Social letting agencies By David Gargaro
Prior to the pandemic, a shortage of affordable housing was a significant and growing problem, particularly in Canada’s largest cities. After the pandemic is over, that situation is likely to grow again. There are many different programs and agencies across Canada that are helping people to find safe, affordable housing. Every option has its advantages and disadvantages, as well as varying levels of success in helping to put people into affordable homes, as well as help them stay in their homes. One model that has had some success in other countries is the social letting agency. What is a social letting agency? A social letting agency is part affordable housing provider and part property manager. In the UK, social letting agencies usually set their rents at the 30th percentile of rent in each Broad Market Rental Area, which is similar to a Census Metropolitan Area (CMA) in Canada. Funding for social letting agencies usually comes from municipalities, management fees, and charitable contributions. The concept of the social letting agency dates back to 2013 when Susan Acktemel, a social innovator, launched Homes for Good in Glasgow, Scotland, which includes some of the poorest people and areas in the UK. Social letting agencies spread across Scotland, England, Wales, Northern Ireland, and the Republic of Ireland, leading to the establishment of 99 such agencies by 2018.
How do social letting agencies work? From one point of view, social letting agencies function much like property managers. They help rental property owners to: • Find appropriate tenants for their available units • Check the tenants’ references • Create and execute the tenancy agreement • Receive the security deposit • Communicate with tenants to handle repairs and do compliance checks
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• Conduct unit inspections • Manage check-outs and deposits Social letting agencies also have experience with tenancy support and maintaining affordable tenancies. They know how to get rent support for tenants and, if need be, maximize their income from social assistance or job-training programs. This enables them to help rental property owners support affordable housing initiatives, with little risk to themselves. The people who work in social letting agencies have a unique blend of experience in the for-profit rental housing sector and in working with people who need financial support to find and maintain housing. Social letting agencies provide rental property owners with a number of benefits. They will guarantee a large percentage of regular rent for rental property owners, even when the unit is vacant. Rental property owners can lease directly to the agency at a somewhat reduced rent (in what would be called a head lease or master lease), which makes the agency responsible for fulfilling the tenant’s obligations to repair damage they caused. The rental property becomes a source of passive income for the rental property owner, providing near-market rents in the medium term for relatively affordable rental units. Signing a long-term lease with the agency provides the rental property owner with the financial security of having a unit rented 12 months of the year.
Social letting agencies also allow the rental property owner to make a positive social impact on their neighbours and their community. The rental property owner can provide tenants with long-term, affordable housing so that they can put down roots and create a stable foundation for their lives.
Report on social letting agencies Founded in 1904, the Joseph Roundtree Foundation (JRF) is a charity that conducts and funds research aimed at solving poverty in the UK. JRF’s stated aim is to “inspire action and change that will create a prosperous UK without poverty.” In June 2018, JRF conducted a review of the social letting agencies concept. The review determined that social letting agencies offered a number of benefits to both rental property owners and tenants due to their ability to: • Draw on different funding sources to support agency activities • Help local governments and agencies to support people who needed affordable housing • Effectively manage vacancies for rental property owners • Acquire their own property portfolios • Cross-subsidize support for low-income or vulnerable tenants
The review identified a number of challenges to the effectiveness of social letting agencies: • The difference between local housing allowance rates and market rents makes it difficult to attract rental property owners • The private rental market makes it difficult to scale into neighbouring areas • Social letting agencies require a unique mix of skills to set up and manage
Conclusion Social letting agencies can help provide more housing options for low-income and vulnerable tenants, and can provide support for rental property owners who need help with renting empty units. While social letting agencies cannot solve the affordable housing problem on their own, they are a useful means of reducing homelessness and helping certain vulnerable people. Governments and government-funded agencies should consider this model as one option for addressing the need for affordable housing, while creating a win-win scenario for all parties involved. Note: For more information on social letting agencies, refer to the handbook entitled “Local lettings agencies: a good practice guide,” which can be found at https://www.crisis.org. uk/media/236936/local_lettings_agency_guide_ scotland.pdf.
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