Sean Hooker: What your agency should be preparing for the year ahead

As Hogmanay hangovers fade into the distance past, the post-Christmas diet fails spectacularly at the first hurdle and wet weather puts paid to dry January, it's easy to drift into the New Year without the convictions we resolutely promised to abide by. In our professional lives this is - hopefully - different. With our business plans, objectives, and targets, we feel resolute in the face of challenges ahead - as long as we understand what may be to come, and prepare in full. 

The economic landscape

Before even touching on the legislative changes ahead, the housing and rental market is faced with particular set of converging circumstances:

• The cost of living is rising rapidly, with inflation set to soar to levels not seen for two decades or more.
• Interest rates will remain high for the foreseeable future, albeit consolidating this year and possibly falling thereafter.
• Housing stock will stay stubbornly low as, even though promises are in place, labour shortages, rising material costs, and planning restrictions will curtail new builds.
• Rental demand is at an all-time high - exacerbated by a changing of the guard amongst landlords - whether because of tax changes, increasing costs, or just cashing in their chips - which has led to rental supply drying up.

Not a great forecast at the moment, and there are some fundamental changes in the pipeline to the legal framework under which the private rental sector will operate. While not all changes will come in this year, their journey will definitely start in the next twelve-month period.

More material information incoming

Last year, the National Trading Standards announced that  property portals would require agents to provide more detailed up-front information on their listings.

The first part of the project went live in May, covering Part A: essential information where there is a cost for the consumer relating to all properties can now be facilitated on all the major portals.

Whilst this is not yet mandatory to list a property, any gaps are now being highlighted and the consumer signposted to guidance.

Agents should now expect new information requirements to follow this year. Part B will cover information, which may affect the consumer decision if it's a "non-standard" system.

Part C will cover additional information that may not be applicable for all properties but should be included if it is - for example, if a property is at risk of flooding due to its location.  

The date for going live is yet to be finalised. However, you'll need to ensure you're collecting this information and speaking to your CRM system supplier to ensure they're up to speed with the new requirements.  

Guidance is also being drafted to help agents understand what material information is and why it is important.

Seek advice on Building safety

The Building Safety Act (2022) was passed into law last year. It's already starting to affect agents, and this will continue as more details and deadlines are announced.

Although these will mainly affect residential property managers, they'll also impact agents who buy and sell leasehold or freehold flats affected by the regulation, and agents who rent them out.

Agents should ensure they seek advice and guidance on their obligations and keep their leaseholders, tenants, and landlords up-to-date with developments.

Certain landlords - i.e. those owning more than three properties - will not be eligible for financial assistance for non-cladding related remediations and even if the property is sold to a non-landlord or they later would have qualified. The exclusion is set in stone as of last February.

Get ready for renters’ reform

This is the year the renters' reform agenda will be implemented, at least in part. Legislation will be laid very shortly and whilst this will take some time to progress to law, the framework will be outlined and the direction of travel clearer.

Work is advancing on phasing out no-fault evictions and replacing current tenancies with a universal periodic tenancy.

The property portal - effectively a landlord register - is being scoped out and redress, in the form of a property ombudsman, is being developed.

The Decent Home Standard will form the base on which rental properties will be measured.

The changes will have a transition period. However, the new regulations could come in faster than people anticipate, and agents will have to adapt quickly.

Make sure you follow all the news on this and have a plan on how you will adapt when the changes come in.  Stay calm and reassure your clients.

Prepare for new Minimum Energy Efficiency Standards

With the environment at the top of the political agenda and with an energy crisis, the government’s plan to raise the minimum energy performance grade to a C in 2025 will be in the spotlight even more.

Industry experts have warned the cost and practicality of achieving this level of compliance in such a short period is daunting, and there is talk of extending the deadline. However, this has not been confirmed.

We also know there's a shortage of qualified engineers able to undertake the work, and landlords are themselves under financial pressure.

As agents, it's essential you understand the impact of this on your clients and business. Ensure you are aware of all your stocks’ ratings, especially if you're managing the properties.

Assessing the cost to bring properties up to the new standard on any new or renewing EPC should be done if the property is being rented. However, this would be prudent to do on all properties, even if they're being sold to a private owner.

The government is currently reviewing the EPC criteria, and there is talk that EPC ratings will have an impact on valuing a property.

Help your landlords source tradesmen qualified to do improvement to properties and sign post them to any potential source of funding, or information about the decarbonisation of the sector.  

Local authorities, for example, have grants for low income and vulnerable tenants, which you may be able to access. Regardless of whether the implementation is delayed, do not leave all this to the last minute.

Expect the unexpected

The above are just my take on things in the pipeline and how you can prepare for them. Make sure you keep ahead of the game by ensuring you're getting regular and relevant information and guidance.

There are other things that you need to prepare for this year I have not touched on and of course as history teaches us, something will come out of the woodwork that nobody could have foreseen.

You need to be on top of your game and make sure you have the best intel and information you get. 

For an in-depth discussion around what agents need to prepare for in 2023, register to watch our free webinar, Your agency's checklist for 2023.