January 5, 2021
What should landlords look out for in 2021?
2020 has been a year like no other for landlords, with Covid-19 causing all manner of complications in the private rented sector. It also brought some opportunities.
For much of the year, there has been an effective ban on evictions because of Covid. That’s despite the plans to scrap Section 21. This section would have made evicting harder. It has been put on hold for an indefinite period.
Meanwhile, new legislation has made the rental market more regulated than ever. And the need for compliance much greater as a result.
At the same time, demand for rental properties soared after the first lockdown, even throughout Lockdown 2.0. And landlords have been able to take advantage of the stamp duty holiday and record low interest rates.
Which means, despite the challenges posed by Covid, it’s still been a good time to be a landlord. The vast majority of tenants were still paying their rent on time. What’s more, recent research found that most renters like renting their home and get on with their landlord. This is going against the grain of what we usually hear in the press.
Further challenges certainly lay ahead, though. While it’s a fool’s game to try and predict anything at the moment, there are a few things we know will be coming into play. And a few things which might.
Here, we give a quick rundown of what landlords need to look out for in 2021.
The scrapping of Section 21
As mentioned above, the government’s plans to scrap Section 21 have been delayed because of coronavirus.
Its headline policy was the scrapping of Section 21 from the Housing Act 1988 as quickly as possible. However, as we enter 2020 with Covid-19 still a major threat it still hasn’t been presented to Parliament.
At this stage, the timescale of the Bill remains very uncertain. It isn’t likely to happen before the middle of this year.
The scrapping of Section 21 is coming at some point. But it remains a matter of when.
A different eviction system
Even without the scrapping of Section 21, landlords and agents have still faced many challenges when it comes to evictions.
During Lockdown 2.0, the government effectively banned evictions from taking place by instructing bailiffs not to enforce any repossessions during this time.
In theory, landlords can start evictions proceedings from January 11. But evicting tenants certainly won’t be straightforward for some time yet, except in the most severe cases.
A possible Brexit impact
Brexit is likely to have an impact on the number of EU citizens – who predominantly rent – making their home in the UK.
London, in particular, has a high concentration of EU nationals. It could be more affected than most by a drop in rental demand. Brexit, along with coronavirus, is also expected to have a major economic impact. This could affect the ability of tenants to pay their rent.
None of this is clear-cut, though. In London, rental demand is likely to remain high regardless of Brexit. It is something for landlords to be aware of, though. There will also be considerations surrounding Right to Rent post-Brexit.
Stamp duty changes
On March 31 2021, the stamp duty holiday will expire and the previous rules will apply again.
Purchasers have been warned to act well in advance of the deadline, as there is every chance you’ll miss out if you don’t get in early enough.
On the very same day, the additional stamp duty surcharge on all non-UK residents purchasing property in the country will be introduced. This will be on top of the 3% stamp duty surcharge and the normal rates of stamp duty owed. You can find out more here.
The need for electrical compliance
On June 1 last year, new regulations requiring landlords to have the electrical installations in their properties inspected and tested by a person who is qualified and competent, at least every five years, came into play. Landlords must provide a copy of the electrical safety report to their tenants, and to their local authority if requested.
The regulations initially applied to new tenancies – i.e. ones that were granted after June 1 2020 – but from April 1 2021 they will apply to existing tenancies as well.
Local authorities could impose a financial penalty of up to £30,000 on landlords who are in breach of their duties. You can find out more here.
An increased chance of lets with pets
A major consequence of lockdown was people getting a pet, or considering the prospect of one. Alongside this, there has been a concerted move to make it easier for renters to have pets in their home without a landlord’s express permission to do this.
On February 5 2021, the second reading of a proposed new law which would allow tenants to have a pet without their landlord’s approval will take place in the House of Commons. The proposed new law – known as The Dogs and Domestic Animals Bill – has been put forward by Conservative MP Andrew Rosindell. It has wide public and cross-party support, and is being supported by a number of animal welfare charities such as the RSPCA.
If the law passes, it means that tenants would have an automatic right to take a pet into any rented accommodation, regardless of what their landlord thinks. As long as they can prove they are responsible owners.
As well as the above, there could be further changes to Right to Rent, sweeping changes to planning regulations, potential changes to Capital Gains Tax and a deadline for landlords to make tax digital.
All in all, another very busy year.
With so much to factor in, it’s vital that you work with an experienced, well-respected letting agent.
If you have any questions about letting a home in the London area, Atkinson McLeod is here to help.
To find out more about our services and current operations, please get in touch with our expert team today. You can find out how much your home could be worth on the current market by requesting a free and instant online valuation here.