Will 2021 see the rise of the ‘accidental tenant’? As the intensity increases around the Governments extension of the Stamp Duty, the Chancellor’s budget, set to be delivered tomorrow; Wednesday 3rd March is highly anticipated to include an extension to the deadline from the 31st March to the end of June.
With under 24hrs to go until we get the full details via the famous red box; it’s still somewhat unclear as to what will happen to the Stamp Duty holiday.
Will Rishi Sunak go for the tiered approach or have us speed towards yet another ‘cliff hanger’ at the end of June?
Any extension though will be greeted with a collective sigh of relief as it will most likely allow up to 100,000 already in the pipeline to complete their property transactions.
Without this support however, the repeal of the Stamp Duty for properties up to £500,00 could potentially leave a lot of owners in the unenviable position of having sold, but with no way to complete the onward chain. This could make some buyers effectively homeless despite the actual purpose of the temporary raise (from £125,000 to £500,000) was to boost the property market in England and Northern Ireland. Devolved governments for both Scotland and Wales also increased their thresholds to £250,000 at the same time as London made their temporary change to policy.
And let’s not forget the conveyancers and agents involved as property exchanges hands. Already under pressure; conveyancers are making a last minute plea to Rishi Sunak to ‘make the right decision’ as they struggle with the current workload that could increase as more people chance their arm by trying to jump on the moving property train. Phones will be ringing off the hook and emails will be pinging into inboxes at a rate of knots as agents try to beat the completion cut off point.
As pointed out by The Centre for Policy Studies; if stamp duty is abolished this could cause an eye watering £3bn gap in the Government coffers. However, according to the think tank, the change to the stamp duty thresholds has had a positive impact on the housing market with house sales at their highest level since the 2007 financial crisis; up 140%.
But despite the positive effects at some point, the party has to end.
If the numbers being reported by Rightmove are realised, many homeowners may not have a home to move into as people pull out of the chain or miss deadlines so there is the very real potential for those who have sold but have not been able to complete the onward chain will need to move into short term rented accommodation. So could we see a sudden influx of ‘accidental renters’ further boosting the rental market?
The short answer is yes, however it is not at all straightforward.
Indications from across the property industry are that ‘stock’ is in short supply, and as soon as rental property ventures onto the market it’s let with lightning speed. This will inevitably leave many disappointed renters wondering ‘what happens now?’.
The recent PWC UK Economic Report Forecast shows that affordability issues remain one of the key factors for people unable to buy property, despite the desire and want for bigger homes as more and more move work from the office to the dining room table. Space is a clear motivator.
For those dubbed ‘generation rent’; the proportion of 16-24 year-olds renting privately has risen from 51% in 1998/99 to 73% in 2017/18 and from 20% to 46% for 25-34 year-olds. ” PWC Housing Report.
But even with the need driving the rental economy, housing quality and safety remains an issue. The private rental sector (PRS) is often in the news because of safety breaches and non compliance with government legislation such as:
- Smoke & carbon monoxide alarms
- Fitness for Human Habitation
- Gas safety certificates
- Legionella risk assessments
With 15% of rental homes rated as non-decent, and 14% had at least one category 1 safety hazard, how does the ‘accidental tenant’ navigate such crowded and unsure waters?
If property rented either through a regulated letting agent or responsible landlord is not possible there are still other options available as you plan your onward property journey.
Short term lets are becoming increasingly popular since the rise and growth of AirBnb, but they are not the only player at the table.
UnderTheDoormat is an award-winning luxury home accommodation business. Founded in 2014 by Merilee Karr, CEO of UnderTheDoormat offers luxury homes to those needing the flexibility of hotel style accommodation but with all the comfort of a ‘home from home’ feel.
After a 13-year successful career at oil and gas giant Shell; Merilee started the business to help people find property to rent short term that provides the comforts of home but doesn’t compromise on safety. As the Chair for industry body, The Short Term Accommodation Association (STAA), Merilee is passionate about helping professionalise and grow the short term rental industry.
The commitment to safety and quality is imperative for keeping the accidental renter safe and to provide them with complete flexibility (they can rent for anywhere between 3 nights and 6 months) as they transition between being a homeowner, renter and (potentially) homeowner again. The short term market is ideally positioned to cater for the accidental renter or as a vehicle of choice to avoid the inevitable issues with chains.
With the uncertainty in the current market, flexibility is key for anyone moving house and what we see across the short term rental industry is an increase in demand for longer bookings, with the possibility to extend. While short term rentals might be slightly more expensive than a long-term tenancy, the flexibility it gives renters can be incredibly helpful when selling or buying a new home and reduces the faff that comes along with setting up utilities, council tax and all of the admin of moving into something more permanent.
Here are our Top 10 key points that you should consider before venturing into the agents office, answering the landlords advert or booking your short term accommodation:
- Decide on the area you want to live and potentially love!
- Check your finances – affordability is a key criteria for renting a property; it can cost up to 35% of your wage and cheap doesn’t mean cheerful or safe!
- If you have pets make sure they are able to be just as welcome – many short term rentals or AST’s don’t allow for pets and the current governments model AST template is not legally binding, so landlords do not have to accept your beloved kitty or friendly four legged friend
- Request an Inventory and Check Out report of the property – a report should be provided but it doesn’t prevent you from commissioning your own
- Your deposit should be registered within 30 days of paying it with a government approved tenancy deposit scheme (TDP) so make sure you know which scheme the landlord or agent is using
- Choose an agent that is regulated – Client Money Protection, member of an ombudsman scheme – and understands the local market
- Don’t be fooled into paying unnecessary fees – the Tenant Fee Ban was introduced in 2019 and only allows for a limited set of fees to be charged when signing the agreement – visit Gov.uk for more detailed advice and guidance
- Make sure the property is safe and secure – smoke and carbon monoxide alarms are mandatory in both short term and long rentals
- Every rental property from April 1st 2021 has to have an EICR which makes sure the electrical installations in the rented property are safe
- Gas Safety checks and certificates – for any gas appliances (permanent or portable), and gas flues that are provided for use to tenants must have regular gas safety checks and a copy of the certificate provided at the start of any tenancy
With more choice comes more responsibility so make sure you have the right advice, all your facts and options to hand and do your research.
Being an accidental tenant, doesn’t mean you should be an unhappy renter. You should always feel at home, whether that be in a rented or owned property. With the laws and legislation in place to protect you, there is no reason why it shouldn’t be anything but a good experience, great even! Renting can provide oodles of flexibility and is often a great stepping stone for those selling a property, providing valuable space and time to wait until the right property comes along. It also puts you in the favorable position of not being in a chain which makes you a better buyer when you come to make an offer.
For more information about short term stays; visit UnderTheDoormat
For more information about how to commission reports from local, vetted and insured inventory professionals visit InventoryBase Workstreams