If you’re wondering what 2015 might hold for agents and the wider lettings market then read on. It should be a very interesting year but it could be one of great change.
More competition in the online lettings market
There’s at least two new faces to online lets in 2015; On The Market and Houser. Both have ambitious plans to change the way the online lettings market operates so could 2015 be the year in which a genuine contender emerges to challenge the duopoly of Rightmove and Zoopla? Keep a close eye on this throughout the year as it will be interesting to see whether the big two will need to respond.
Demand for high-end rentals to stagnate
2014 wasn’t a great year for high-end rentals and there’s no sign that 2015 will be any different as the number of corporate lets fall and the dwindling demand experienced in previous years continues. However, there’s no reason to expect demand for mid-market lets to waiver, providing properties are well prepared and priced correctly.
In the early part of 2014 the sales market exploded as investors saw property as a safe haven for their cash. Rather than acting as a deterrent many landlords expanded their portfolios in order to take advantage of stable mortgage rates and to avoid being priced out of the market at a later stage. The softening of sales prices by mid-2014 and throughout the rest of the year increased the market supply of rental property, which would normally have led to lower rents. However, the growing population, fuelled in part by the economic recovery, looks set to keep the rental market in check well into 2015.
Will interest rates rise?
With rates currently at an all-time low and with the economy continually improving, it’s inevitable that interest rates will rise soon and could well do so before the year is out. However, the Bank of England has yet to commit to a date and any rise will be determined in part by who takes power after May’s General Election, so there’s no need for panic just yet.
Yet more regulation on the way?
We all wait with baited breath to see what the outcome of the election will be. All the major political parties are looking to appeal to a growing number of renters who make up a significant proportion of the electorate, and the pressure on the sector will be cranked up this year as the expectation of customer service intensifies.
Last year it was all about agent redress and quality assurance in the industry. I wrote back in September, before the scheme was launched, that it presented an opportunity for agents to jump without being pushed, and a chance to demonstrate that renters can rely on the services they provide. While it’s too early to evaluate how effective this will be, what’s certain is more regulation is coming in 2015; the Consumer Rights Bill, currently undergoing ping-pong in Parliament, will introduce a duty to display fees later in the year – probably April. And more regulation will come unless the industry can turn the issue on its head and create a compelling counter-narrative.
Accreditation to come to the fore
One way to do so is though accreditation. At UKALA we offer a national benchmark and believe that accreditation is the best way to improve standards, for both landlords and agents. The London Rental Standard, introduced in May last year, has been widely successful and the government are currently considering what it would take to roll out a similar standard across the UK. While this may not take place in 2015 we expect this year to play a major part in shaping any future initiative. Watch this space.
But back to politics
The big questions of 2015 will rely undoubtedly on who will form the next parliament. We know that if Labour or the Liberal Democrats take the reins a combination of potentially lethal policies should be expected. This includes an outright ban on fees, removal of no fault evictions, and, of most concern, rent controls.
Above all, greater regulation will only place a greater burden on those who provide much needed investment in homes in the UK. This year’s election is likely to be the closest on record and no clear front runners have yet to emerge. Until then it looks like the majority of landlords, agents and even the financial institutions that fuel the buy to let market will sit tight, but rightly feel unnerved by the uncertainty.