The curtain has now been raised on 2022, and the UK finds itself in a difficult position politically and economically. Yet, the show must go on! How will the lettings market fare in 2022? Here’s some food for thought; there’s plenty to talk about.
Dealing with the Pandemic
The coronavirus virus remains at the forefront of most people’s minds.
Some good news, however, is that the government has now announced that masks will no longer be required in public—a small win in theory, but it is great news for the housing market.
This means that house-viewings and in-person meetings in agency offices will certainly see a big boost in 2022 as buyers, sellers and renters can return to a new kind of normal.
Vocation, Vocation, Vocation
The Association of Residential Lettings Agents (ARLA) has made its intentions clear to make the PRS a chosen career path in the same way as teaching and nursing—not just an office job that turns into an accidental career path.
1,200 agents signed up for qualification last year, and many more will do so in 2022 as the lettings industry shifts towards a vocational career choice and away from under-qualified or low-quality agents—driving up standards for the industry as a whole, while also dealing with reputational issues that have plagued agents for long enough!
Therefore, we may see a shift in how agencies operate in the next year or so—with more qualifications and training requirements starting to come into force.
The Energy Crisis
Possibly the biggest issue facing the UK right now, the ongoing energy crisis is putting a lot of people at real risk—with many not knowing how they will afford their rent, heating and food if prices keep rising.
More than a dozen energy suppliers have gone bust since August 2021, and prices have surged as suppliers scramble to find a way to make their business models work for them and their customers.
The bad news is that the energy price cap could rise by as much 50% by April, which means suppliers will be legally allowed to charge far higher rates to consumers as energy costs soar. Ofgem will decide the next price cap on 7th February 2022, with any changes coming into effect in April.
Some suppliers are already offering new fixed and variable tariffs for customers willing to take a risk on how much their energy will cost this year—but it is going to be a long road before energy prices return to any sort of normality.
Build to Rent & housebuilding
Tenants in England, Scotland and Wales have faced an availability crisis for rental stock since 2010, driving up the cost of rent and giving landlords greater power when choosing tenants.
However, the Build to Rent sector (new-build properties designed specifically for lettings) made great headway in 2020 and 2021, with 26% more build to rent properties coming to market in that time. The likelihood is more developments will come in 2022, but it will take time for any new stock to come to market.
However, ARLA has warned that build-to-rent won’t solve the stock shortage across the UK for two reasons. One is that it is expensive compared with renting from a private landlord, and the other is that build-to-rent properties currently make up just 6% of stock in the UK.
The Monetary Policy Committee (MPC) opted to raise interest rates to 0.25% in December 2021, with the MPC next meeting in February. The likelihood is that the MPC will keep interest rates steady while the UK grapples with political hardship, supply-chain issues and the ongoing pandemic.
However, the fact remains that the Bank of England wants inflation rates to drop from the current 5.1%—the highest inflation rate since 1992— to a more manageable 2%, and further interest rate increases will be required over the next 18 months to meet those demands.
This means that landlords and buyers will have some time to adapt to the new interest rate before it is raised again, and savvy buyers will make their moves sooner rather than later, as interest rates will only go up as the UK moves past the pandemic and Brexit fallouts.
The government announced its intention to abolish Section 21 notices in 2021, but it has delayed any official moves until 2022.
This year will be a significant time of change for landlords and letting agents in England. who will no longer be able to evict “no-fault” tenants (those who haven’t broken the conditions of their rental agreement).
The flipside is that Section 8 (a landlord’s right to repossess their property) will be strengthened to give landlords more power should they choose to sell or move into their property. The hope is that this will equalise the power shift caused by the abolition of Section 21.
You can find out more on the consultation here.
EPC ratings. Renewable energy. These are just a couple of buzzwords surrounding the property industry’s green problem.
ARLA has reported that 14% of the UK’s carbon emissions come from housing, so there is a serious need to address replacing heat pumps, insulating homes better, and finding more environmentally friendly methods to power our properties.
Change is abound in the lettings industry right now, and 2022 could well be a transformative year for agents and landlords alike.
Ensure you’re keeping open lines of communication with your landlords (especially for new legislation surrounding Section 21 and going green), and also use the early part of 2022 as an opportunity to get your house in order as the country moves away from the pandemic and back towards the new ‘normal’.