How is the Rental Sector Likely to Change in 2021?

The private rental sector has been heavily impacted by Covid-19, but even more changes are afoot in 2021.  The types of properties in-demand by tenants, the best locations for landlords, and more, have all been affected by the pandemic. Read on to see how the next 12 months could impact landlords. 

Demand for Property Remains High

The only reason many landlords are still in the game is that demand for property remains high due to strong market demand. This applies equally to both the rental market and the overall housing market. Landlords can still buy properties and know there are plenty of tenants looking to rent them. With strong demand in the housing market, capital growth is good. 

Strong demand ensures investing in rental property offers a much better return than most other investment vehicles. This applies even to landlords who own a heavily leveraged portfolio, thanks to low interest rates. As such, business-minded landlords are unlikely to desert the sector yet, even though conditions are challenging right now.

Tenant Requirements are Changing

The rise in the number of people working from home has affected the types of homes people look for in the private rental sector. Whereas city centre flats were once very popular with working professionals, because they can work from anywhere, rural locations are becoming increasingly in-demand. Lockdown has forced children to stay at home for long stretches, and more families now want a home with a garden. Many renters want a property with space for a home office.

This means landlords with portfolios of city centre flats may struggle to find tenants whereas landlords with family homes in the suburbs may find it easier. 

Regulatory Changes

There are regulatory changes on the horizon that might cause more than a few landlords to question staying in the sector. The government has shelled out billions to fight the coronavirus pandemic and is now heavily in debt. Tax rises are almost inevitable. It looks likely that capital gains tax may be increased after a recommendation from the Office of Tax Simplification that CGT should be increased. If the chancellor does this, landlords may sell up to avoid paying a much larger CGT bill. 

There are also proposals in the pipeline to extend regulations applicable to smoke alarms and carbon monoxide detectors.

And finally, the Debt Respite Scheme (Breathing Space) guidance is due to come into effect on May 4, but not all landlords will be aware of its significance. The proposed regulations state that creditors (including landlords) can’t ask a debtor (e.g. a tenant) to settle their debt for a predetermined period. 

The point attracting interest in the private rental sector states: “The mental health crisis breathing space… lasts as long as the client’s mental health crisis treatment, plus 30 days.”

If you’re a landlord, it is a good idea to stay abreast of what lies ahead, in case it hits you hard in the pocket. Rest assured that we will keep you posted on the latest changes, here on this blog. Follow us on Twitter and Facebook for the latest landlord news.