Chichester Property News: covid-19

Showing posts with label covid-19. Show all posts

Thursday, 7 January 2021

What’s in store for Chichester’s landlords in 2021?

Whilst attention was largely focused on tackling the coronavirus pandemic in 2020, new laws were still implemented that affected the lettings industry. Indeed, the pandemic seems to have provided the excuse to fast-forward into law a few matters that were previously only ‘on the horizon’ and, as such, 2021 looks set to be another busy year for landlords.

Letting agents must have Client Money Protection - confirmed
The deadline for this mandatory requirement has been pushed back twice in the past few years, but a firm date of 1^st April 2021 now exists. From that date, all letting agents must have Client Money Protection, which covers the misappropriation of their landlords’ and tenants’ money. So, check your letting agent has it in place!

Electrical safety checks - confirmed
Since 1^st July 2020, an Electrical Installation Condition Report (EICR) must have been carried out (and a copy provided to the tenants) when starting a new tenancy. From 1^st April 2021, EICR’s will become mandatory for all tenancies.

Changes to stamp duty - confirmed
In July 2020 the stamp duty exemption rate was increased from £125,000 to £500,000. Although landlords are still subject to the 3% additional property surcharge, it has meant big savings have been on offer on property purchases (of upto £15,000). This is set to end on 31^st March, although it’s quite possible that this period will be extended. What is confirmed though is that, from 1^st April, all non-UK residents will be liable for an additional 2% stamp duty surcharge.

Changes to Section 21 - highly likely
Emergency legislation in light of Covid-19 currently means landlords must provide tenants with six months’ notice (compared to the normal two months). This is set to end on the 31^st March, but it’s likely that political pressure will see this period extended. Worryingly for landlords, this ‘temporary’ measure could set the way for the full abandonment of the current ‘no fault’ Section 21 notice system. This has been lobbied for by pro-tenant groups and discussed for years, and would result in all evictions needing to go through the courts (which are already stretched beyond capacity…).

Increase in tax - highly likely

Nothing has been confirmed in this regard, but Rishi Sunak did say that tax increases in 2021 were “inescapable” after the vast sums of money spent dealing with the coronavirus pandemic. One likely candidate is Capital Gains Tax, whereby the rates are increased to match those of the income tax bands (for which many landlords are now in higher brackets, due to the full ramifications of the ‘Section 24’ mortgage interest relief changes being felt).

Changes to Right to Rent - likely

Since February 2016, landlords in England have had to check their prospective tenants’ immigration status to ensure they had the right to live in the UK. Brexit has brought in a new points-based system, but landlords have been told to continue with the existing checks until 30^th June. Guidance for what to do after then is due to be released in the Spring.

No more ‘no pets allowed’ - likely

A bill has been put forward that would allow tenants to have a pet without requiring their landlord’s approval. Whilst I am typically pet-friendly as a letting agent / landlord, some people and types of property simply aren’t suited to having a certain type, or number, of pets. Many landlords also simply do not like being dictated to, as further control about their property gets taken away from them.

Further impact from coronavirus & Brexit - who knows!!

Whilst no one knows what the future holds, we can at least prepare ourselves for what might happen. Those who are able to adapt to the frequently changing world of lettings should be well-placed to cater for the growing number of tenants, at a time when the number of landlords and available properties is decreasing.

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Friday, 6 November 2020

How will lockdown 2.0 affect the housing market?

England has entered another lockdown as a result of the Covid-19 pandemic. The restrictions may be less severe than back in March when the first national lockdown was announced, but nevertheless it will have many serious knock-on effects for a large number of people, which in turn is sure to impact the housing market.

During the first lockdown, some estate & letting agents were known to have furloughed all their staff, unplugged their phones and become completely uncontactable! Most agents however (myself included) were even busier than normal, creating solutions so as to best serve their customers and continue to provide a service.

Ultimately people still wanted to move home - particularly those moving for critical work positions or who would be made homeless, having already sold or given notice on their current property! I was still able to accommodate such people during lockdown as the majority of the lettings process is completed online and via the telephone anyway. My normal move-in process however, where I guide the tenants around their new home and show them how things work, was replaced by me videoing myself doing this instead.

The use of video has of course been one of the few winners this year. In the property world, this has meant the ability to do virtual viewings as well as pre-recorded video tours. These are commonplace amongst agents now (with varying levels of quality and success) and have become a great way for people to minimise their physical contact and travel, whilst being able to provide a good overview of any particular property.

The housing market is one of the industries allowed to remain open during this second lockdown though, so there won’t be such a dependence on these methods this time round. Nevertheless, for everyone’s safety, convenience and to help fight the spread, it seems foolish to simply abandon these technologies, which I believe are now likely to become a permanent pre-cursor to ‘in-person’ viewings.

Similarly, I shan’t be undertaking my standard tenancy check-ups during this second lockdown, even though the less-restrictive guidance suggests I could (unlike during the first lockdown). They’ll either be postponed until lockdown ends or conducted via telephone, which worked well previously, especially for those tenants I’ve seen several times and note their home to always be beautifully looked after.

Maintenance works can continue as normal this time around though, whereas the first lockdown restricted such call-outs to emergencies only. Simply carrying on because it’s allowed in the rules though, as opposed to actively reducing people’s travel and contact during the second lockdown, becomes a fine balancing act between serving customers, maintaining tradespeople’s livelihoods and keeping people safe.

There is likely to be an overall slowdown to the economy regardless of whether that’s through enforcement or sentiment though. Indeed, one thing that is likely to repeat itself during this lockdown is my need as a letting agent to acquaint myself with the variety of (ever-changing) financial support schemes on offer. Much of my time in March and April was spent helping my tenants navigate the choppy waters and, ultimately, to help them pay their rent so as to support my landlords through the difficulties too. The government has again extended the furlough scheme (of which 1.7 million people were a part of in October), as well as the self-employed income support scheme. In addition to these emergency schemes, there were 2.4 million people who sought Universal Credit for the first time in the two months after the first lockdown started!

The period between the two lockdowns was noticeably busy for the housing market. Predictions of property prices dropping were quickly quashed as the market was propelled by a variety of reasons for people wanting to move, along with a further reduction in interest rates and the stamp duty savings on offer for purchases completed by 31st March 2021. This has led to property prices across the UK standing 2.5% higher than a year ago.

From a rental point of view supply has been low, yet demand has been strong. The majority of properties I brought to market in the past few months were ‘let agreed’ within 48 hours, with houses especially quick to get snapped up. Some of this demand has come from tenants whose landlords have decided to sell, which is increasingly the case due to rising taxation and legislation. Plus, some landlords have been scared off or had their fingers burnt during the pandemic, which afforded many more protections to tenants, such as extended notice periods and a ban on evictions.

The sales market may be facing a perfect storm next Spring though, as this supply/demand imbalance is likely to reverse. Many more landlords will finally get their properties back from non-paying tenants after the prolonged notice period and court backlog, whereby they will simply cut their losses and exit the market. This could coincide with both the stamp duty relief and Help to Buy schemes ending, putting a sudden stop to many transactions. If this occurs at the same time as the furlough and self-employment support schemes end, unemployment will surely rise, meaning disposable incomes and affordability will decrease.

Of course, the politicians will be aware of this, which is why there’s already suggestions that an extension or further tinkering to some of these schemes is probable for the medium-term. As the days get shorter and the focus turns to Christmas, the property market typically slows down during the best of years. Lockdown 2.0 is likely to add fuel to that and without further government support to the economy there doesn’t seem too many reasons as to why the property market will start 2021 any stronger than it is likely to finish the annus horribilis that has been 2020.