7th
Dec 2021
A PropTech entrepreneur blasts the scrapping of Section 21 eviction powers that landlords currently have.
Alexander Siedes, chief executive and founder of a PropTech company, says it would so much better for landlords to be given more ‘robust and detailed’ information about prospective tenants.
Siedes says: “In my experience, there is always a reason why a landlord chooses to evict - it could be because the tenants are in arrears, or they are not meeting their legal obligations under the agreement..
“In some circumstances, the landlord may be struggling financially and need to sell the property, and surely they need to be able to sell their assets to avoid being forced into debt.
He continues: “I think there is a much bigger issue here around tenant discrimination and how good tenants are being effectively ‘blocked’ from renting while bad ones are slipping through the net - this is having a detrimental impact on the market as a whole, and it will continue to if the industry uses old measures to address new challenges.”
Siedes says traditionally due diligence on prospective tenants is carried out by insurance businesses which although it is a loss leader it does give them the opportunity to cross-sell other products to landlords/agents.
He has no doubt whatsoever that some of these insurance businesses will not carry out a thorough ‘search’ and in some cases deliberately so they can upsell insurance.
They use the standard credit reference agencies for tenant checks instead of technology, which means whilst they are collating the ‘necessary’ information Siedes says they have no real idea on what to do with it.
He continues: “They can’t spot rental fraudsters, and those who don’t have a credit file - which is common amongst internationals, the self-employed, or students - are forced to pay the rent upfront and are, ultimately, financially discriminated against.
“The result is that good but ‘invisible’ consumers are being denied properties, while fraudulent applications make it through the process, resulting in 8.0 per cent defaults and 1.6 per cent court possession claims in the private rented sector. This is a huge cost to landlords, much of which has to be recovered by increasing rents to mitigate further risks.”
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