What to expect from the property market in 2021

What to expect from the property market in 2021

We’re heading towards a new year and, for most people, being able to leave a testing 2020 behind can’t come soon enough.

For landlords, your attention will be turning to potential new legislation in 2021, not to mention keeping an eye on how the property market performs against a backdrop of coronavirus and Brexit.

Here, we’ll be taking a look at everything landlords can expect in 2021, including the potential networking events pencilled in for the new year after almost 12 months of Covid-19 restrictions…

 

New landlord rules in 2021

With the turn of any year comes a host of new rules and legislation for landlords and 2021 is no different.

Here are some of the proposed changes you should look out for as a landlord:

 

Smoke alarm rules in Scotland

Scottish landlords should keep an eye out for a new law aimed at ensuring homeowners and renters are protected from fire threats.

From February, all homes in Scotland, including rental properties, must have a smoke alarm in living rooms and on hallways and landings.

Heat alarms must also be installed in kitchens and carbon monoxide alarms placed near boilers and wood burners.

 

Eviction rules during coronavirus

Currently, landlords have to provide their tenants with six months’ notice under laws passed in the wake of the Covid-19 pandemic.

Under some circumstances, including in cases of domestic abuse, rent arrears or anti-social behaviour, shorter notice periods may be given.

The eviction rules are set to revert back to two-month notice periods in March 2021, but as with anything Covid-19-related, this could change.

 

Stamp duty for landlords

From April 1, 2021, non-UK residents buying property on these shores will have to pay an additional 2% stamp duty surcharge.

The stamp duty ‘holiday’, meanwhile, introduced after the spring 2020 Covid-19 lockdown to stimulate the property market, is due to end on March 31, 2021.

 

Client Money Protection

If you use a letting agent to manage your rental property, or properties, they should already be compliant with Client Money Protection legislation, which has been mandatory since 2019.

This protects your rental income as a landlord if it’s collected by an agent and that agent goes out of business.

The deadline for all agents to be compliant with this legislation is April 1, 2021.

 

Electrical safety certificates

New regulations on electrical safety in rental properties came into force on June 1, 2020.

The rules currently apply to all new and renewed tenancies after that date and mean landlords must have an Electrical Installation Condition Report (EICR) carried out and supply the safety report to all tenants, as well as carrying out any required work.

From April 1, 2021, the rules will apply to all existing tenancies too.

 

Changes to eviction rules in Wales

An amendment to the Renting Homes (Wales) Act 2016 is being put forward in February 2021 which could see tenants protected from eviction for 12 months from the start of any new tenancy.

The minimum notice period in Wales could also be extended from two months to six months under the proposal.

 

The end of section 21 evictions

The Renters' Reform Bill will end so-called “no fault evictions” by abolishing section 21 from the Housing Act 1988 and replacing individual security deposits with a lifetime deposit that follows the tenant from property to property.

It will also make a government database of rogue landlords and property agents, accessible to tenants, agents, landlords, employers and professional bodies.

Under current rules, landlords can evict tenants at the end of their fixed term tenancy, or during a periodic tenancy, with a notice period of six months (two months under non-Covid-19 rules).

The government is proposing the abolition of section 21 in 2021, meaning landlords could regain possession of their rental properties only through the court system, bringing compliant creation and conduct of the tenancy under expert scrutiny.

 

New landlord tax rules in 2021

Changes to income tax rules and the deduction of landlords’ mortgage interest are now fully in place, but there are other tax changes coming in 2021 that you should be aware of.

 

Digital tax regulations

If the turnover from your rental property, or properties, is more than £85,000, you may already be using the Making Tax Digital (MTD) system.

Under the system, you send four quarterly updates on income and expenses to HMRC rather than completing an annual tax return, before signing a declaration at the end of your trading year to confirm your numbers are correct.

If you’re not using MTD and your turnover exceeds £85,000, there will be a deadline to do so at some point in 2021, although this date is unknown currently.

In 2022, it’s expected that MTD will be rolled out to all businesses, regardless of turnover.

 

Possible capital gains tax changes

With the Treasury now drawing up plans on how to repay the huge amount of national debt caused by the coronavirus pandemic, tax increases are now widely expected in 2021.

That means changes to capital gains tax (CGT) could be on the cards, although this has not yet been confirmed.

 

Tenant law changes

Tenants, as well as landlords, should be aware of the new rules surrounding eviction notice periods during the Covid-19 pandemic.

Until March 31, 2021, landlords must give tenants at least six months’ notice if they wish to regain possession of their property. The rules may be extended further depending on the situation with the pandemic.

 

Property market predictions for 2021

Despite such a tumultuous 2020, the property market has performed remarkably well.

The bounce-back of the market following the spring Covid-19 lockdown has seen Rightmove predict 7% growth in UK property prices for the 12 months to December, while Zoopla is predicting a 4% rise.

With Brexit on the horizon and the pandemic still playing out, the feeling for 2021 is one of caution before renewed optimism in 2022.

PriceWaterhouseCoopers (PwC) suggests a 7% fall in property prices could be likely should there be a serious third wave of Covid-19 but adds that a 1% rise in prices is more likely.

The Office for Budget Responsibility’s assessment, meanwhile, is that prices will stabilise before eventually rising by 4% in 2021.

 

Brexit and the property market

The UK’s transition period for its exit from the EU ends on December 31 and, at the time of writing, no trade deal is in place.

That uncertainty, combined with the pandemic, could have an impact on the property market in the UK, while landlords will also have to factor in legislation changes caused by Brexit.

 

Right to Rent checks and Brexit

Under current laws, landlords or their lettings agents must check the immigration status of all potential tenants to ensure they are legally allowed to rent in the UK.

From January 1, 2021, the UK is bringing in a points-based immigration system, but landlords should continue to use passports and national identity cards to assess Right to Rent until June 30, 2021.

New rules are expected to be revealed in the spring.

 

More on how Brexit could affect landlords

Take a look at our guide on the Brexit affect for landlords.

 

Property networking events to look out for in 2021

After many of 2020’s property events were postponed or cancelled due to coronavirus, there is a hope that more face-to-face events will be able to take place in 2021.

Here are some of the events on the 2021 calendar:

 

The National Landlord Investment Show

The National Landlord Investment Show is set to take place both live and online in 2021.

Two nationwide online shows are set for January 27 and September 8, while live dates include:

  • London – May 25
  • Midlands – June 16
  • Manchester – October 12
  • London – October 26

 

The Property Investor Show

Date: April 9-10

Venue: London Excel

 

ARLA Propertymark Conference & Exhibition

Date: April 27, 2021

Venue: London Excel

 

Landlord opportunities in 2021

With borrowing still affordable thanks to record low interest rates and the stamp duty ‘holiday’ in place until March 31, 2021, there are some superb opportunities for landlords looking to boost their portfolios.

Take a look at our development opportunities for landlords in 2021.

 

Don’t get caught out

With this raft of new legislation in the pipeline, landlords have more and more to think about when it comes to staying compliant and protecting their right to vacant possession.

Martin & Co is dedicated to providing guidance and advice to landlords so they can enjoy a trouble-free letting experience.

We will take away the burden of regulation, maximise your rental income, reduce the risk of arrears and free up your valuable time.

Contact your local branch to find out more about our property management services.