What a year 2021 has been! Once again, we have seen reports of shocking rent rises, Airbnb taking over the housing market, and house prices soaring not just in Swansea, but across the UK too.
So what is in store for landlords in 2022? We’re expecting more legislation, rent controls, and the long-awaited Renting Homes Act – but let’s start with some good news!
The Good News
The UK housing market is still going strong and according to Rightmove, house prices are set to rise again in 2022. This means that there will be more equity for those who already own property, which means landlords will have more options when it comes to refinancing, mortgage restructuring, etc.
Average asking rents are still on the rise. The UK rental market has seen rents rises anywhere from 5%-25% (depending on location). Here in Swansea, we hit a peak rise of 29% this November compared to November 2020. This was primarily down to a lack of stock – the rise was accompanied by a 40% stock decrease.
We predict that rent increases in 2022 will be less dramatic, but we could see at least another 5% increase – especially if rent controls come in (more on this below).
There is no doubt that the pandemic has contributed to a surge of people looking to move to Swansea. And it isn’t surprising – with our beautiful parks, gorgeous countryside, endless beaches, and the investments being made in the city centre (which are looking fantastic!), Swansea is a very attractive place to live.
In June 2021, McCartan received an average of 351 enquiries per property to let. Whilst encouraging, this is something we hope will not continue at quite this level in 2022!
There is a real buzz of excitement in Swansea at the moment surrounding the developments of the Arena and City Centre. The Arena has already begun announcing their 2022 line up. We have said it many times before: where there is investment, there are jobs, and where there are jobs, people want to live. The rental market will be thriving because of this long-term investment for many years to come.
The Less-Good News
A new “loose political alliance” between Welsh Labour and Plaid Cymru is giving serious consideration to whether to implement rent controls for Wales, the parties have said. This announcement is part of a list of proposals they have agreed to work on together following talks over the summer on “areas of mutually-beneficial join cooperation”.
These rent controls proposed would see annual rent increases capped at inflation.
Inflation in September 2021 was 3%. On rent at £750pcm, this would equate to an increase of £22.50pcm – just shy of what would generally be considered to be a reasonable rent increase. Just a month later, however, inflation rose to 4.2% – that’s a £31.50pcm increase – higher than what would generally be considered to be a reasonable rent increase.
The housing market is already stretched thin, and it’s difficult to see how this won’t stretch it further.
Security Deposit Caps
The Welsh Government first raised the question of capping security deposits when they brought in the Renting Homes (Wales) (Fees, etc) Act 2019 – better known as the Tenant Fee Ban. They decided to delay the decision as to whether to bring them in to early 2022. Should such caps be introduced, we’re expecting them to be at between 4-6 weeks’ rent.
Renting Homes Act 2016
We’re still waiting for confirmation, but it seems likely that this much-anticipated overhaul of Welsh housing legislation will come into effect in April 2022.
We were advised at a NRLA conference 2 years ago that the delay in bringing this in had been to do with Brexit and the Ministry of Justice. With Brexit now enacted, there is no obvious reason for further delays.
The Tenant Fee Ban was originally intending to form part of this Act, but has been brought into effect ahead of it.
Housing Health & Safety Rating System (HHSRS)
This will be part of the Renting Homes Act 2016, and sets out 29 different criteria within 4 categories for measuring the suitability of housing conditions. They will become an essential part of our day-to-day lives as landlords and letting agents.
HHSRS will change what is required of landlords and agents when getting a property ready for let, and when conducting property visits.
Not only do we have to thorough assess the condition of our property against the 29 different criteria, we are also required to provide documentation to prove we’ve done so – and what we’ve done to mitigate any risks.
HHSRS has already come into effect in England; tenants in England have the ability to take action against their landlord on the grounds of unsatisfactory or unsafe accommodation based on the criteria.
Section 21 Notice for Possession
Notice periods for eviction were increased from 2 months to 6 months for landlords last year in response to the pandemic. Although the Welsh Government have been setting dates to review this, we don’t envisage the notice period will be reduced as we go into the new year.
Reform of Section 21 Notices was due to take place with the aforementioned Renting Homes Act 2016, but this hasn’t happened to date.
Mandatory Smoke and CO2 Detectors
In England, it has been a legal requirement for landlords to provide smoke and carbon monoxide detectors for all their rental properties, and for these to be tested regularly.
Currently, it isn’t a legal requirement to provide these in Wales, but it is considered best practice to do so by Rent Smart Wales. We’re expecting it to become a legal requirement.
Self-managing landlords are already obliged to schedule regular visits to their rental properties to comply with the terms of their Rent Smart Wales licence, but this will increase the liability attached to those visits as landlords will need to test these alarms (and keep a record) whilst there.
If you’re concerned about any of the above, or you want more housing and legislation updates from McCartan, please don’t hesitate to get in touch. There’s a lot going on in the Welsh housing market at the moment, and we’re here to keep you up to date and informed through it! Click here to get in touch, or click here to subscribe to our newsletter mailing list.