As we approach the end of the year, there is no doubt that it has been a turbulent 12 months for all involved in the lettings sector.
After a bright start to 2020, the COVID-19 pandemic has dominated industry agendas since March. Agencies have also had to contend with a seven-week market shutdown in the spring, new working practices enforced by the various lockdowns, as well as increased rent arrears and frequently changing eviction rules as a result of tenant job losses.
All of this moreover happened against a backdrop of further regulation of the private rented sector (PRS), heaping additional compliance obligations and administrative duties on agents.
Despite all of this, the market has performed impressively during the second half of the year and there is hope that 2021 will be more positive for everyone due to the nationwide rollout of a COVID-19 vaccine.
But with tight restrictions still in place for the foreseeable future, there will still be challenges ahead. Below is an overview of some of the key issues letting agencies need to look out for next year.
Further legislation changes are on the horizon
Letting agencies have had to contend with various new pieces of legislation in recent years and it looks like 2021 will be no different.
In February, the Dogs and Domestic Animals (Accommodation and Protection) Bill - which aims to stop landlords from banning pets in rental properties - is due for a Second Reading in the House of Commons.
From April, the final deadline for letting agencies to comply with Client Money Protection rules will pass. During the same month, a 2% stamp duty surcharge on the purchase of UK properties by overseas investors will be levied and electrical safety rules, which were introduced earlier this year, will be extended to cover all tenancies.
Landlords will need support in meeting these new obligations to ensure they don't leave themselves open to significant financial penalties for non-compliance.
Dates still to be set for significant PRS regulation
Alongside those measures, now with confirmed dates, there are several high-profile regulation changes which currently have no set date but could still take place in 2021.
The Renters' Reform Bill - which includes proposals to remove Section 21 from the Housing Act 1988 - has been delayed for an indefinite period. However, due to the Bill's strong cross-party support, it would not be a surprise for it to return next year.
Just a few weeks ago, the Office for Tax Simplification (OTS) published a report on Capital Gains Tax (CGT). The report, commissioned by the government, calls for CGT rates to be doubled and exemptions to be cut in order to raise an additional £14 billion for the Treasury – a move that could see landlords face much bigger tax bills when they sell properties.
The government is now considering the OTS report 'in due course'. If it decides to action the proposals, an announcement could come as early as the Budget in March.
With the Brexit transition period coming to an end on December 31, there is still uncertainty as to how the Right to Rent scheme could be affected next year. What's more, the Regulation of Property Agents (RoPA) proposals - which include mandatory qualifications and a new industry Code of Practice - are yet to be enacted, so this is another area of regulation which could progress during 2021.
Due to the high number of measures and policies in the pipeline, it will be crucial that letting agencies keep landlords up to date and explain clearly what is required of them and when.
Navigating a post-pandemic rental sector
Letting agencies have provided invaluable support to landlords in 2020 and this will need to continue next year as challenging conditions remain.
The agencies that stand out to landlords in 2021 will be those that provide an all-in-one service and communicate effectively with all parties involved in the rental transaction.
With plenty more regulation on the horizon, landlords will also be looking for agencies that have a strong track record on compliance and transparency.
Meanwhile, considering the long-term impact of COVID-19, agencies will thrive in 2021 if they provide a streamlined, technology-led service that facilitates remote work.
Although there is now light at the end of the tunnel thanks to the release of COVID-19 vaccines, 2021 could be an equally challenging year and the best letting agencies will be needed once more to help the PRS operate smoothly.
*Neil Cobbold is Chief Sales Officer at PayProp