6 expert predictions for the lettings industry in 2023: From inflation to fraud
As the new year begins, here are six predictions from the lettings experts to help agents and landlords as they plan for 2023.
From legislation such as the Renters' Reform Bill and housing stock predictions to the impact of inflation in the coming 12 months - six industry experts share what letting agents and landlords should expect to see in 2023.
William Reeve, CEO at Goodlord, predicts that fraud will become more prevalent in 2023
"At Goodlord over the last 12 months we’ve seen a significant increase in attempted fraud amongst tenants moving house, presumably to do with cost of living pressures.
"Those of us on the front line, monitoring and recognising those attempts, have an important role to play - especially those of us that work at scale and have datasets going back years to draw upon.
"We are seeing bad actors using the same techniques across different agencies and locations - and are sure we will catch more fraudsters in 2023.”
Abs Hassan, Director at Prime Living, shares his thoughts on expected stock fluctuations
"My expectation for 2023 is that there will be an increase in landlords leaving the market. This will predominantly be due to the increase in interest rates that would have negatively impacted many landlords' cash flow.
"Additionally, landlords that were previously on the fence may be encouraged to exit the market due to additional factors, including the looming abolishment of section 21 and the continued increase of property requirements, such as property licensing and upcoming EPC changes. Either one of these factors could be the 'last straw' for what has been a challenging decade for landlords.
"Nationwide, we anticipate more properties on the sale market will encourage sales prices to decrease slightly, particularly from those vendors who need certainty of sale. We would also anticipate rental values remaining at high levels due to a lack of supply from those landlords leaving the sector.
"The general public is also battling the cost of living crisis - so we anticipate the HMO market to stay particularly strong as room-lets being the most affordable private rental option available to tenants."
Greg Tsuman, Lettings Director at Martyn Gerrard, comments on the housing market versus inflation
"The property market has been so hot over the last couple of years that we need to be realistic about how sustainable those levels of growth are.
"That doesn't necessarily mean that we're going to swing the pendulum in the opposite direction and have 20% price drops, like some were predicting. Now it's about being realistic - stable house price growth including periods where prices don't go up is not the end of the world.
"In terms of inflation, I'm a little bit less optimistic. I think inflation is here to stay. I cannot see how it can reduce to an average of 5% over the next 12 months. There are still significant pressures on rents going up and energy prices. I also don't believe food inflation has been fully factored in - but I think the longer term outlook is mainly positive.
"We need to work hard because, no matter how good or how bad the market is, we, as an industry, can make or break it. If we put our minds to it like we did during the pandemic, like we did during the Lehman Brothers crash and many other difficult periods, I think there's a lot to look forward to in 2023."
Peter Knight, Founder of Property Academy, reflects on how agents are bringing extra value - and how agent fees will change accordingly
"There's been no joined up thinking [on housing policy] for many a year now. We're in a situation which has planted a seed of doubt and fear into an already nervous marketplace. The best agents will understand what the impact of these things are on their localities, and they will properly communicate to landlords.
"Agents can't just go out with a general statement or a newsletter and expect to be able to address all of their customers' needs in one hit. They're going to have to speak with all of their clients to find out their individual circumstances and work with them to come up with plans to mitigate these situations as best as they're able to.
"I think that is where the opportunity comes in - and agents are going to need to charge appropriately for that. In the coming year, we're going to see a separation between the cheaper agents, who've managed to get away with it, and the premium agents, who are genuinely offering their clients a quality advice."
Robert Bolwell, Senior Partner at Dutton Gregory, presents some insight into upcoming lettings legislation and government investment
"There will be an outcry during the first few months of 2023 from Shelter on behalf of those tenants who are not receiving the promised support with energy bills, primarily due to the fact that they are on pre-payment meters. After a sustained campaign on behalf of those in receipt of Universal Credit, the government will finally agree to a complete overhaul of the support system whereby those claiming benefit will see weekly payments increased to help with the still escalating costs of energy.
"I also predict that, in the wake of the inquiry into the death of the toddler in Rochdale in 2022, the government will publish its long-awaited paper on updating the Decent Homes Standard, which will be applicable to all public sector housing from 1 October 2023. It contains new guidance on dealing with damp and related health issues. Michael Gove makes it perfectly clear that this new, higher, standard will be imposed on the private rented sector when the Renters' Reform Bill goes through Parliament.
"New home starts will also be a fraction of the 300,000 promised by previous governments. As a result, there will be a major falling out between Michael Gove and the Prime Minister when towards the end of the year, Gove suggests giving local authorities cash incentives to build more homes."
Sean Hooker, Head of Redress at the Property Redress Scheme, speculates on which of the Renters' Reform Bill measures will be prioritised
“This will be the year Renters’ Reform will finally reach the statute books. After the 'push me pull me' and merry-go-round in government, the current administration needs to show they have done something and delivered on their promises.
"Whether the whole agenda as outlined in the white paper is delivered remains to be seen. However, the evidence is there, the core promises of introducing the Decent Homes Standard is set in stone and work on the property portal - i.e. a property register - is well advanced.
"The introduction of a landlord ombudsman is also a firm commitment and the issue is now how to implement this. The other top favourite will be the introduction of universal periodic tenancies and the abolition of no-fault evictions.
"They are currently consulting on how these changes would affect the duty of councils to tackle homelessness and how to overcome the issue of a tenant making themselves intentionally homeless. This issue was highlighted by Paul Shamplina and the work on new grounds for the new section 8 appears to have been embraced.
"Whether we see pet friendly tenancies is touch and go, but I think an exemption under the Tenant Fees Act for pet insurance premiums to be permitted is likely. No change to deposit protection but landlord redress should cover no deposit alternatives.”