July is shaping up to be an important month, not just for our industry but for the whole country.
In our first story of the July Rent Report, we talk about COVID-19 rules. What will agents legally be able to do from Monday, and what are they likely to do in practice?
In our second story, we look at the potential impact of new funds announced by the Scottish and Welsh governments to help tenants pay off COVID-related rent arrears.
A new HomeLet survey puts the average UK rent at £1,000 for the first time ever. We look at the factors behind record rents – and ask if they will keep rising.
We return to Wales for our fourth story as the government cracks down on second home ownership. What does it mean for private landlords?
In our fifth story, a recent wave of buyouts and integrations is changing the shape of the PropTech sector. Will a few companies rule the roost, or will agents still have plenty of choices?
Finally, Agents Giving is getting ready to name the country’s most charitable estate and letting agents in the Fundraising Champion Awards. We share how you can enter – and how you can get a head start on next year’s competition.
The government has confirmed that England will enter the final stage of easing COVID-19 restrictions on 19 July.
From next Monday, face masks will no longer be legally required inside agency branches – although the government has said that people should continue to wear them in crowded indoor settings. Social distancing requirements are also being dropped, making open house viewings possible again.
One very impactful change will not occur until 16 August. From this date, double-vaccinated people will no longer have to self-isolate after coming into contact with someone with COVID-19 – a requirement that has scuppered home moves in recent months and left both landlords and tenants facing unexpected costs.
Agents outside England will also have to wait a little longer. The Scottish government currently plans to drop remaining legal restrictions, including indoor social distancing, on 9 August. In Northern Ireland, masks and social distancing will be reviewed on 12 August. As yet, Wales has no set date for ending all restrictions, but will remove most from 7 August.
But the legal requirements only tell half the story. The government has urged people to remain cautious, and both agents and their clients may wish to keep some measures in place. An Ipsos MORI poll earlier this month found that 40% of Britons wanted people to wear masks in shops permanently. Propertymark’s updated guidance suggests that agents should keep their masks on for now.
Some of the adaptations agents made during the pandemic may also continue. While the government has now dropped its advice to work from home, many have discovered that having the right technology makes remote or hybrid working not only viable, but productive. Innovations that were accelerated by the pandemic, like the rise of virtual property tours, are also likely to stick around.
The Scottish and Welsh governments have each pledged to help pay off COVID-related rent arrears and sustain private tenancies.
In Wales, tenants with more than eight weeks of arrears built up between 1 March 2020 and 30 June 2021 will be able to apply for a Tenancy Hardship Grant from the middle of this month. Details are still being finalised, but private sector tenants will be eligible to receive the full value of their arrears from this period – so long as they have not received housing benefits or deliberately withheld rent that they could have afforded. The Welsh government has earmarked £10 million for the fund.
Meanwhile, the Scottish government has announced a £10 million support fund of its own for tenants in arrears. Politicians plan to work out the details with stakeholders over the next few weeks with a view to launching it later in the year.
The schemes are intended to prevent tenants from being made homeless, but may not be enough to reimburse landlords for the losses they have suffered over the last year. The most recent PayProp Special Report estimated a total arrears bill in Wales of over £35 million at the end of Q1 2021, with the figure in Scotland reaching almost £37 million.
In-depth application processes, in which tenants have to demonstrate that their finances were affected by COVID-19, could also put off some renters. Wales’s Tenancy Saver Loan scheme, which is being replaced by the Tenancy Hardship Grant, received just 41 successful applications in seven months.
In effect, the funds may both be inadequate and not fully utilised. Even so, a successful scheme could go some way towards helping to repair landlords’, agents’ and tenants’ finances after a difficult year. Private rented sector stakeholders of all kinds will hope that it does.
June stats from insurance agency HomeLet revealed that average rents across the UK reached £1,007 per calendar month – a new record, and the first time they have reached four figures.
The report uncovered year-on-year rental growth of 5.9% nationwide, with the biggest price rises occurring in the South West of England.
Not all studies have found quite such a dramatic increase – the Deposit Protection Service’s latest figures showed an average rent of £804 in Q2, up 2.81% year on year. Nonetheless, a clear picture has emerged of good rental growth across most of the country, which will be welcomed by agents as the sales market cools off. Even rents in Inner London, which fell significantly during the pandemic, are starting to recover.
Rising rents are partly due to increased demand. ARLA’s latest report found an all-time record number of tenants registered with letting agencies in May – an average of 97 per branch. Meanwhile, the supply of rental stock is down year on year, suggesting that rents could easily rise further over the next few months.
But industry figures have also blamed rising taxes and repossession delays for rent hikes, saying that landlords have had no choice but to pass on increased costs to tenants. With both the Scottish and Welsh governments planning to introduce costly new rented sector regulations in the near future, and reform also on the cards in England, this month’s record may not stand for long.
The Welsh government wants to reduce the impact of second home ownership in the country, and landlords could find themselves in the firing line.
Second homes and holiday lets are controversial in Wales, where locals say they are being priced out by large numbers of investors and holiday home buyers. In some areas popular with holidaymakers, almost half of all homes sold in 2020-21 were bought as investment properties or holiday homes.
Now, politicians plan to pick a pilot area this summer for an approach that will focus on:
Improving the affordability and availability of housing
Making registration of holiday homes compulsory and amending planning rules
Relooking at taxation of second home owners
Welsh councils already have the right to impose up to 100% additional council tax on second homes, in order to fund local infrastructure where they do not get regular income from providing services to year-round residents. As of January 2021, though, only 8 out of 22 had chosen to do so – and only one planned to charge the maximum allowed this financial year.
Wales also charges an extra 4% Land Transaction Tax (equivalent to stamp duty in England) on second homes and buy-to-let properties. However, opposition parties have claimed that the Welsh government’s plan doesn’t go far enough, calling for local caps on second home numbers and a trebling of the surcharge.
Lettings industry figures have welcomed the plan to hold a pilot scheme before new rules are introduced nationwide, but also called on politicians to recognise the value of tourism to local economies. In addition, say some, new rules that hit rented homes could also reduce the supply of housing available and encourage landlords to pass on their additional costs to tenants.
Consolidation has been a theme in the estate and lettings sector this year, with experts predicting that the market could in time be the stomping ground of just a few agencies. Now PropTech providers are going through their own wave of mergers and acquisitions.
So far the year’s biggest buyer has been German PropTech giant Aereon AG, which bought property management platform Arthur Online in January, and then lettings management software Fixflo in May. This month, Arthur Online in turn bought Tilt, which owns a trio of platforms aimed at small and medium letting agents, property managers and social housing providers.
Larger British firms have also been snapping up smaller PropTech platforms. Property portal OnTheMarket completed its purchase of Glanty, the company behind lettings platform teclet, in May.
Consolidation in the estate and lettings sector is partly driven by the cost of complying with more and more complex and expensive regulations. In PropTech, it’s also driven by customer demand: agents enjoy having access to multiple tech solutions delivered through a single platform.
In a different strategy to meet demand without changing ownership, PropTech providers have also been integrating their services.
Within the last month, Reapit gave clients access to home setup service Just Move In through its AgencyCloud platform, where it already hosts a long list of PropTech apps. Lettings platform Goodlord and tenant referencing service Vouch, which merged last year, have combined their platforms.
But in a less drastic type of integration, PropTech firms are also releasing their APIs to third-party developers, allowing both users and other PropTech companies to interact with platform functions and data in new and bespoke ways. Since PayProp opened its API earlier this year, selected users have received upfront access to powerful, time-saving integrations with e-mail marketing platforms, cloud-based accounting suites and lettings management software, among others.
PayProp isn’t the only PropTech leader to go down this route. The UK’s most innovative PropTech suppliers, including PayProp, together make up the Innovation Collaboration Group, which is dedicated to building bridges between different PropTech platforms to the benefit of estate and letting agents.
Given this trend, consolidation in PropTech may take a different route, resulting in the market not being dominated by a few massive companies over time. With agents now facing a dizzying array of PropTech services on offer, experts are in fact asking if we have reached “Peak PropTech”, or if we are in fact only at the beginning of a PropTech revolution. If PropTech companies continue to follow the integration route, clients could enjoy the convenience of consolidated services while still having plenty of options.
From mental health awareness to food banks, we’ve seen some inspiring fundraising work from estate and letting agents over the last year.
Now Agents Giving is getting ready to recognise the property sector’s top fundraisers in this year’s Fundraising Champion Awards. Individual agents, teams, agency branches and industry suppliers can enter now at the Agents Giving website by describing their fundraising activities between September 2019 and July 2021.
Some of the industry’s biggest names have sponsored the awards, including Zoopla, The Property Franchise Group and Foxtons.
The winners will be announced and awards presented at the Agents Giving Ball on 24 September.
Why not get a head start on your fundraising for next year’s awards? If you’d like to start your own fundraising drive for your favourite charity, as an individual or an office team, go to leading online fundraising platform GivenGain (PayProp’s group Foundation) to register now. If you need help getting started, e-mail robyn@givengain.com.
