UK private and social rented sector headlines 20 May 2021
Dear Property and Housing Professionals,
Welcome to the May issue of the PayProp Rent Report. This week brought more big milestones in the easing of COVID-19 restrictions – and with them, big changes for our industry.
Our lead story this month introduces the latest PayProp Special Report on rent arrears, which reveals the impact of a year of COVID-19 on tenants, landlords and letting agents across the UK. Read on to find out how you can claim your free copy.
Eviction rules are changing in England and Scotland this month. In our second story, we look at how COVID-19 restrictions are being rolled back.
Could Section 21 evictions soon be banned just as normal processes are resuming? We ask what the Queen’s Speech means for the future of the Renters’ Reform Bill in our third story.
Fourth, new figures show that the private rented sector is shrinking. Is buy-to-let dead – and if so, what killed it?
In our fifth story, we ask how the pandemic has changed the ways agents work. A new poll by Property Industry Eye sheds some light on the issue.
Finally, as the country marked Mental Health Awareness Week last week, we look at how property professionals rose to the occasion.
It’s been more than a year since COVID-19 reached the UK. How has the private rented sector been affected?
In November 2020, a study from the London School of Economics forecast that the number of private tenants in arrears could triple over the following 12 months. But the latest PayProp Special Report on UK rent arrears reveals a more optimistic picture. According to our data, taken from live rental transactions across the UK, the share of tenants in arrears has been falling since Q2 2020 – from 13.4% at its peak to 11.4% in the first quarter of 2021.
While this is still higher than the pre-pandemic figure of 8.7%, it shows that most tenants are paying back accumulated arrears on top of their full contractual rent.
However, the figures also reveal a smaller group of tenants getting deeper and deeper into debt. The average amount that a tenant in arrears owes has risen every quarter throughout the pandemic and now sits at 161% of monthly rent. More than 27,000 households in England alone currently owe more than six months’ rent, placing them at risk of eviction even under the current rules.
Our full report includes our most complete data yet on rent arrears across all UK regions. We also examine the impact of the pandemic on landlords and letting agents, many of whom have seen their businesses hit hard.
Eviction processes in England and Scotland are starting to return to normal this month after a year of pandemic-related restrictions.
England
The ban on bailiff enforcement of evictions in England will end on 31 May – although bailiffs have been asked not to carry out repossessions if anyone in the household is self-isolating due to COVID-19.
At the same time, the notice period in England will be reduced from six months to four, and if lockdown restrictions are rolled back as planned, to two on 1 October.
Notice periods for serious cases, such as anti-social behaviour or rent arrears of more than four months, will remain shorter.
The move was welcomed by industry organisations but slammed by activists, who say it will lead to many more renters losing their homes – although court backlogs mean that any rise in evictions will be gradual.
Diverse groups including the National Residential Landlords’ Association, Propertymark and Generation Rent have also called on the government to set up an emergency fund to help tenants pay back arrears.
Scotland
Sheriff Officer-enforced evictions were allowed to resume across most of Scotland this week. Scotland’s ban on enforcement applies only to areas under level 3 or 4 COVID-19 restrictions, but on 17 May all regions except for Glasgow and Moray were downgraded to level 2.
Other devolved nations
Rules in the other devolved nations were left unchanged this month. The Welsh ban on eviction enforcement is set to end at the end of June, and as yet the Welsh government has not announced whether or not this will go ahead as planned.
In Northern Ireland, eviction enforcement was never banned, but the extended ‘notice to quit’ period remains at 12 weeks until the end of September.
The government’s latest announcement on private rented sector reform has raised new questions about the future of the Renters' Reform Bill.
Alongside various changes to property sales, the Queen’s Speech on 11 May pledged that the government would “enhance the rights of those who rent”. Some interpreted this as meaning that the government would move ahead on the long-awaited new law, which would mean an end to ‘no-fault’ Section 21 evictions, as promised in the 2019 Queen’s Speech.
However, the bill was never brought before Parliament and not mentioned by name again this year, leading some industry commentators to argue that it has in fact been kicked into the long grass.
The government plans to publish a white paper outlining its vision for the future of renting in the autumn, and is seeking input from rented sector groups. Some of the topics slated for discussion include lifetime deposits for tenants, a national register of landlords, and eviction reform.
The government is also expected to finally publish its response to the 2019 consultation on scrapping Section 21. This could give more clarity about its plans for the future of evictions.
For now though, agents, landlords, tenants and other industry stakeholders have no choice but to wait for further updates – and hope that politicians take their concerns into account when drawing up new rules.
That’s the conclusion of a report by Nationwide’s buy-to-let lender, The Mortgage Works, which found that the share of privately rented households in England has fallen in each of the last three years.
The sector now provides 4.4 million homes, or 18.7% of the country’s total stock – down from 20.3% and 4.7 million in 2017. While this is still more than twice as many as in 2000, before the buy-to-let boom, analysts are now concerned that it could be a long-term trend.
Changes to tax deductions, new regulations and the introduction of a 3% stamp duty surcharge in 2016 have all made buy-to-let less profitable than during the boom, discouraging further investment. Estate agency group Hamptons International estimates that, without the tax changes, landlords would have bought an additional quarter of a million homes between 2016 and 2021.
Schemes like Help to Buy have also enabled more tenants to leave the private rented sector and become owner-occupiers. According to the English Housing Survey, the share of 25-34 year olds renting privately has been falling since 2014.
Even so, rents are rising across most of the country, with some Northern towns hitting 8% rental growth over the last year. If that level of demand continues, buy-to-let investors could quickly be tempted back.
What permanent changes have there been in the day-to-day work of letting and estate agents after a year of social distancing, office closures and furlough?
A Property Industry Eye poll shows plenty have now gone back to business as usual, but some of the changes made during COVID-19 could indeed stay.
Three in ten agents now split their working weeks between home and the office, while almost 10% are working from home full time.
Even where agents are back in the office, the offices themselves are often different. Just over 40% are currently open to customers by appointment only, while a smaller share work on reduced hours.
Technology has been essential in keeping businesses running over the last year, and having seen the advantages of tech, agents aren’t giving it up. More than a third of morning meetings now take place online. Customer service innovations like virtual viewings also seem likely to remain in agents’ toolboxes.
However, the news wasn’t all good. While a growing majority of agents believe their jobs are safe, more than 20% reported reduced numbers of full-time and part-time staff. And while few respondents said their agencies had closed for good, the Office of National Statistics last month reported that 8% of real estate businesses had permanently ceased trading.
Last week was Mental Health Awareness Week in the UK, and estate and letting agents turned out in numbers to make a difference.
More than 50 property professionals across the country teamed up to walk, run and cycle in the ‘Miles for the Mind’ challenge in support of mental health charity Mind.
And while the week is now over, the spirit of giving lives on. Propertymark is encouraging families across the country to take part in the Big Family Walk on 5 June and raise £10,000 for youth mental health charity YoungMinds.
Mental health is an issue that hits close to home for many agents. In January, research by Agents Together found that 62% of estate agency employees experienced mental health problems during the pandemic, while 84% would like more education on mental health in the workplace.
A fundraising challenge is a great way to bring your colleagues together and do some good. To start a corporate fundraiser and get your coworkers fired up for social change, go to leading online fundraising platform GivenGain (PayProp’s group Foundation). Need help fundraising or registering your charity? E-mail robyn@givengain.com.
