Predictions for 2020 and a review of 2019

Hello readers, first of all may I wish you all a Merry Christmas and Prosperous New Year!

It’s been a challenging year for property investors and letting agents. We were hit with several difficult pieces of legislation such as the Fitness for Human Habitation act and the Letting Fees Ban, not to mention all the wrangling and indecision over Brexit plus a snap General Election.

So what are my predictions for 2020? I’m summarising my guesses on what might happen in the new year below.

Rents will continue to grow

Rents are reported as having another good year in 2019, having nearly doubled in growth this year. I think this trend is set to continue due to landlords selling up as the mortgage interest rate relief changes begin to take effect.

This is scaring a lot of landlords. They’re starting to be hit by the removal of the mortgage interest relief. A lot of landlords that were making profit are now not making profit or their profits very low. I think these landlords are going to quit, or at least change strategy, and there’s going to be amateur and accidental landlords selling up and that’s going to contribute to the housing crisis. I think rents are going to continue to go up.

S21 could be axed

S21 notices are on the axe block, as there has been a lot of talk about the removal of s21 notices, the no-fault eviction process. If s21 notices are removed, this will hit HMO landlords the hardest as we use s21 notices to evict tenants where proving a s8 ‘fault ground’ could be difficult to prove. E.g. The tenant is engaging in anti-social or undesirable behaviour. In these situations, if s21 is to be removed, we will need to improve the strength of our tenancy agreements and also our evidentiary collection procedures.

Build to Rent

It was interesting, I was talking to someone about Build to Rent. It’s when people build properties from the ground up normally, or they convert existing disused properties into new accommodation. In Germany, they’re very keen on this. Funnily enough in Germany, there’s no housing ladder. The prices of houses just stay the same, because there’s so much being built. Over time, property doesn’t go up in value, generally, because so much has been built in relation to the demand.

I don’t think that the UK is going to go to that extreme because we do have a housing crisis in the UK, because there’s not enough houses being built. I think large investors such as pension funds are going to be getting into Build to Rent and there’s going to be a lot more professionalization of the industry.

EPC Minimum Rating

I think they’re going to bring in the minimum EPC rating as a D in the next couple of years, or even a C possibly has been mooted. We don’t know when, but I’d probably be looking at your properties now and just thinking if you do have any, how you can get it up to a D, so you’re ready in time.

Mandatory electrical certificates

I think all rental properties are going to need electrical certificates. It might be worth doing one now, there is a duty to make sure that your property is safe on the electric side of it, but it’s unclear how we prove it’s safe or not. Having electrical certificates is a good thing, anyway, to do, so I recommend people get prepared for that.

Accredited by a professional body

In Wales, there’s a thing called Rent Smart, and all landlords and agents have to be accredited by a professional body. I believe that’s going to come to the UK and it’s going to come to England quite soon.

I think it’s going to start with agents, I think all agents are going to need to be accredited. It’s, actually anyone who works within that agent, even if they’re not involved in the management of property or the leasing of property. Even if they’re just admin, everyone has to be accredited.

We’re preparing for that now, as an agency, we’re getting everyone onto these courses so that we’re accredited in time. Then I think it’s going to happen to landlords as well, but not straight away. I think it will be agents first, and a couple of years down, the landlords. All landlords are going to have to be accredited, as well. It’s not cheap as well, these courses. It could be a good thing, though. It seems to be over the top.

Summary

Well, that sums up most of the battering that we as property investors and HMO landlords in the South East have been hit by in 2019. I think 2020 could be a great year for property investors as the fundamentals remain sound, as long as you invest in the right areas and in the right properties. I am excited to remain supporting our clients and investors into growing their property businesses into 2020. We will be having regular landlord seminars, legal updates and buy-to-let workshops in the new year so I’m very excited to meet you all there!

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