Thinking around corners on UK rental market could transform life for the better
With pubs and restaurants open across London once again, the capital’s young professionals can return to one of their favourite pastimes: gathering together over a drink to complain about the rental market.
We all know the stereotypical ladder: you begin in a slightly shabby, probably shared flat, you move on to somewhere on your own or with a partner, and you keep climbing with the objective being to get a mortgage and buy a property of your own.
One of the problems which young people encounter is a sudden and substantial, but sometimes short-term, need for capital, particularly to pay deposits. And there is a host of other issues: references from previous landlords, credit checks, conditions in the lease. It can become a stressful juggling act which makes a challenging situation that much harder.
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I’m a big fan of Christopher Lochhead and his championing of category design.
His essential message is that to be successful in business you need to create your own category, by solving a problem no-one has addressed or doing something in a wholly innovative way. This involves a lot of what I’ve come to term “thinking round corners”.
Abandon your preconceptions and look at a particular challenge or sector from the ground up. Don’t be guided by received wisdom or precedent; there isn’t always a good reason that something has always been done a certain way, and there are often better ways to achieve the same outcome.
Reimagining the rental sector sweeps away a lot of unnecessary superstructure. Deposits, credit checks, conditions in leases: what are they actually for? They all exist so that landlords can guarantee their income and protect themselves against excessive repair and maintenance costs. Is there an easier way to achieve this outcome?
Todd Ortscheid, the CEO of US-based Revolution Rental Management, believes he has shaken the pieces, crafted a new solution and opened up a new category.
He is offering what he describes as “landlord protection”, an insurance scheme that would obviate the need for deposits, credit checks and other conditions because the income from the landlord’s property would be protected and he or she would be safe from any unexpected costs like a tenant leaving without notice, damage sustained by pets and so on.
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The effect of this would be to empower the tenant and protect the landlord. Imagine a 20-something looking at flats in London and calculating how much rent they could afford, without having to factor in finding six weeks’ extra rent as a security deposit. Or, in the aftermath of the pandemic, a couple with a new pet shopping for a new place to live but not being constrained by clauses in the lease forbidding animals. Ortscheid describes it as providing “much broader approval criteria for residents”, and that must surely be good news for the consumer.
More importantly, if he’s right, and the numbers can be made to add up, it needn’t be a zero-sum game. Broader choice for the consumer need not be a penalty for the landlord. Perhaps this genuinely is a circle squared.
Could this work in London? It seems in some ways tailor-made. The capital will always have a stream of young professionals who need to rent property, and, with rents still disproportionately high compared to the rest of the UK, being able to save a four-figure sum just at a point when life is at its most expensive would be hugely welcome. It would also benefit those whose credit record is patchy, perhaps the self-employed or those who have lost work during the pandemic.
Our emergence into the post-pandemic world is persuading people that change is not only possible but often necessary. Looking at the London rental market, it is hard not to think that something is broken, dysfunctional. There are many causes, some within the control of public policy and some not, but surely the offer from a company able to ‘triangulate’ between tenant and landlord, and reduce the burden, financial or emotional, on both, must be worth considering.
If we get it right, we could enhance London’s national and international appeal and competitiveness across business by making it a better and easier place to live. That’s a prize which is worth at least considering innovative solutions and previously unaddressed problems. As the mayor’s office is now saying, let’s do London.
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