2021 is a difficult year to plan for - but there are certain predictions that can be made based on the current state of play in the property market. Five experts share their prognosis for the coming 12 months.
The impact of the stamp duty holiday, the supply of landlords, and the continued strength of the lettings market are just some of the topics raised when predicting what 2021 may bring for the property sector, for these industry experts and Goodlord customers: Michael Jones & Company, Andrews, and LiFE Residential - as well as Goodlord's CEO William Reeve.
Mark Howell, Group Lettings Manager at Michael Jones & Company:
"My prediction as it stands will be a strong start to the year for sales in terms of banking, because of the stamp duty deadline at the end of the first quarter - a big driver for people to get that money and those exchanges and completions in.
"Lettings will remain strong because people will still need to move. Despite the market being strong, it's still quite hard to get a mortgage for a lot of people. So there'll still be a lot of demand for renting.
"Then we'll probably see a bit of a reverse with a few more sales properties coming back onto the lettings market, at the latter part of next year. That being said I do believe both the sales and lettings market will remain pretty strong.
"The big question mark, which is on everyone's lips, is the stamp duty deadline. When it finishes at the end of March, what impact will that have on the sales market for the remainder of that year? We just don't know. My feelings are that it will only have a small impact on the market for a limited period and the natural buoyancy of the spring sales market will counter-balance the possible negative short term tilt.
"Probably of all the years to predict, I think 2021 will be one where we're all a bit 'fingers in the air' really. I don't think anyone can make a solid prediction for next year because we've seen this year that a series of events happened that none of us could have ever forecast."
Ellie Donaghy, Head of Lettings at Andrews:
"In 2021, we've still obviously got the Renters' Reform Bill. We're still looking at the abolishment of Section 21. Some of the surveys that have been carried out said that 33% of landlords might look to exit if the abolishment of the Section 21 does go ahead. That does pose a bit of a concern. However, that's not to say they won't be purchased by other investors.
"We've got the changes to carbon monoxide regulations and the energy performance regulations. We will have to look to make upgrades to properties, which is going to cost landlords money. In a roundabout way, it is all going to cost landlords money, but it just depends what you're in it for as a landlord - if you're in it for the short-term gains or the long-term capital gains.
"I don't think the stamp duty holiday will be extended. I think it's kept the market moving in the most challenging of times. The notice periods, I have to be honest, I'm on the fence with. Once furlough starts ending, I think they may extend it, because we may see more tenants not able to pay their rent, and they'll want landlords to work with tenants to keep them in their properties, and to be sympathetic to that. But then there will be such a backlog that the courts are trying to catch up with, it may be that they do reduce that back down to three months, or potentially four. That's something we will have to watch closely."
Jonathan Werth, Managing Director at LiFE Residential:
"There is a lot more movement in the market, especially if in March they don't reduce the stamp duty, rentals will be busier. People still want to move. If they're not traveling, they're still going to want to move. They'll be moving jobs more. I'm certainly in between very confident and somewhat confident for the first part of the year.
"I'll be massively surprised if they extend the stamp duty holiday. You can see the government is using March as a deadline for various things with furlough, with stamp duty. By March, there'll be quite a number of people vaccinated. Brexit will be three months out of the way. I can't see they'll extend it.
"I think educating the clients, educating our staff, really, to be mindful of interest rates and currency exchange rates [will be important after the end of the Brexit transition period] because a lot of the trade that goes on, especially in London and with investors, is dependent on what else is happening in the market. It's really important for us to know where the interest rates are going. That is something to be very, very mindful of post-Brexit."
William Reeve, CEO at Goodlord:
"The long term picture is clear - the rental sector is growing. Affordability is the driver of that, and with the economy under pressure it is hard to see that changing.
"However, the mix within the rental sector is still unclear. Plenty of evidence suggests some landlords will exit the market. What isn’t so clear is who replaces them - after all, every seller needs to find a buyer. It seems reasonable to think that, in line with government policy, the industry ‘professionalises’. This means more use of letting agents, more PRS, and even potentially more social or local authority housing, but probably fewer ‘amateur landlords’.
"These long term trends are clear. The challenge is predicting the short term - and 2021. Volumes in 2020 have been down about 10% on 2019, but with massive fluctuations, and we think the dust won’t settle in 2021. That’s why we’d say Keep Calm, and Carry on Letting."
