Although Chancellor of the Exchequer Rishi Sunak’s Spring Statement did not include many announcements regarding housing, it did provide a good idea of the direction of the UK’s economy, including tax rises and tax cuts. From this, we can extrapolate what’s in store for the country’s private rental sector.
What did Sunak announce?
A 19% cut to basic income tax and a 5p per litre reduction in fuel duty is good news for homeowners, as is the announcement that those with energy-saving materials like solar panels, heat pumps or insulation will pay zero VAT for the next five years. However, these savings are undercut somewhat by a National Insurance increase from £9,600 to £12,570. Combined with rising fuel bills as a result of the Ukraine conflict, many—both occupiers and landlords—will be looking to tighten their belts.
With a forecast that the UK economy will grow by 3.8 per cent this year (substantially down from a previous expectation of 6.0 per cent), and projections for growth of just 1.8 per cent in 2023, and then 2.1 per cent, 1.8 per cent and 1.7 per cent in the following three years, we can assume that the purchase of property will continue to be out of reach for many. This will place additional strain on the private rental sector, especially in major cities like London, where demand continues to outstrip supply.
What does this mean for agents?
These economic pressures, combined with pending changes to regulation such as EPC ratings that could require substantial investment, may cause some landlords to choose to exit the market entirely. With fewer landlords in the market, we can expect the property portfolios of those who stay to expand. The UK’s shortage of private rented property provides a prime opportunity for landlords who are able to purchase and handle a large portfolio.
Furthermore, thanks to the increased regulation the Government will explore in its forthcoming rental reform white paper, these landlords will want to work with agents that can guarantee high levels of service, continual compliance and fast response to repairs and maintenance issues. To stay competitive, agents will need to ensure they can meet these expectations by delivering consistent, dependable results, keeping properties full and dealing with issues as soon as they arise before they can escalate and cause further problems.
The need for PropTech
With larger portfolios to manage than before, agents should embrace any opportunity to work more efficiently and save time. Proptech solutions for key functions such as repairs and maintenance management can greatly reduce the time taken on manual tasks using features such as works order scheduling, reminders and automation. This allows you to focus on those duties that can’t be facilitated using technology, such as finding tenants and building relationships and trust with both landlord and occupier. This will allow you to deliver dependable results and exceed customer expectations.
*James Dilgul is the head of marketing at Fixflo, the repairs and maintenance management software provider