Residential Overview

17.1.22 2 MINUTE READ

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2021 was a busy time for the residential sector. With Covid restrictions in place at the beginning of the year, the house move process was more onerous, though demand for vacant properties remained strong.

As lockdown restrictions were slowly lifted, the high demand for the majority of residential properties has enabled many landlords to obtain higher rental income compared with pre-pandemic rents. Demand remains high as we move into 2022.

Legislative changes

As in the last few years, 2021 saw various legislative changes for residential
properties. Under the Coronavirus Act 2020, notice periods were extended in March 2020 and again in August 2020 to take notice periods in the majority of cases to six months, with some exceptions.

This was then extended through to 31 May 2021. As of that date, the notice periods were reduced but it was not until October 2021 that they returned to pre-pandemic lengths. The government have retained the right to revert to the longer notice periods again if required until March 2022.

There is a backlog of cases within courts currently. This is a result of courts being closed for a period last year, fewer cases going through the courts (once opened) due to Covid-19 restrictions, longer notice periods, and more people unfortunately falling into arrears through changes in circumstances during the pandemic. This being said, even when notices have expired, if tenants had not left the property at the end of the notice, the process for eviction through the legal system is a long one.

The courts are encouraging landlords to try and negotiate with their tenants to avoid going through the courts which, if possible, is likely to be the quicker method at this time. On the subject of debtors, the debt respite scheme was introduced in May 2021 enabling individuals to apply to a debt advice provider for 'breathing space' whereby they have up to 60 days legal protection from creditors.

This does not remove any of their liabilities (including rent due/rental arrears) but allows them to seek advice or financial assistance without people chasing them for payment or notices being served on them. Interest cannot be charged during this period.

There is also another version of the scheme for people who are suffering from mental health problems, whereby the breathing space will be for the whole period of their treatment plus 30 days.

Property Compliance

The Electrical Safety Standards in Private Rented Sector (England) Regulations 2020 came into effect for all residential let properties from 1 April 2021. Prior to this, for the period from 1st July 2020 to 31 March 2021 it had just been for new lettings.

There are a few exceptions, including social housing and shared accommodation with a landlord/landlord’s family, but the majority of residential properties are now included within the regulations. Local Housing Authorities monitor this and in worst case scenarios, fines can be imposed.

It is therefore recommended that inspections and works are booked in as soon as possible to avoid any such issues.

After Brexit

Having left the European Union at the beginning of 2021, there were knock on effects with who can reside in the United Kingdom. There was a delay on the changes regarding documents required for Right to Rent checks but, as of 1 July 2021, applicants over the age of 18 from the EU/ EAA/Switzerland have to have paperwork in place as per the EU settlement scheme.  There is a 'view and prove' service on the government’s website where the applicant’s status for residing in the UK can be checked, which has worked well in practice. The checks are not required retrospectively for tenants already in occupation before 1st July 2021.

After Coronavirus

As a result of the Coronavirus Act 2020, it was agreed that Right to Rent checks could be completed virtually to minimise contact with applicants. This has been put in place until April 2022 and the government are considering ways of this being the case permanently going forward.

Overall 2021 has been a mixed period for the residential property market with rents increasing and fewer tenants struggling than in 2020, but with landlords facing long periods for gaining possession of properties, especially where the courts are required.

With the Renters Reform Bill being delayed until 2022, there are some uncertainties as to what lies ahead for residential landlords. More protection is likely for tenants in some ways, but also improved terms for landlords for obtaining possession of a property on other grounds.

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Jo Gadd

Associate, Private Estates

Jo keeps her finger on the pulse of the ever-changing world of property management and the associated myriad of regulations

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