Arrival of EU citizens planning to spend at least 12 months in the UK have fallen by around 34% since the June 2016 UK referendum result, and the ongoing COVID-19 pandemic is only likely to have impacted this number further in 2020. Less EU citizens entering the UK, will undoubtedly mean less EU tenants entering the UK rental market overall. Right to Rent requirements are also under the spotlight, and likely to change at some point, meaning that those EU citizens who do want to rent in the UK could face further challenges in securing a home.
Regional differences in rental trends may be more obvious because of Brexit in 2021; areas with high demand like London and the major student population cities are likely to see the least impact and recover faster. But in areas where industries rely on both EU citizens & seasonal demand (e.g. Leisure and hospitality), the effects could be felt more keenly and result in a more tenant-centric market emerging.
All of this is compounded by other upcoming challenges like the end of the stamp duty holiday, which The Guild of Property Professionals latest research indicates could result in a third of homebuyers pulling the plug on their deals, which could impact rental stock. Along with the Renters Reform Bill and Section 21 changes still to come later this year, and the fact that much of the COVID-19 legislation will undergo further change or expiry as the UK re-emerge from lockdown, the overall position is complex.
But the lettings industry has faced times of change and had to adapt to legislation many times before including the Tenant Fees Act in 2019, and there are positives to focus on. The rental sector has traditionally been stable because people will always need homes and as the UK recovers from COVID-19, the affordability of homeownership could be further away for those affected economically. Landlords may decide that property is still a more attractive investment than other markets during the pandemic, even if the stamp duty holiday ends. In addition, it’s possible the rental market will see higher numbers of EU students entering the market this year, delayed from taking up study opportunities in 2020. And there are some 4.9 million EU nationals who have already applied for the European Union Settlement Scheme to remain in the UK, plus many who will still travel for work reasons and meet the requirements defined by Brexit and Right to Rent.
One thing is clear and that is that there are still clear signs of a strong consumer demand across the market, despite multiple ongoing and uncertain changes affecting the state of play. Letting agents have, and are, taking action to become more tech efficient; PayProp’s December Rental Confidence Index found 77.6% of agents increased the use of technology in their businesses last year to help manage an ever-changing landscape.
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