The Lettings Revolution

A revolution could be about to sweep through the Lettings industry

Nowadays we all take the residential Lettings market for granted, however, it has not always been thus. Comparatively recently, there was no residential Lettings market to speak of.

The whole thing started as a direct result of reforms made in the housing act 1988 but even then the market didn't start to grow strongly until 1995. The 1988 act created the Assured shorthold tenancy, the cornerstone of the private Lettings market in that it guarantees a landlord can reclaim their property at the end of a tenancy.

Before that the rent acts introduced by Labour meant that Landlords would loose possession to protected tenants on controlled rents, this legislation had reduced the private rental market to a negligible percentage of UK households.

However 1988 also marked the start of another massive housing and mortgage crisis. Without funding Lettings could not grow but with the eventual introduction of buy to let mortgages, the market took off and now accounts for nearly 20% of all households with more growth on the way.

So, given this amazing growth in Lettings, unsurprisingly there has been an equal growth in the number if Lettings agents out there. Lettings remains an unregulated business with some as agents doing a great job and others not so much so.  Landlords need to be discerning in their choice of agent if they are to avoid the many pitfalls and risks that are the flip side to the enormous financial attraction of bring a private landlord.

Now however, one agent has created a new business model for the Lettings industry, a model which purports to have major significant benefits for Landlords, tenants and agents alike. We have seen a preview of a brochure describing this new business model which is called the Primary Tenancy and is available to Agents under licence through Angels Media publishers of Estate Agent Today and Lettings Agent Today.


We must say that it seems to do what it says in the tin and be a well researched and piloted system. In essence the Primary Tenancy is a refined version of the profit rent model that has done the rounds in the Lettings market for several years. With a profit rent, the agent becomes the Landlords tenant and sublets at a. Profit instead of charging commission. The big difference with the Primary Tenancy is that they have refined the model cleverly and thought through the very beneficial consequences to all parties to the transaction.

For example take rent guarantees, these used to be generally available tomLandlords through their agents but not any more. Since insurance has been regulated, most agents have either stopped selling rent guarantees or resorted to offering them in an unregulated and potentially illegal way. This problem is completely solved with the Primary Tenancy. As the agent is the tenant,the terms of payment are down to the Tenancy agreement and can of course provide for a rent guarantee. The agent can then take out their own policy to offset the risk.

We asked Nat Daniels the CEO of Angels Media to comment on the rent guarantee 'the beauty of the primary tenancy is it's flexibility with the agent able to offer the landlord a rent guarantee within the contract, or leave the liability for rent with the sub tenant with no regulatory obstacles in the way'

Rent guarantees are not the only benefit if the Primary Tenancy. There are many other advantages which come onto play if fir any reason anything goes wrong. For example because the Landlord is the agent there is no need for the tenant to know the personal contact details of the superior landlord. Equally if the tenant has to be evicted the agent can act without having to directly involve their client in the proceedings. The landlord is also protected from any failure to adhere to the deposit protection rules and from some of the more heinous aspects of the health and safety rules.

On the other hand there also appears to be benefits to the tenant who ends up dealing with an experienced professional landlord who is aware of and committed to meeting their obligations towards their tenants.

As far as the agent is concerned, in addition to the considerable marketing advantage of being able to offer a more comprehensive service than their conventional competitors, they also benefit from a financial edge because profit rent is not liable for vat, translating either into more competitiveness or more profitability.

The model has been piloted since 2008 by a well respected and established Lettings agency with several thousands of properties under management and having used the system which has successfully been tested on court and by the property ombudsman on many occasions.

It is not often that an innovation like this has the potential to change an entire industry but this does seem to have that potential, comparing the conventional agency model to the primary tenancy starts to feel a bit like comparing the modern motor car yo a horse and cart.