Social Models of Letting Agencies

By: Shelter Scotland
Published: November 2015

Social Models of Letting Agencies

Developing "social letting agencies" in Scotland
Shelter Scotland is committed to supporting and encouraging the further development of social letting agencies in Scotland. By this, we mean letting agents who manage and let properties on behalf of private landlords and who are particularly interested in the additional help needed by tenants on lower incomes or who face some other form of disadvantage.

If you want to take part in this development work please contact Ellie Hutchinson Private Renting Project Manager at Shelter Scotland, 0344 515 1847 Ellie_hutchinson@shelter.org.uk or the project researcher, Anna Evans, 07747 352813, anna.evans@aehousing.co.uk

Introduction
As part of a 4-year funded programme of work aimed at supporting improvement in the private rented sector, Shelter Scotland is exploring how best to encourage the development of letting agency practice which recognises the particular circumstances of lower income tenants.

Overall, Shelter Scotland wants to support:

More organisations to provide social lettings services
Further development of current practice within mainstream letting agents to best meet the needs of the intended client group
The embedding of social lettings approaches in national and local policy and practice.
From earlier work carried out by Anna Evans and her research team, we have found:

The term "social letting agency" has some currency in Scotland but is used quite loosely and there is little evidence of sustained momentum being built up or shared groundwork.
There are important pockets of practice and good practice but these are quite isolated and national policies or local housing strategies give very little steer on social letting approaches.
At the same time, the private rented sector is growing and that growth encompasses lower income or disadvantaged groups who hitherto may have accessed social housing.
On its own, there is no evidence that the market will respond to the needs of lower income tenants since letting agencies work at often fine margins and, in an expanding market, there is no incentive for letting agents to focus on tenants who may be perceived to be more risky.
There are opportunities to build on current provision. RSLs are increasingly expanding into intermediate rented markets; social purpose organisations and charities have also expressed interest in greater activity; and a small number of commercial organisations recognise gaps in provision.

Definitions
The term "social letting agency" is used quite loosely to cover a number of approaches, from not-for-profit focus to support-based organisations to the target audience being people on low incomes. In the current context Shelter Scotland uses the term in relation to intermediaries between landlords and tenants where the primary focus is on lower income tenants or those who may face some other form of disadvantage.

Ways forward
Shelter Scotland wants to encourage and support more letting agents to recognise the particular needs of lower income tenants; to focus efforts on this part of the private rented system in a way that meets their needs; and to do so within a viable business model.

We have identified a number of potential options to do so at this stage but please note that these are by way of illustration at the moment and should be taken as neither exclusive nor necessarily as a preference. They include:

Working with one or two "vanguard" letting agents who have expressed interest in or are already making inroads into this part of the market. This might involve providing funding through staff capacity, tailored training or resources to facilitate further development.
More generic training and resources for letting agents more generally.
Supporting networking and good practice sharing between interested organisations.
Defining clear criteria by which to recognise social letting activity and developing accreditation.
Working with Scottish and local government to strengthen the policy support for social letting activity.
Ensuring that Scottish development is well-connected to development elsewhere in the UK, by national government, councils or NGOs.
Whatever the best mix of activities they should all be grounded in a clear rationale and evidence for:

What tenants need and want: what makes a letting agent attractive; what are the specific barriers faced by lower income tenants or those paying through LHA?
What landlords need and want: how do they decide to contract a letting agent; how might that vary by tenant profile?
What agents need and want: what are the barriers to taking lower income tenants; what is a viable commercial model?