Big changes are shaking up the property industry, in some entirely unexpected ways. Home purchases are down in the UK; focus has shifted to making more rental properties available to specific demographics based on age and lifestyle.
Many new things are in store for housing in 2020, for the property industry to keep up with sweeping market trends, it must initiate a revolution of its own. New legislation, along with advancements in technology, cannot be overlooked.
The declining availability of properties for sale
Not since 2009 has the UK seen a sparser selection of homes for sale. New listings are down 15%, and sale prices have dipped by 1% (Rightmove).
Sellers have been waiting to see what would happen with stamp duty reform, meaning that home sales may recover in 2020; however, we can’t forget about all those people who needed housing in 2019, as well as all those who shudder at the thought of long-term financial commitment in a shaky UK economy.
Where are they now?
The rental market is richer than the homes sales market is poor. In May 2019, UK residential rental rates had increased 1.3% in just one year (Office for National Statistics), and there’s no downturn expected for 2020. Compare that to a 7% increase in rental rates since 2015; demand for residential rentals in 2020 is likely to be robust.
The demand for rental properties in the UK has been steadily climbing since 2016. And until the rental supply catches up, property managers can expect plenty of letting activity.
How will managers keep up with all the activity expected in 2020?
The answer is technology.
Technology’s role in contemporary property management
In response to demand the availability of rental properties is likely to grow in 2020. With that will come more construction, renovation, repairs and maintenance, tenant vetting, contracts, dispute mediation, rent collection…basically, more of everything.
Add to that an increased demand for relationship building in every step of the process, and PropTech starts to become a no brainer.
Big Data is no joke. Property managers have masses of information at their fingertips, and managing it all calls not just for tech, but Big Tech. Cloud-based systems with unlimited storage were the wave of 2018 and 2019, and 2020 will see a surge in integrations across more platforms for gathering information around things like lead generation and conversion, air quality and temperature in units, one-touch bookkeeping, and AI.
What’s more, the tech that only a year ago kept us from losing contracts and missing rent collections will now be used to help planning. Tools like integrated sensors and other software that can predict potential challenges will further streamline the property manager’s typical workday.
The technology is in place. The real revolution in 2020 will take place when property managers and tenants jump onboard and embrace its potential.
Rental property legislation, moving forward
Owners and managers in the rental industry felt the sting of new and revamped regulations in 2019. There were the Tenant Fees Act, the Homes Act, Client Money Protection, HMO licensing extensions and more.
And the coming year will bring its own set of regulatory updates.
In 2020, you will no longer be permitted to deduct mortgage interest from taxable profits on properties owned by individuals. The phasing out of this deduction has already started and will be fully enforced by April.
April will also bring changes to minimum energy efficiency standards. Regulations were introduced in 2018; however, standards will apply to all tenancies as of April 2020. All will be held to an EPC rating of at least an “E.”
More regulations may surface in 2020, but they have no set roll-out dates. These include mandatory five-year electrical system checks for residential rental properties and rent controls in London.
Understanding what 2020 has in store for the housing industry
The rental market may have been slow to jump on the technology bandwagon; however, the swell in demand is making streamlined software and apps virtually irresistible for busy property managers. Add new legislation and revisions to regulations, and PropTech starts to take on an air of necessity.
Shifts in the housing industry are proving that more and more, long-term relationships are overshadowing short-term sales. Property managers are expected to fill an increasing number of roles, whilst adhering to a growing number of rules…all meaning one thing: they need help. Nearly every other industry has turned to technology. 2019 was the year when we recognised PropTech’s value.
2020 will be the year we embrace it, and profit from it.