A new rating system of private rented properties is to be launched. It is, says the firm behind it, an attempt at industry self-regulation and could be used by local councils as an alternative to licensing.
The system, Rental Ratings, will work like the one to five star rating system for hotels, enabling tenants to see the better quality properties at a glance.
Each rating will last two years and be paid for by the landlord.
Independent inspectors will use different criteria including size, location, condition, outside space and car parking, with a weighted average system used to calculate the score.
Kirsty McGregor, who has come up with the scheme, said: “It’s a game change. It will give agents and landlords a brand new marketing tool. Rentals will no longer be priced just on location and the number of bedrooms as at present.
“Poor quality properties will be highlighted – just as a ‘no star’ rating in the hotel industry speaks a thousand words.
“I also think it could help increase standards. In time, if the private rented sector gets behind this as a way of demonstrating quality properties, local authorities could direct their efforts and resources to those landlords who choose not to have their properties rated.”
Agents will be able to sell the concept to their landlord clients and either choose to make referral money or get a discount for their landlords – or a mixture of both. There is a 20% offer available to agents registering before October 11; after that, it will be 10%.
McGregor said: “The agent can decide how much they want to keep as a commission and how much discount they want to give to the customer.
“We have 20% available to those agents that sign up as premier introducers by October 11 – they have to commit to some PR and marketing to do this – and for those who get involved later, there is 10% available.
“Agents could choose to keep all of this for themselves, pass 100% on to their landlords, or share 50:50, or whatever they choose.
“All the bookings will come direct to our site and we’ll report back to the referrer each month.”
McGregor added: “When we get traction, national property portals are willing to support the scheme by showing logos and allowing tenants to refine their search choice.
“Until then, agents and landlords can use the Rental Ratings star rating in the narrative of their adverts and use the award logos on any local sites and newspapers. The more market presence we get, the more valuable it will be.
“It also gives agents a chance to do something different for landlords and tenants, and help to increase standards as well as justify rental prices in their areas.”
McGregor emphasised that the inspectors – mostly full-time surveyors or project managers, but including some building specialists – will not be allowed to pitch for any improvement work at properties. “The independence element is very important to us,” she said.
The full Rental Ratings site is due to go live from Monday, September 30, initially offering rental ratings at £25 each for the first 30 surveys booked.
The service itself is due to launch on November 1, with products costing £150 to £250 depending on the size and type of property.
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Comments
"I completely disagree that a property's rental value demonstrates a property's quality"
I would disagree with this statement, usually a tenant will have done some research on the area and know what the average value for a property is, anything significantly higher would normally denote better facilities / condition, and if he does not recognise this a good agent would point it out.
Having said that this does seem like an interesting proposal, but I think with the current market place being quite buoyant and good properties being taken up quickly the pricing structure will discourage many from even considering trying it out.
4 & 5 * normally stand out from the crowd, it's the middle of the road ones that would perhaps need some assistance, but in my experience these are quite often accidental landlords who would not usually be prepared to pay out anything more than is absolutely necessary.
Toby you said "I have struggled to rent fabulous properties internally because of their location" -so if I gave you an extra marketing tool that was an independent stamp of quality, that drove tenants to your property - despite the location - you wouldn't take that?
I have never heard of such a silly dea. I have struggled to rent fabulous properties internally because of their location and had to fight tenants off trying to rent a 'c**p' hole in a great location! How on earth would a star rating system work. Sorry but absolute joke of an idea. As a landlord I would never pay for it even if every other landlord in the land had one.
I completely disagree that rental value demonstrates a property's quality. In this crowded marketplace, the landlord is limited by the size/type of the property and its location. If a luxury property, with amazing facilities and in a beautiful condition was being marketed at present for more than say 5-10% of the average for that area, he would get no viewings (unless you're in London). There's a glass ceiling and no matter what you write in your narrative about how beautiful it is, or how lovely your photographs are, it won't make ?much/any difference to a tenant - unless they can see a stamp of an independent quality grading that gets their attention.
We all ready have a system that defines how good a property is - it is it's rental value. Tenants understand that the cheaper the property is the less it Is likely to offer but they can only afford what their budget will allow.
Hello Savvi! Thanks for posting that lovely comment :-)
i think this is not as daft as you thing we are agents and landlords but i am going to comment from being a landlord and i can tell you my porfolio is bigger than some agents. we all try to stand out and tooking at this and the ammount of money we put into keeping ower property at its best why do you think as a landlord i would not want a system to show that (sorry forgot this is a letting agents site )those that cant manage for others that can
sorry Ray I've only just seen your comment from this afternoon and thank you for such a brilliant comment - some really good questions here and I'd be delighted to answer them. And thanks also for taking the time to watch the presentation and understand more about the product.
We expect that at FIRST only landlords of 4* and 5* properties will be interested because they will get a point of difference & be able to use a tool to help them stand out in a crowded market. I'm not saying that tenants would necessarily change their size/location requirements -- I'm just saying that if one property has a 4* rating and another similar property has no rating, the tenant is bound to take notice of that. Then it will obviously come down to a personal decision for them on how much they trust that property over the other, if they do they may (if that's their nature - and it definitely is in some people's nature) decide to pay more.
Longer term, we do intend that more properties will be 1 & 2 star rated as well - it may be that these are more for the LHA market for instance, and I agree, it's important for the long term success of our scheme that we have the full range in the market. We are already working with one city council to trial at the lower priced end of the market, so we'll see where that goes. But then again, you don't tend to find many 1* and 2* rated hotels advertising themselves as such do you?
Research from an existing industry scheme (with a type of property element, but quite different to ours) in the student sector has been reported as finding that out of 1000 tenants, 98% said they would value some independent quality check. And let's face it, why wouldn't they?
Trials - several different types. With a letting agent on some private professional lets and with some HMOs. But that to refine the operational and scoring assessments. We haven't used the star ratings publicly to market properties, because you can't on a one by one basis, it's needs to be done across a wide area to get the attention/impact.
I'm not prepared yet to publicise our full ratings programme - it's our IP and we are very proud of it, and let's face it, it's an easy concept to copy for some existing national businesses. So I'm not naïve. But I can tell you that for a typical property it takes one of our surveyors around 30 minutes to do the full survey. When we are established, much like the hotel industry, I will publish our full programme so landlords can almost score themselves before apply for a new rating, to be sure they are going to get what they want/expect. But in the meantime, when we launch our full our website there will be quite a lot of guidance to make it obvious enough to advise landlords.
The lowest priced survey (at full post-launch prices) equates to £6,25 per month. That's hardly going to get the Shelter's back-up I wouldn't think. And if the market won't stand it, the tenant won't pay it. But I think tenants will be prepared to....
Have I covered it? By the way, more comment on my blog http://www.realsurv.blogspot.co.uk/ especially regarding that Watchdog item...!
sorry
"You will lose credibility if every property is 4* or 5* so what will you do? downgrade properties? "
I've looked at your presentation; ignoring the first 3-4 minutes of waffle before you get to the point, I have some questions.
Where have you trialed this? I've seen no mention of it anywhere else but you must have trialed it somewhere to see if it has any legs and to get an equity investor involved? what were the results of that trial, how many properties were involved, how did the results stack up against the number of lets and increased rent. Were the results collated independently for you? and if so by whom.
On what basis do you think tenants will give up looking for property in the location they want, and the size they want in preference for something with a higher rating not in the area/size they are looking for?
You mention a landlord with a 3* star house carrying out improvements to get upto 4*, but what of the landlords with poorer quality properties? why would they want to advertise their property with only 1* or 2*. You will use credibility f every property is 4* or 5* so what will you do? downgrade properties?
What do you base your assumption on that tenants will be interested in this? do you have market research to show this is something tenants demand? the EPC can have a direct impact on a tenants energy/heating bills yet, and I'm sure the majority of agents and landlords will agree with me when I say this, the vast majority of tenants still couldn't give a hoot about it, much less know what it is.
Passing yet more costs onto tenants when rents are at the highest they've ever been will just bring the industry into more conflict with Shelter and other like minded groups. Your starting costs are more sensible but what makes you think landlords or agents would want to lean on tenants even more or that tenants would welcome the increase for the service?
You mention that you look at 'hundreds' of different things when carrying out a survey; please elaborate or list them as this seems more in depth than a Homebuyers survey or even a structural survey.
I know it's tricky getting visits with tenants - inventory companies and agents themselves have to do it all the time. As done my MD in his line of work already). But if needs must....
Thanks for your comments guys, I'm all for feedback.
But have a look at this first please & then if you want to offer some constructive criticism I'll welcome it - specifics I can answer, just telling me it's a rubbish idea is hard to reply to! http://my.brainshark.com/Presentation-agents-35744215
Give credit to Letting Agent today, they always amuse me daily with a draft story,. If it' was April 1st you think it was an April fool,
This rates up there with the professional photographer who came to me a few years ago offering to take a professional portfolio of photographs for our properties; a mere snip at £500 a time.
Another get-rich-quick scheme off of the back of landlords; a ridiculous concept and bound for failure imo
Well said IO. Laughable.
I have seen some daft ideas in my time on this forum, but this is the daftest idea ever.
Obviously Kirsty has never tried arranging a visit with a tenant