired by the Rugg Report and aimed at cracking down on unscrupulous landlords. A similar system is already in place in Scotland.

Landlords who do not keep their property in good condition could be struck off and have their licence revoked.

No such schemes are in place in Wales and Northern Ireland.

And under a new licensing scheme announced by the Association of Residential Letting Agents (Arla), a professional qualification will be required by letting agents acting on behalf of landlords.

Nightmare scenario

But what about the responsibilities of tenants?

Science teacher Joanna Hartas, 27, had her Newcastle home on the market immediately after the collapse of Northern Rock.

She was moving down to London for a new job and, with very little mortgage lending in the local area, was unable to find a buyer.

Instead she organised a letting agent to find and oversee tenants in the property.

Tenant Frank Bertwhistle speaks of his fears over repossession

By the time the tenants - a couple - moved out, there were piles of rubbish in the garden attracting rats, holes had been punched in the walls, rent was unpaid for three months and there was a £2,000 bill to replace the furniture, she says.

"I am not a landlord to make a profit, I was forced into this situation," she says.

"I have been utterly helpless in this situation and the letting agent will accept no responsibility for putting such terrible tenants in my house."

She says she has been left £3,000 in debt as a result of the saga.

Unlike the west London mansion, this is the ugly end of the rental sector.

By law, tenants are expected to act in a "tenant-like manner" which is essentially by treating it as they would their own property, keeping to the tenancy agreement, paying rent and reporting any faults promptly.

Landlords can go through the courts for a fast-track eviction for those deliberately flouting these rules. That takes about six weeks on average, but the National Landlords Association says that this time period is inconsistent across the country.

It says that a regular eviction can take 15 weeks, which would hit the pocket and patience of landlords.

All of this makes it a major decision to enter the buy-to-let market.

Not only do the current economic conditions mean that more repossessions might be expected of properties owned by landlords who lose their own jobs, but some accidental landlords might also not realise the bureaucracy involved.

They say that moving home is among the most stressful times of your life. Finding others suitable to live in your property might be just as bad.



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