Lucy’s Market Update – 11/08/21
2021 has been a turbulent year so far for the lettings industry, and it doesn’t look like that is going to slow down any time soon. Our Senior Customer Development Manager Lucy Mitchell, has therefore decided to provide a market update to prepare agents for what’s to come in the final few months of the year:
At Rentshield, we are always looking to offer our strong market knowledge to support our customers wherever possible. It is very important for agents to be aware of what has happened in the industry, and what is going to happen, and although we are living in unprecedented times, it’s vital to plan for the future
In this update we look at some key future dates, what’s happening in the market, and some exciting news for Rentshield and Barbon Insurance Group.
Barbon Insurance Group acquires Rent4sure
Earlier this month, it was announced that Rent4sure would be joining Rentshield Direct, HomeLet and Let Alliance as part of Barbon Insurance Group Ltd. Rent4sure’s vision and aims as a business are aligned with that of Rentshield, HomeLet and Let Alliance, making it the perfect addition.
Rent4sure are a PropTech company with 11 years of experience in offering tenant referencing, insurance, rent protection and Right to Rent checks.
Everyone at Rentshield is very excited to work alongside Rent4sure, and we are looking forward to the even stronger position we will hold in the market!
Rent prices on the up
According to the latest data from the HomeLet Rental Index, rent in the UK for July 2021 was 2.2% than in June. June saw the average rental monthly cost hit the £1,000 mark for the first time in recorded history, and going into July, this continued to rise, to an average price of £1,029.
Prices have been rising steadily throughout the year, and are now 6.6% higher than one year ago, and this month, every single region in the UK showed an annual, and monthly growth. Therefore, it is definitely worth considering the impact that rising rental prices could have in the future.
The table below shows the average rent for each region in July 2021:
The end of furlough
The furlough system was introduced in March 2020, when a lot of businesses were forced to close due to the Covid-19 pandemic. Its purpose was to support businesses and employees by paying employees who were unable to work 80% of their salary.
This has been widely successful and helped many companies stay alive, however, it has come at great cost to the Treasury (approximately £66 billion.) Because of the great cost, and the fact that most restrictions are now lifted in the UK, the furlough scheme will be officially ending on the 30th of September.
With under two months to go, and almost two million people still relying on the furlough scheme, it is predicted that this will have a huge impact on the private rental sector, as well as the UK economy as a whole. Since the 1st of August, companies have been contributing 20% of salaries for employees still on furlough, and BBC have estimated that one in five companies will be making job cuts.
Both landlords and tenants who are still being furlough will be heavily affected, with some landlords possibly opting to exit the PRS if they need to free up funds, decreasing the supply of rental properties.
The PRS will be hit most heavily, though, by tenants who have been relying on the furlough scheme, now having no source of income, and therefore potentially having difficulties in paying rent and falling into arrears.
It is vital for agents to be ready for this by preparing with good, organised record keeping, strong communication to both landlords and tenants, and affordable repayment plans.
Another way of mitigating this risk and protecting landlords, is to take out a rent protection policy, which will ensure that your landlords still receive the rental amount, even if the tenant is unable to pay their rent. We continue to offer Rent & Legal Protection to new and existing tenancies across your managed portfolio, please get in touch if this is something that you are interested in.
Notice periods returning to normal
Evictions have been an ever-changing topic throughout the pandemic, with the eviction ban in place up until May 2021. Notice periods were then dropped down to four months, however from the 1st of October notice periods will be returning to two months – as they were pre-Covid.
This change will be welcomed by landlords with problematic tenants, although upcoming changes to section 21 and section 8 notices may make evicting tenants more difficult in the future.
Thank you for taking the time to read this update, I hope that it has been insightful and helpful. If you do require any assistance, please give me or the team a call – we’re always happy to help!
Lucy has been with us for five years and has a wealth of experience in the private rental sector. With her knowledge and passion for exceptional service, the team are providing high-quality tenant referencing, whilst driving growth for our customers through a range of revenue-driving services.