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Posted by Ellie Dreisenstock on August 16, 2021
The first half of 2021 was a busy, eventful period for the lettings industry, with the ending of the eviction ban and the first stage of the stamp duty holiday, as well as changes to Right to Rent and new regulations to ensure that the electrical installations in all rented properties are safe.
But what is in store for the second half of 2021? Below, we take a closer look at what letting agents need to be aware of for the rest of the year.
During the pandemic, landlords and lettings agents have been able to carry out the Government’s controversial Right to Rent checks via video call rather than face-to-face. This was most recently extended until the end of August, originally planned to end on June 20. That deadline had already been extended several times because of the ever-changing situation with Covid.
The temporary changes to Right to Rent checks, adapted as a result of the pandemic, are designed to make it easier for letting agents and landlords to conduct them.
Since the pandemic started in March last year, the Home Office has not required agents to see original documents – instead, it currently allows checks to be undertaken via video calls. This means prospective tenants can submit scanned documents, rather than originals, to show they have a right to rent or work in the UK.
You can find out more about the current status of Right to Rent checks by clicking here.
The first stage of the holiday (on homes worth up to £500,000) ended on June 30, making way for the phasing out period where the holiday applies to all homes worth up to £250,000. This is set to end entirely on September 30. From October 1, the nil rate threshold will return to the pre-Covid levels of £125,000.
Landlords have taken advantage of some beneficial savings during the holiday – up to £15,000 in some cases. Still, the end of the stamp duty holiday has been baked in for some time already. The dreaded cliff-edge scenario discussed earlier this year before the holiday was extended is unlikely to materialise come the end of September.
There will likely be a second stamp duty rush before the new September deadline and then something of a fall away in the market. Still, most commentators agree that this won’t be drastic as there are many other things incentivising buyers, sellers, investors and landlords at present.
The furlough scheme, officially known as the Coronavirus Job Retention Scheme, has played a massive role in propping up the economy – by protecting millions of jobs since the start of the pandemic in the UK in March 2020. It’s has been widely praised as one thing the Government has got very right since Covid hit our shores.
However, the scheme has also come at an enormous cost to the Treasury – standing at approximately £66 billion. With this in mind and the easing of restrictions reopening previously closed parts of the economy, the scheme is due to end in the autumn, having been in play for nearly 18 months.
It’s undoubtedly the case that many tenants will have been reliant upon, or still are, furlough to cover the cost of their wages and in helping them to pay their rent. When the scheme ends, many could face job losses if their employer doesn’t believe their job is still viable. A spike in unemployment could cause issues regarding rental payments and a possible rise in rental arrears emanating from this.
On a similar note, some landlords may have depended on the furlough scheme or the self-employment income support scheme and could also be hit hard when this support is taken away. This could cause financial issues for landlords, forcing them to seek an exit from the sector, which would cause problems for the PRS at large, including a lack of property availability.
The furlough scheme has already been given a stay of execution four times during the pandemic, with nothing to suggest this won’t happen again if some restrictions are reimposed. The Prime Minister and the Chancellor have both said they don’t wish to extend the scheme again because of the sheer amount it costs, but Michael Gove – Chancellor of the Duchy of Lancaster – has hinted that it could still be extended.
Agents need to prepare for the end of furlough and a potential increase in rental arrears and tenants having financial difficulties. A rent guarantee is a great way to ensure that you and your landlords still receive the rental payments, even when tenants go into arrears. Our Rent Guarantee covers up to 15 months’ rent, as well as up to £100,000 in legal fees, meaning that if tenants fail to make payments or go into arrears, you won’t lose out, and your landlords will be protected. To find out more about our rent guarantee, click here.
When the eviction ban ended on May 31 2021, having been in place (in one form or another) for much of the previous 14 months, the notice periods landlords must provide to tenants if they want to evict dropped from six months to four months. It is expected to return to pre-Covid levels – typically two months’ notice – from October 1.
This will rely on the easing of restrictions, which were largely stripped away entirely from July 19, and no further lockdowns or restrictions would be introduced if a fourth wave were to hit in the winter.
The Government promised to release a white paper in the autumn, laying out its long-mooted plans to reform the PRS. There is no fixed date for when the White Paper will be published or what it will include, but it is anticipated to inform what are expected to be the most sweeping changes in the PRS for a generation.
We already know what is likely to come because of what has been suggested for the much-talked-about Renters’ Reform Bill, including abolishing Section 21 eviction notices and introducing lifetime deposits for tenants.
The reforms have been in the pipeline for over 18 months, with their first mention in the Conservative Party’s manifesto for the December 2019 general election as part of a ‘better deal for renters’. The plans, originally due to be brought before Parliament in 2020, were inevitably put on hold by the pandemic and repeatedly pushed further back.
But now the Government has committed to a White Paper this autumn, with legislation anticipated to make its way to Parliament before the year is out or early 2022. The planned reforms enjoy broad public and cross-party support, but any legislation will likely face opposition and obstacles from the lettings industry, with agents and landlords both unhappy about the prospect of Section 21 notices being scrapped in favour of beefed-up but less effective Section 8 notices.
It is doubtful anything concrete will change this year regarding rental reform, but we should at least have a more unambiguous indication of the Government’s plans.
These are just some things that letting agents could be affected by before the year is out and are subject to change given the current fast-moving situation. But it’s certainly a good idea for letting agents make sure they are prepared for these changes and keep up to date with the latest news to ensure they’re ready for whatever it is that the private rental sector faces this year.