2020 was the year of the unprecedented. Covid-19’s impact on the property market simply couldn’t have been prepared for and, despite the damage caused, property professionals have poured their efforts into recovery. What 2021 represents, therefore, is a crucial opportunity to reflect on the lessons learned, and ensure the year becomes one that is led by foresight. With the country well into the swing of a third national lockdown, it’s now more important than ever that landlords, letting agents, and tenants alike know how to prepare for any further impact. Should they fail to, we could face many more years of diminishing growth.
Legislative changes we cannot ignore
Firstly, let’s reflect on recent and upcoming legislative changes. The government’s stay on evictions – which was initially due to end on the 11th January – has now been extended, protecting tenants amidst this period of continued uncertainty. As it stands, the ban will remain in place until the 21st February, which means that in England no tenants are expected to be evicted until 8th March at the earliest. Going a step further, Wales and Scotland have extended the ban until 31st March.
It’s important to note that the ban is not applicable in cases that are “egregious”, including instances of anti-social behaviour, extreme rent arrears, and the death of a tenant. However, despite this clause – which will offer relief to some landlords – landlords and letting agents must continue to invest time into mitigating the impact the ban will have on their businesses. From mediation strategies and insurance structures to diversifying portfolios; rising arrears and court proceedings need to be built into all 2021 strategies.
To aid with this, the government has announced a new “mediation pilot”, which will be rolled out across England and Wales next month. The pilot will be free to use and aims to help landlords and tenants reach an agreement without the need for stressful and costly legal proceedings. No matter the circumstances landlords and letting agents find themselves in over the coming months, they shouldn’t need to look any further than the possibility of looming student rent strikes to appreciate the need for swift and effective mediation.
Other legislative changes include the Dogs and Domestic Animals (Accommodation and Protection) Bill, which gives tenants the right to live with their pet. The bill is expected to gain Royal Assent this year with cross-party support, but it’s worth noting that any prospective pet-owning tenants will first need to pass a test of responsible ownership before moving into a property. This includes obtaining a certificate from a vet which confirms that the animal is healthy, well-behaved, in the care of a responsible owner, and if appropriate, is vaccinated and microchipped.
In addition, the Building Safety Bill – which is expected to become law this year – will also introduce new and enhanced regulations for building safety and construction in England. The bill will provide a complete regulatory overhaul of building fire safety and will require landlords, developers, and construction workers alike to drastically rethink the ways buildings are constructed and occupied going forward. The regime will be overseen by the Health and Safety Executive (HSE) and will apply initially to all multi-occupied residential buildings over 18 metres, or six storeys, high in England. The regulations will then apply to all existing buildings in England on a phased basis.
Whilst the bill remains in the pipeline, the government is making a considerable effort to strengthen safety rules in 2021 and so landlords should familiarise themselves with their new responsibilities at the earliest opportunity, or risk facing potentially serious consequences.
Likewise, the deadline for ensuring that rented homes comply with the Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 is fast approaching. By 1st April, all rented homes should comply with the guidance that was first introduced by the government in June last year. However, with a number of trade associations asking for an extension on the deadline date – partly due to the difficulties in sourcing tradesmen during lockdown periods – landlords may have some more time to get organised.
Finding tailored insurance
The government’s furlough scheme currently expected to end on the 31st March and, despite the speculation surrounding its possible second extension, property professionals should prepare for the impact of its wind down. If tenants are made redundant at the end of March, they could soon end up in rental arrears.
For this reason, it would be wise to not only explore Rent Protection Insurance but take the time to find a provider that works best for you and your tenants’ individual circumstances. If a provider were to change its policy last minute, the outcome could be stressful and costly, so it’s imperative that all necessary requirements are communicated at length before any decisions are made.
What should we be keeping in mind?
Beyond the legislative changes that have been officially announced, there are a number of areas to keep under close watch throughout 2021. With rumours rumbling about whether the property market can remain open during this lockdown, the possibility of another total closure must be prepared for.
Business owners must therefore think about how they could recoup those potential losses once the market opens up again; whether that’s streamlining services through technology or introducing new revenue streams into their company offering. Investing in technology could prove instrumental in future-proofing your business and helping you retain an efficient, cost-effective business model.
Talks of a ‘PropTech 3.0’ boom have long been on the cards, but with more and more property professionals benefitting from artificial intelligence (AI), open banking and virtual reality during 2020, the coming months could see these contingency measures become permanent fixtures.
Overall, it looks as though the sector will be required to confront a range of significant changes in 2021, and despite the uncertainty that continues to surround the market, moves being made to get ahead of the curve now could prove instrumental in cushioning companies and portfolios against any lasting damage.