David Alexander is joint CEO of apropos
04 February 2021 11334 Views
For most letting agents the last year has been a challenging one which has focused attention on dealing with the immediate, the here and now, in a bid to get through these difficult months. There has been a need to be able to quickly respond to the shifting regulations and rules which the pandemic has created and to explain these to landlords and property investors. Equally there have been serious financial issues to address for many agents and for their clients. For some this has been a period of simply trying to survive but for others it has been a time for growth. The stamp duty holiday has seen many landlords and investors expanding their portfolios providing the potential for many more properties for agents to manage.
The last few weeks and the successful rollout of the coronavirus vaccine has told us that the pandemic is going to subside, in a matter of months rather than years and that the world will start to return to normal.
What that means for agents who have been focused on the here and now is that they need to start looking to the medium to long term and plan accordingly. The market will not return to the way it was before although it has remained remarkably bullish in the face of such an extraordinary downturn. Agents must now help their landlord and property investor clients through the next phase in the post-pandemic world.
The government seems disinclined to delay the introduction of its proposed legislative and regulatory changes so agents must take control of this situation and ensure they are fully informed and able to help their clients through the coming developments.
Although some complain about these changes the truth is that they are coming and that tenants will be given more security of tenure, section 21 will be removed, and notice periods may be reduced. You may not think these are good ideas, but they will be implemented, and it is incumbent on agents to explain what the impact will be for landlords and investors businesses and help them adapt and comply with the new regulations. This is a time when agents can really show their worth to their landlords and highlight the need for a professional approach to smooth the path of regulatory change and ensure the property owners are fully compliant and not liable to fines or penalties.
It is true that more regulation can mean more cost but can also mean greater revenues. It is not always a negative and tenants are becoming pickier and, if they have options, they will vote with their feet. It is, therefore, incumbent on agents to ensure their landlords and investors keep ahead with the changes that are already coming through.
An example is the much heralded and greatly anticipated Electrical Safety Standards regulations which become applicable to existing tenancies from 1st April. The Government has given no indication that this date will be put back due to the pandemic. Having an Electrical Inspection Condition Report (EICR) is mandatory for all properties let after June 2020. There may be exceptions if access is difficult but, in general, this is a regulation that must be adhered to and agents must ensure they have explained this to their landlords and investors in good time to ensure they are compliant.
This should also be a time for agents to encourage landlords and investors to review all aspects of their financing. Lenders to the private rented sector have been reviewing the criteria for lending and agents should encourage all owners to look at their borrowings, their terms, and any conditions to determine whether they are getting the best deal. Any good letting agent should be able to assist with this aspect of the market but it is essential to encourage all landlords to regularly review their financing to ensure they are getting best value.
Agents should encourage their landlords and investors to examine the structure of their business and how it operates. With a potential substantial increase in capital gains tax (CGT) predicted there are tax efficient ways to structure a property business to limit liability and maximise returns. A good agent will know about this and be able to provide advice and information.
Above all else this is a time when agents should be looking at where the market is going. Everyone involved in the private rented sector should be looking at where they, and the market as a whole, will be in the next five years. Despite the occasional messages of doom and gloom about the private rented sector the truth is that it is here to stay, it is the second largest provider of homes in the UK and is an essential part of the property market.
A good agent needs to plan for their future in the private rented sector to ensure their business is financially viable, with current knowledge on compliance on legislation and regulations, operate an effective online system to keep up to date records, communicate effectively with landlords and tenants, and monitor payments, repairs, and relevant data.
The lettings business has become more complex, more regulated, and more competitive but it remains a profitable market. I have no doubt that despite all of the changes that have come, and will be coming, the private rented sector remains an important and profitable part of the UK’s housing sector now and in the future and agents need to lead the way in showing landlords and investors that it will not only survive but thrive in the next few years.
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